2011 in review

2011 - the year that I saw the light.

Enough games, enough allocation rules, enough mediocre companies, just pile into the best companies.

I have been in and out of Google several times over the years and made some nice profits but if I had just sat on my hands and kept my position (and added to it) my results would have been so much better.

This also seems to be the theme of the famous book "Common Stocks, Uncommon Profits" - rather than search for bargains buy great stocks and hold them.

Charlie Munger endorses buying and holding a great company that keeps on growing because "then you can just sit on your bum for years!"

The problems are that trading is fun, it is human nature to want to just do something and we have the financial media bombarding us with stock ratings and price targets.

Warren Buffet says that the fact that he lives in Omaha rather than New York has been a huge benefit as it gives him a better perspective on the market, away from all the Wall Street hype.

So less is definitely more when it comes to investing.

I have now sold the last of my mediocre holdings and am about to buy more Google and Apple. So it was farewell to BP, BHP Billiton, British Land and Barclays. This is not discrimination against the letter B! Rather I am focussing on companies that I understand, that are growing fast and have a low cost of growth. It is hard to sell stocks that are as cheap as the four above but I believe that Google and Apple are even cheaper when you factor in their growth.

So how was my 2011? Pretty decent compared to the market, largely thanks to my Apple and Google holdings. My aggressive portfolio, which ended up just consisting of Apple, was up 10% compared to a fall of 5% for the FTSE100. My "pay the mortgage" portfolio, weighed down by the British companies mentioned above, just rose 2%.

Here are the rules for 2012 and beyond:

1. Buy only beauties.
2. Keep It Simple Stupid - no allocation rules.
3. Stop trading.
4. Do something interesting with your life!

All the best in 2012.