Fundsmith 1 : Tip From Friend Nil

[irc]

A sorry tale in The Telegraph. A reader had his entire SIPP invested in Fundsmith worth £241k. In 2019 following advice from a friend he sold the entire fund and kept it in cash missing out on 39% growth since then.

https://www.telegraph.co.uk/investing/funds/lost-1...

[simong800]

The irony being if he'd have put the money into a global tracker at the time (May 2019) he'd be better off than if he'd left it in Fundsmith

[LeoSayer]

I should really stop reading those 'rate my portfolio' stories on Telegraph money - they always wind me up.

The poor chap reckons he has maybe 5 years to live so the money was for his wife and kids in 10-15 years from now. He clearly is not up to the job of making rational decisions so what were the recommendations from investment professionals?

One gave a list of 10-12 active funds to 'consider'. Another recommended LS100 (because typical Global equity trackers are overly concentrated in the US) along with smaller stocks in the UK, India and China without specifying which ones.

Well I'm not an IFA so what do I know?

[Sheepshanks]

Who can tell though? What if the markets hadn't bounced back from Covid - he'd be feeling pretty pleased with himself? If he'd put it back in Fundsmith at the the start of this year he'd be feeling even sicker sick now.

I find it annoying that the public has to gamble with things like this.

[LeoSayer]

Sheepshanks said:

I find it annoying that the public has to gamble with things like this.

It's a first world problem.

He made a decision that is poor in hindsight but he hasn't lost anything, he just missed out on gains. It's not as if he frittered it away in the casino or did some silly minibond scheme.

He still has £240k and a property portfolio.

What I find annoying is the situation that savings rates are <1% and inflation is >5%.

[Sheepshanks]

LeoSayer said:

It's a first world problem.

He made a decision that is poor in hindsight but he hasn't lost anything, he just missed out on gains.

I'm in a similar boat, although one the investments I have kept is a low six figure sum in Fundsmith. I've been on the verge of retirement for a few years and I expected the issue to be forced, but it just hasn't happened so I'm still working and during Covid I really haven't had to do an awful lot.

I felt I couldn't do anything rash but now lie awake at night thinking what might have been. Perversely it's almost a joy to look at the markets and see them down, but any recession probably would be curtains for my job.

[Countdown]

irc said:

A sorry tale in The Telegraph. A reader had his entire SIPP invested in Fundsmith worth £241k. In 2019 following advice from a friend he sold the entire fund and kept it in cash missing out on 39% growth since then.

https://www.telegraph.co.uk/investing/funds/lost-1...

Surely in March 2020 he will have been laughing his socks off thinking how clever he was.......?

Hindsight is always 20-20

[LeoSayer]

Sheepshanks said:

LeoSayer said:

It's a first world problem.

He made a decision that is poor in hindsight but he hasn't lost anything, he just missed out on gains.

I'm in a similar boat, although one the investments I have kept is a low six figure sum in Fundsmith. I've been on the verge of retirement for a few years and I expected the issue to be forced, but it just hasn't happened so I'm still working and during Covid I really haven't had to do an awful lot.

I felt I couldn't do anything rash but now lie awake at night thinking what might have been. Perversely it's almost a joy to look at the markets and see them down, but any recession probably would be curtains for my job.

I'm staying fully invested in the run up to retirement (potentially only 3-4 years away). Not in Fundsmith, just global equity trackers.

It's probably too much risk but if there's a crash then I'll just have to work a bit longer, hoping that jobs will be available.

[Sheepshanks]

LeoSayer said:

I'm staying fully invested in the run up to retirement (potentially only 3-4 years away). Not in Fundsmith, just global equity trackers.

It's probably too much risk but if there's a crash then I'll just have to work a bit longer, hoping that jobs will be available.

I guess it really depends on how quickly you'll need chunky amounts of money and where it's coming from - you may be able to stay invested for longer. My wife's state and work pension combined are pretty reasonable but she's had a couple of cancer scares and there's no provision in her pension for a widowers pension.

I think I'm an averagely lucky person but to be honest I kind of don't want to 'jinx' my current situation by going all in. Snag is I've been thinking that for about 5yrs now!

[irc]

But to some extent the safety of cash is an illusion. 1% in the bank 7% inflation. In two years time your cash is down 14% etc.

Tracker funds are risky compared to cash. But once you have made 20 or 30% gains it would take a major crash to make you worse off than staying all cash.

Perhaps the Telegraph reader if he wished to hedge would have been better taking out enoiugh cash to cover any unforseen big bills. Say £20k so he wouldn't be a forced seller later. Then put half the Fundsmith into a different tracker/fund covering a different area.

But I guess we are all clever with hindsight.

[Carbon Sasquatch]

So what was the recommendation ?

No point crying over it - but he has £241k in cash - what should he do with it ?

[tescorank]

Dare I say 50% in bitcoin, I'll let someone else comment on the other 40%

[supersport]

Sheepshanks said:

LeoSayer said:

I'm staying fully invested in the run up to retirement (potentially only 3-4 years away). Not in Fundsmith, just global equity trackers.

It's probably too much risk but if there's a crash then I'll just have to work a bit longer, hoping that jobs will be available.

I guess it really depends on how quickly you'll need chunky amounts of money and where it's coming from - you may be able to stay invested for longer. My wife's state and work pension combined are pretty reasonable but she's had a couple of cancer scares and there's no provision in her pension for a widowers pension.

I think I'm an averagely lucky person but to be honest I kind of don't want to 'jinx' my current situation by going all in. Snag is I've been thinking that for about 5yrs now!

Remember that retirement is likely to be 10, 20, 30 year plus in length the money needs to last.

[DonkeyApple]

LeoSayer said:

I should really stop reading those 'rate my portfolio' stories on Telegraph money - they always wind me up.

The poor chap reckons he has maybe 5 years to live so the money was for his wife and kids in 10-15 years from now. He clearly is not up to the job of making rational decisions so what were the recommendations from investment professionals?

One gave a list of 10-12 active funds to 'consider'. Another recommended LS100 (because typical Global equity trackers are overly concentrated in the US) along with smaller stocks in the UK, India and China without specifying which ones.

Well I'm not an IFA so what do I know?

I think that what is depressing is that it doesn't matter how many times the same basic story gets republished, there are people who repeatedly put all their eggs in one basket.

This chap was all in on a single fund then all in on cash. Others were all in on Woodford. People went all in on mini bonds, P2P and all the other junk. Kids are going all in on single sticks or fake currencies.

Over the years I have numerous clients who despite hour long conversation where they agreed completely with what you were saying about not going all in, within minutes of you putting the phone down they've gone all in on some junk stock or highly volatile commodity or index.

Many years ago I just resigned myself to the reality that there are just some people who you can never help. They will inherit a lump sum, get hold of the wife's money or be given access to their pension and regardless of what anyone does or says to them they will go all in on something.

This chap is just very lucky that he went all in on cash and didn't receive a call at any point from one of the many 'specialists' because at least he still has his money and only lost some potential opportunity cost. And even then I would hazard that it's a fair roll of the five that he would have dumped his Fundsmith position when the market first dumped on Covid and booked a big loss anyway, so my wager is that by going to cash when he did he is almost certainly much better off.

[irc]

DonkeyApple said:

I think that what is depressing is that it doesn't matter how many times the same basic story gets republished, there are people who repeatedly put all their eggs in one basket. .

Correct. I have a friend who lost the majority of his investments (which he accumulated the hard way with years as a merchant seaman) by getting onto a roundabout of dodgy cheap mining stocks. Always another mineral find somewhere.

[bitchstewie]

irc said:

Correct. I have a friend who lost the majority of his investments (which he accumulated the hard way with years as a merchant seaman) by getting onto a roundabout of dodgy cheap mining stocks. Always another mineral find somewhere.

This is one of the things that amazes me both on here and on other websites.

All in on one "any time now" stock and almost always a miner or "when they hit the jackpot" stock.

[okgo]

Human nature. Everyone knows how to lose weight, and it generally is a gradual process. Doesn't stop people doing boom and bust diets to get those results NOW. People are silly.

[chip*]

okgo said:

Greed is a Human nature.

EFA