20% annual return - realistic?

[austek]

Just a word of warning using a buy & hold strategy.
I held CBH last year and although it grew 100% in profit rather swiftly, it became my biggest loser for the year over $5000.

I made 51% last year but over 5 years my average would be under 20% per annum. So I think profit taking & stops are a must, in some form.

Keep the risk down & learn how let profits run.

austek

 

[Shane Baker]

Why on earth would you want to restrict yourself to the ASX200

One word. Liquidity.

 

[nizar]

Why on earth would you want to restrict yourself to the ASX200

One word. Liquidity.

You can also make the whole market your universe BUT with a filter so that you can only buy stocks with X dollars of turnover per day.

 

[mime]

As the saying goes. There is more then one way to skin a cat. I trade what works for me.

 

[exberliner1]

hmmm interesting comments....I started with about $10k to play with in the Aussie market last July.

I followed a plan of buying speccy mining stocks and ... the first 3 were CDU (AUM) CQTO and THXO these gave me 100%, 400% and 350% respectively.

Since then every time a stock I held doubled in price I sold half and went free carried... net result here was that after about 6 months I had acquired a free carried portfolio of 9 stocks.

Along with a few useful punts like JMSO at 2c (sold at 20c a few days later) and MPOOA - 3c to 13.5c in a couple of months. I have easily beaten your 20% by a vast margin.

I have invested for about 20 years on and off so I have a rough idea what I am doing but surely if you cant make 20% as an absolute minimum then something is seriously wrong.

For example I currently hold a large holding in EXM and EXMO ... I fully expect that one to be around 10c by Christmas....so another 400 - 500% there.

In a market such as we have at the moment 3 figure percentage gains should be the target. They will be writing history books about the period we are going through.... the golden age of massive gains in resource stocks.

All the recent market sell off did was create a huge buying opportunity. Buy companies with JORC assets and mining plans... its worked for me so far... even with complete write offs in JPR and GEDO.

EB

 

[tech/a]

ex

Since then every time a stock I held doubled in price I sold half and went free carried... net result here was that after about 6 months I had acquired a free carried portfolio of 9 stocks.

A great strategy one I was introduced to 12 yrs ago but have never used.
Your the first I have seen in many years who actively adopts it.

For interest what is your exit strategy?

 

[wayneL]

I have invested for about 20 years on and off so I have a rough idea what I am doing but surely if you cant make 20% as an absolute minimum then something is seriously wrong.

That does depend on a whole bunch of things.

*Trading/investing style
*Risk appetite.
*Size of Bank.
*The Business Cycle

I agree that a private active trader with a small to moderate size pot should kick 20% in the @rse, otherwise give the dosh to a fund.

But... we are talking > 20% consistently here. That's a bigger ask than a few freakish years when everybody is a freakin' genius.

Remember that Buffett runs at ~14% compounded.... there are a few reasons why a small private trader can well and truly outperform that, but it ain't easy over the long term for most.

 

[Sean K]

But... we are talking > 20% consistently here. That's a bigger ask than a few freakish years when everybody is a freakin' genius.

here, here. I need to keep reminding myself of this. One of the reasons specs have run has been commodity prices, liquidity and risk taking, adding significant momentum in short time, creating these massive gains. Not sure if conditions are heading that way. Perhaps the hay has been made, or there's a short window left? Brings me back to the old Chindia story unfortunately (sorry) which is in part way driving the specs. etc etc. 20% ++ on resource specs over the next 20+ years may not be in the bag.

 

[martinhale]

I believe that the original query was whether you could make a reliable 20% pa using 75% Blue Chips, 25% speccies, no leverage and receiving no dividends.

I would still be impressed if you could do half that.

 

[prawn_86]

A great strategy one I was introduced to 12 yrs ago but have never used.
Your the first I have seen in many years who actively adopts it.

tech,

I know this is off the topic, but I too adopt this strategy, mainly for the preservation of capital due to my small portfolio size.

 

[exberliner1]

Agreed guys... I have only been active in the Aussie market for a little over a year....long term even 20% may be difficult...but at the moment we have so much positive underway in Australia that it may be worth running 2 brokerage accounts...one for the long term blue chips and one for the 25% you have in speccies.

With good research 100%+ pa on the speccies should be attainable in the current market....especially if you used the recent market drop to accumulate bargains.

Anyway best of luck....each to their own... I only invest in the speccy end of town but even there one can mitigate risk. For example CVI and EXM/O both of which I hold large positions in have big asset backing...they are not just explorers. It is here one can find value...companies that have pospects and some JORC'd reserves or very prospective Angolan oil in the case of CVI.

Anyway best of luck to all

EB

 

[It's Snake Pliskin]

here, here. I need to keep reminding myself of this. One of the reasons specs have run has been commodity prices, liquidity and risk taking, adding significant momentum in short time, creating these massive gains. Not sure if conditions are heading that way. Perhaps the hay has been made, or there's a short window left? Brings me back to the old Chindia story unfortunately (sorry) which is in part way driving the specs. etc etc. 20% ++ on resource specs over the next 20+ years may not be in the bag.

If one understands the science, one can practise the art.

 

[juw177]

exberliner, I have similar views to you despite common sense saying that if it was so easy, nobody will put money into funds. That is because I have not experienced any difficult times (until now).

The reason why we can do this in the last year is because of the strong bull market and people willing to take leveraged risk. You only needed to pick one or two good spec trades and you meet your target for the year. But will you be able to do this when the market conditions change?

 

[exberliner1]

I probably would not be able to achieve the results I have recenty if we were in a sustained bear market. I am old enough to remeber the 1987 crash... the negative equiry problem in housing in the UK (where I lived at the time) and a few other busts that have come along to taunt us.

But Australia is in a special position... it has huge quantities of resourcs - most fo which are just waiting to be discovered. So as long as China, India and in years to come places like Vietnam keep buying this stuff that comes out of the ground in Oz then there are opportunities for large SP gains.

I don`t see a sustained bear market ahead of us - however I still mitigate my risk by doing loads of research and only buying undervalued speccies.

So to go back to our original question. with 75% in blue chips and 25% in speccies is 20% pa a good target. Lets presume the Blue chips are paying dividends and the speccies not. It would still be quite easy to achieve a 20% gain overall taking dividends and gains across both classes of holding.

For example in the speccy portfolio I would certainly expect MPO, CVI, EXM, YML, RWD amongst others all too double over the next year. I have posted on all of them in the relevant threads both here and on HC.

On the Blue chip side I would certainly include (at current prices) RIO, BHP, MBL amongst others.

It doesnt look too difficult to me.

Finally out of the stocks I have mentioned hold positions in MPO (free carried) , CVI, RWD, EXM but not YML .... not plugs just a statement of interest as I wrote I have posted on them before.

Best of luck with your 20% target

EB

 

[martinhale]

Back to the original question...

75% blue chips, 25% speccies. No dividends. No leverage.

20% pa return.

Still easy?

 

[Nyden]

Yeah, 20% P/A is easy, heck - I already did it this year ...

Oh, wait, no. There's a minus symbol infront of my 20 :

 

[CATAPILLAR]

Yeah, 20% P/A is easy, heck - I already did it this year ...

Oh, wait, no. There's a minus symbol infront of my 20 :

LOVL
Cheers CATAPILLAR and dito

 

[explod]

Yeah, 20% P/A is easy, heck - I already did it this year ...

Oh, wait, no. There's a minus symbol infront of my 20 :

Yep with care. Just got my audited spread sheet back from my DIY Super Fund trading for 06/07. Had 25 winning trades and 42 losers. Clear gain of 75% which includes all fees brokerage etc.

Notable winners, CTO - BGF - JRV (he he, quick and perhaps some luck) - GDR - OXR - and SAU.

Worst loser BDG - ouch, stop loss dont' work sometimes and never in gap downs. Other losers, AND (can you believe that), LHG now LGL - and RNG.

Method, simple stupid,---- fundamentals with chart trend following, and whenever in doubt GET OUT.

I am sure others would be doing better but with my super have to be conservative. On top of that I never have more than 30% of my Super in shares at any one time; buuuutt... some times the 30% can be on one trade. Increase on strength and decrease on the first wavers of weakness.

Motto again "keep it simple stupid" for better than 20% IMHO

 

[youngone]

Method, simple stupid,---- fundamentals with chart trend following, and whenever in doubt GET OUT.

When in doubt GET OUT doesnt sound like a strategy. When trading one should never be emotional. Having a system or an exit plan would be efficient then to relies on doubt.

 

[kingcarmleo]

I have heard of one guy that has averaged 23% over the last 2 years which is pretty amazing, but I'm still sceptical that these types of returns can be done over say a 5 year period.