It's always important to reflect on past actions...

Here are some mistakes I've identified:

1. Being overweight positioned for a recession during a rate-cutting cycle (This was more about timing and the recession never came).
2. Overestimating UK retail investors' inability to see value in light of private equity deal-making.
3. Not realising the Trust sector had become overcrowded by pensioners who are still hiding in Cash equivalents.
4. Failing to slow down the frenzy of energy sub-sector buying, then diving into UKW myself - but is this really a mistake when you take a long term view...

Today, however, I received my bumper dividends from UKW and SUPR, which has softened the blow. These just need time to recoup. It may happen sooner as 5Y-bond yields are falling. The 10Y may fall in time and so this is sector is like having insurance.

Re-reading Vanguard's pessimistic 2015 report, I think most of the market struggled with how to interpret falling rates ... We could say: we only have rates like this when we're in extreme economic distress – so many assumed the economy was signalling distress at some level ... Rather than the rates being engineered, and very stimulative.

All the defensive plays were on high premiums – while Private Equity discounts were acting like we were in a recession. Crazy, the whole retail space looked to have got it backwards – and most the pundits.

The great thing with discounted ITs is having that NAV to show you the value's actually there, and you're not just hallucinating it. And when you can get your average buy prices close to the bottom, that's some margin of safety. And if the aging IT investors do abandon ship, it just makes room for activists and private equity.

I kick myself for not sticking by the old adage: that everything is ultimately a bet on inflation. Inflation dictates policy, which moves markets, etc. And there was this structural deflation, and Japan was already throwing everything at it – we presumed we were just a bit behind the curve on Japan. Really, it seems obvious now.

I think it's mostly psychological – we always thought rates were rising next year. But I don't know why we thought that now. The prospect of inflation was always there, but there was never any sign of it.

It's why trend following was such a good strategy for that environment. It just kept you in the things that were going up. Since 2022, trend following's worked great too – but the problem is we know everything hinges on events that can't be predicted (inflation, tech news, etc.) so I'm not sure whether markets are really trending now, or they're just plotting a path that happens to have been quite one-dimensional.

I think the majority of self advised gamblers have a different investment strategy

1. Look at the SP chart
2. Is it pointing up, down or sideways
3. Select all those where the chart points up
4. Rank by those with the steepest rise
5 Buy that stock and hang on to it

OR

Chose the stocks with the highest dividends and buy them. You may chose to restrict this selection to ones you have heard of.

The key to both of these methods is to do no research whatsoever into the stocks you are buying.

The problem with trend following is there's no foolproof rule to avoid whipsawing. Easy to avoid in backtests – because you will adjust your variables to fit what happened, and just assume it's a rule.

Michael Platt had a nice rule of halving positions on a net loss over a period, and then closing next drop. So if a strategy starts going wrong, you're smoothly rotating out of it. And even running it with virtual trades. Because there's no guarantee any strategy will keep working – or won't just lose you money.

Trend following worked better than any backtest I ever did, over the period I started doing it, post-GFC. It was an absolute return strategy when I tested it. But it couldn't fail, post-GFC, because everything was just going up – so rather than whipsawing being a problem, it was constantly rotating into better trades. But I stopped after the sell-off, because markets had become much more focused on macro. Plus you had these big discount plays in ITs all of a sudden. Luckily broad indexes and gold have been beneficiaries – but I think there's a lot more randomness in things right now. I like collecting dividends and volatility harvesting atm.