Just finished doing a casual review of our investment portfolio. Those of you who follow me will remember I did a lot of comparative research on various ETFs and ASX20 stocks 6 months ago as part of an effort to rebalance our portfolio, which was decidedly non optimal post Covid. I also ran various portfolio optimisation algorithms and did some historical backtracing of the efficacy of those algorithms.

The investment climate is now quite different. 6 months ago, stocks were at historical highs, interest rates at historical lows, and the markets were generally optimistic. There has been a significant softening of US equities due to pushback against some tech stocks, and in EU equities due to the war in Ukraine. Inflation is on the rise, and consequently also interest rates.

Surprisingly, the Australian markets have done comparatively well, and as a consequence so did our portfolio. Our selective rebalancing decisions have individually performed well for the most part.

The past few months have highlighted the dangers of following naive investment trends and relying on social media “finfluencers.” These people often have little or no financial knowledge, and push simplistic “passive investment” strategies such as investing in a basket of globally diversified ETFs, or worse still cryptocurrencies.

We are very conservative investors. We value stable income over potential capital gain, and generally invest in Australian blue chip companies that we are familiar with with a good ethical stance. If we had followed the advice of some loudmouths and put all our money in a diversified ETF such as VDHG we would have lost capital. Any good investment strategy requires broad awareness of the markets you are investing in, monitoring of companies that you have invested in, and a good understanding of investment fundamentals. Don’t follow the hype!