This analysis summarizes a remarkable year in investment, where the author's portfolio achieved a 62% return, significantly surpassing both the FTSE All Share and the NASDAQ. This impressive performance is attributed to a strategic focus on non-technology sectors, anticipating a potential shift away from the current tech-driven market. The author reflects on past investment decisions, noting that broad sector and thematic bets proved more successful than individual stock selections. The portfolio's overall trajectory since 2008 shows a slight outperformance against the NASDAQ, even when accounting for the full depreciation of frozen Russian assets, or a more conservative 30% lag if those assets are valued at zero. This review sets the stage for a discussion on future investment strategies and risk management.
The investor's end-of-year assessment reveals a substantial 62% growth in their portfolio. This growth markedly outstripped the 24% rise seen in the FTSE All Share and the 9% increase in the NASDAQ during the same period. Since 2008, the investor has maintained a performance that either slightly exceeds the NASDAQ, provided frozen Russian holdings are not written off entirely, or trails by approximately 30% if those assets are considered worthless. This outcome underscores the impact of geopolitical events on investment valuations.
A core tenet of the investor's strategy has been a deliberate avoidance of the technology sector. This approach stems from a belief that the extended bull run in tech may be nearing its conclusion, potentially representing a market bubble. The expectation is that once this cycle unwinds, the diversified, non-tech heavy portfolio will demonstrate superior resilience and growth, offering a competitive advantage in a rebalancing market. This forward-looking stance is a key driver behind the current sector allocation.
The investor acknowledges that, while broad thematic investments have generally succeeded, individual stock picks have yielded mixed results. This highlights a leaning towards macro-level market trends and sector-specific opportunities rather than relying on the performance of single companies. The portfolio's significant exposure to natural resources, currently at 45%, is identified as a critical risk factor. The investor recognizes that high correlations within this sector could lead to amplified losses during downturns and is actively planning to reduce this concentration through diversification.
Optimism persists regarding the frozen Russian equity holdings, which constitute 25% of the portfolio's value. The investor draws confidence from the European Union's decision not to confiscate Russian funds, interpreting this as a positive sign for potential recovery. There is a strong anticipation that these assets will appreciate significantly once the current geopolitical conflict concludes, presenting a substantial upside. This view reflects a long-term perspective on undervalued assets awaiting a resolution to external pressures.
In summary, the investor navigated the past year with remarkable success, significantly outperforming major market indices. The strategy, centered on non-tech investments and broad thematic plays, delivered strong returns. While individual stock selections posed challenges, the overall portfolio structure, despite high exposure to natural resources and the uncertainty surrounding Russian assets, is positioned for anticipated future outperformance. The focus remains on strategic diversification and long-term value realization, with a keen eye on market shifts and geopolitical developments.