‘I have an economics background, so I have always been interested in how the economy works rather than financial markets per se.’ Debt-free and semi-retired, Damian is cut from a different cloth to the average retail investor.

While most will look for good companies at attractive valuations, Damian takes a top-down approach. He says the foundation of an investment portfolio is determined by asset allocation. ‘Not only does this provide a disciplined way to balance risk and reward across assets it also enables me to keep emotions at bay by not reacting impulsively to changing market conditions and passing trends.’

However, recognising the global economy is undergoing fundamental changes requires a portfolio fit for the 21st century. ‘I help a friend with his video game analytics company by writing about industry trends, with a particular interest on where the industry is heading, which is a key part of macro analysis,’ he says.

This directly impacts how he invests. ‘Given the shape of current and projected global GDP as well as societal changes like demographics and debt, I hold a mixture of large and small cap global funds, emerging markets, and have only a modest exposure to global bonds,’ Damian reveals.

‘Between four funds I am diversified globally and not too skewed towards specific countries or types of companies,’ he believes.

LIMITATIONS OF A WORKPLACE PENSION

Damian began his investment journey early, building his initial portfolio through a workplace pension in his mid-20s, helped by a modest inheritance lump sum. He quickly realised certain limitations of a buy and forget strategy.

‘I took the view that the administrator, Scottish Widows, was not offering good value, with a limited variety of high-cost funds,’ he says. He also concluded that paying commission every year to the scheme’s financial adviser was poor value, a sentiment that may chime with retail investors, so he consolidated his various pensions into a SIPP (self-invested personal pension).

Since taking a more direct approach to investing, Damian admits to having evolved his strategy over the years. ‘I went from being a broad-based investor in active funds around geographic regions and themes, to a balance of buy and hold low-cost index trackers with adventurous-to-aggressive thematic investments.

‘I can take on higher risk and ride out volatile market periods because I have no debt. I own my house outright, have low bills to pay, and hold sufficient cash for daily expenses and emergencies, spread across current accounts, NS&I Premium Bonds and index-linked bonds.’

GENERATING INVESTMENT IDEAS

During the pandemic, Damian spent hours watching videos of Raoul Pal at Real Vision and the InvestAnswers channel on YouTube. ‘Both feature people from hedge fund backgrounds and they have been influential on my understanding of deflation, debt and demographics, and disruptive technology. I also think Cathie Wood (Ark Invest CEO), James Anderson (ex-Baillie Gifford fund manager) and Michael Saylor (US entrepreneur) have a deep understanding of secular trends.’

He also enjoys reading opposing inflationist arguments, because he believes that the timing of cycles and future trends is about understanding the balance of probabilities. ‘Commodity investors I like to watch and read are Jeffie Currie at Goldman Sachs, Rick Rule and Tony Greer.’

Other influences include Jack Bogle, Warren Buffett, JL Collins, Lars Kroijer, and, in the distant past, the Buttonwood column at the Economist.

Books that he has enjoyed reading and found useful include Superforecasting by Philip Tetlock and Dan Gardner, the Steven Levitt and Stephen J Dubner-penned Freakonomics, and the writings of philosopher John Gray, ‘whose great insight is human progress is a myth because politics and ethics are not cumulative whereas science and technology are,’ he says.

WHAT’S IN DAMIAN’S PORTFOLIO?

An issue with index trackers is that they capture the good with the bad, Damian says, and returns can take decades to reap. ‘Picking winners is extremely hard but not impossible, especially if market timing is mitigated by holding a position long term.’ But he also says that research is compelling on how the vast majority of fund managers and professional traders fail to beat their benchmarks, especially over extended periods.

Patience, says Damian, is incredibly important. ‘I have done some short-term trading, with the likes of Shell (SHEL) and TUI (TUI), with mixed results,’ he says. ‘I don’t do much trading anymore because it is more fun than profitable.’

But he does continue to buy individual stocks now and again, going for higher potential rewards he perceives available despite greater implied risk, underscored by a high conviction to bitcoin.

‘Fiat debasement via quantitative easing since the 2008 financial crash has put a spotlight on sound money,’ says Damian, who believes a 21st Century solution to analogue government policies is blockchain technology.

Damian owns a ‘solid amount of various crypto assets’ from which he hopes to build value, kept in a hardware wallet for safety. ‘I embrace the price volatility with lots of patience and conviction,’ he says, again separating himself from typical retail investor peers.

HIGH CONVICTION STOCKS

His high conviction for bitcoin and other crypto assets explains his stake in US software designer MicroStrategy (MSTR:NASDAQ), something of a bitcoin proxy.

MicroStrategy is one of three high conviction stocks Damian holds in an ISA, with any capital gains or income ring-fenced from the taxman. Tesla (TSLA:NASDAQ) is another holding, offering the potential for growth in areas including electric vehicles, artificial intelligence and energy storage. ‘I am cognisant of the fact that Tesla has an enthusiastic, loyal and often younger following, which makes its price fickle yet resilient.

‘I occasionally swing trade this stock,’ he adds, referring to the strategy of trying to capture the rewards of short-term price moves.

Lastly, he bought shares in Russian gold mining firm Polymetal (POLY) in reaction to ongoing geopolitical uncertainty. ‘Being semi-retired, I looked for an income stock as a potential pension stock,’ explains. Damian thinks that the company has successfully navigated recent events and he is hopeful it will start paying dividends again.

‘My portfolio is a testament to the relentless march of technology,’ Damian concludes, ‘which may cause unease in all of us, but cannot be stopped.’

DISCLAIMER: Please note, we do not provide financial advice in case study articles, and we are unable to comment on the suitability of the subject’s investments. Individuals who are unsure about the suitability of investments should consult a suitably qualified financial adviser. Past performance is not a guide to future performance and some investments need to be held for the long term. Tax treatment depends on your individual circumstances and rules may change. ISA and pension rules apply

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