Last Updated November 4, 2020
Unfortunately for his investors, Neil Woodford’s flagship fund is to be closed in the new year.
(Update: The entire Woodford empire is now closing down)
This is obviously terrible news as a lot of people could lose a lot of money.
I don’t want to trivialise this by jumping on the news-cycle bandwagon, although I guess that’s how this is going to look.
I saw a lot of “lessons from Woodford” articles across my news feed this morning, so I though I would apply the Tesco philosophy of “every little helps”, and re-publish an article I wrote a few weeks ago.
Reading back through the article, I think two lessons are paramount (one of which I forgot to mention):
- Don’t borrow short and lend long (or in this case, don’t invest cash into assets that could take months to sell if you might need the cash back at short notice)
- Diversify, diversify, diversify (even if that means holding several funds which are themselves diversified)
FTSE 100 fair value could be close to 10,000
While I’m in the process of “repurposing” magazine articles into blog posts, here’s another one where I talk about the FTSE 100, its unusually high dividend yield and how its fair value could be as high as 10,000.
Obviously there are no guarantees that the FTSE 100 will hit 10,000 anytime soon, but I do think 10,000 and beyond is the likely outcome at some point in the 2020s (and until then, the index’s 4.5% dividend yield is an attractive consolation prize).