Right, let’s all do a year-end toxin cleanse


What, a juice one where you spend 1/2 the day cutting fruit & the other 1/2 hungry, with a headache?

But 3 days later feel amazing, full of vitality & hope?

Almost – the same feeling of hope & promise, but minus the headaches – we’re getting rid of those

Although some “cutting” may be required

I’m in

Ok, it’s a portfolio cleanse

We “cut” the “toxic” funds & stocks that have caused us headaches all year

And do that ahead of the year-end tax loss selling to avoid any migraines

Sounds good, but how?

Well, when did the world pivot from the OLD environment to the NEW?

What from:

Low to high inflation
Global stability to instability
Offshoring to Onshoring
Low to rising interest rates?


Late 2020 after supply chains let the inflation genie escape and companies realised the vulnerability of offshoring

I agree

Now go onto Morningstar and look at the performance of your funds over the past 1 & 2 years

To assess their performance in this NEW environment

And 5 & 10 years?

Sure, if you think the world is about to pivot back to the OLD …

You see the winning strategies in the OLD aren’t winning in the NEW 

Well, I know Value is working very well in the NEW, but what if we go back to the OLD?

Value makes sense in any environment because it’s based on economics, not finding a greater fool

I know it didn’t keep up in the unique years of zero interest rates & QE, but if you think we’re going back there, please book a session with your local Central Banker

Did you shop on Black Friday?

Of course!

See, you understand Value investing – you want your money to go further – simple economics  

Ok, give me an example of OLD strategies that aren’t relevant

Funds full of “bond proxies” like P&G & Nestle & Unilever made sense in the OLD because bonds yielded 0% so their 4% dividend yields were attractive – that’s the main reason they rose in price – their EPS growth has been low single digits the past 10 years

But now bonds are yielding ~4% and these proxies are yielding ~2.5% so they’re unattractive

But aren’t you supposed to BUY and HOLD?

That only works if you BUY at the right price and HOLD for as long as there’s value

Please don’t BUY overpriced and think HOLDing is the answer!   

If you paid 25x earnings for Coca-Cola in 1997 (great business – duopoly etc)

10yrs later you were down 24%
20yrs later your return was 1.7% p/a or 3.7% with reinvested divis

Sound exciting?

Definitely not! But how do I know if my Fund is holding overpriced companies?

The Morningstar “Portfolio” tab tells you the weighted average PE of the Fund’s holdings –  a good start

But I don’t want to sell my OLD fund and take a loss

No, you’re “switching and lowering risk”

Look, many successful money managers, like Peter Lynch,

“grow their flowers and cut their weeds”

So, if that makes sense to you, get cutting

and start growing

Or buying…