I’m writing this on Monday 9 March. Earlier today I saw the price of oil fall 20% and the FTSE 100 open below 6,000 for the first time since February 2016. Today’s fall has left the FTSE 100 down by 20% so far this year. Already, the coronavirus outbreak has led to the biggest market correction since I launched my rules-based SIF fund. So far, we’re not at 2008 levels of distress, but there’s no doubt this is a serious situation.Sticking to the rulesHere at Stockopedia, we talk a lot about the importance of overcoming behavioural traits such as overconfidence, loss aversion and recency bias. When times are good, it’s easy to claim mastery over these academic concepts. But when the going gets tough, it gets much harder. As the saying goes, everyone’s a hero in a bull market.
One way to stay disciplined is by running your investment portfolio using a set of rules, rather than subjective judgements.
Stockopedia founder Ed Croft has done this since 2015 with the NAPS Portfolio. And I’ve been doing a similar thing since April 2016 with my Stock in Focus fund (archive here). Both portfolios have outperformed the market since…
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