Ask Colin

Why are you not fully invested (May 2017)?

The detailed question was:

In your investment plan I understand that by this stage of the cycle you intend to be fully invested and previously sold out of your LICs to buy better opportunities. If my understanding is correct then you still don't seem to be fully invested because in your portfolio neither the amount invested or the current value of the investments, based on the percentages shown total 100. Any educational comments you make on this would be appreciated.

You can see what percentage level I am invested at any time from the Portfolio Details file on the website which I update each week. I am 79% invested at present. I need some cash next month to pay compulsory pensions, but beyond that, you are right that, as set out in Building Wealth in the Stock Market, I should be 100% invested. I am not because I cannot find any compelling stocks to buy. This is because the market has become rather highly valued with an average PE ratio around 18%. I could use my Listed Investment Company strategy, but have held off while looking for stocks to buy. With the market so fully valued, I am not uncomfortable being less than 100% invested - it is better to be in cash than in poor or overvalued stocks. Also, a correction seems to be happening now, so there is no hurry to buy anything.

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