Fair Value for FTSE-100 and Portfolio Update

Fair Value Estimate

As I have mentioned I like to use a number of price ratios of shares from the FTSE-100 as a proxy for the broader market, seeing where these ratios are in relation to their long term average means that its one indicator that can help keep you out of trouble and identify opportunities. Take a look at the graph below – it works best in Google Chrome – and you can see we are now just above fair value.

Never use this indicator in isolation but it definitely helps show where we now!


Model Portfolio Update

Things are moving forward at quite a pace and sticking with Index Linked Gilts may have been boring but this certainly has not dented performance as returns have now just topped 20% for the year to date and rising 7% since late July.

model august

Two recent additions have also made a real contribution; Atkins (WS) and Interserve that were identified back in July on some simply contrarian rules; so far Interserve has been the star as it bounced back from multi-year lows with returns just over 38% since purchase.

interserve

So far these two purchases success can be put down to…..

Keep it simple stupid!

Applying a few simple rules does not guarantee success but it ensures clear thinking an avoiding the inevitable errors that occur if you start to try and forecast how a share may perform in terms of price and fundamentals (us humans are generally pretty bad at this!).

 

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