If that's not an explosive start to the year then I don't know what is. The FTSE 100 has been unable to break above 6,000 for two years, and in a week it goes from 5,900 to over 6,100.
While it's nice to finally see equities making some real progress, I always have to remind myself that ultimately these short-term moves are not important. What really matters is the long-term growth of the businesses we hold in our portfolios.
One way to speed up that growth is to sell overvalued companies and reinvest into undervalued companies. And that's precisely what I did recently when I sold N Brown out of my model portfolio (as well as my personal portfolio). You can read the investment case study in the article below:
N Brown investment case study (50% return in 8 months)
N Brown is a FTSE 250 company with more than 20 different internet and catalogue home shopping brands, mostly selling clothing and household goods. The company was added to the UK Value Investor model portfolio in May 2012 at 241.5 pence per share. Last week I sold those shares for 359.1 pence, which produced a capital gain of 47%. Add to that a dividend income of 13.2p and the total returns were more than 52% in just 8 months.... Read the rest of this article >>
Ultimately this style of investing is about holding outstanding businesses at low prices. If the price is no longer low then the odds are that there will be better alternatives out there, and the rational thing to do is to take advantage of them.
Have a good weekend,
John Kingham
Editor, UK Value Investor
Email: john@ukvalueinvestor.com
PS. If you're looking for high quality, high yield stocks then try my monthly newsletter for six months, risk free - Find out more >>
Note: I provide information for investors who can make their own decisions. I do not provide financial advice. You should seek a professional advisor if you think you need one. Please remember that the value of investments and their income can fall as well as rise.
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