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Actively managed portfolio journey

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Speculating . Risky business for sure and only for the very brave .

Well ,that's what I believed for decades after early unsuccessful ventures ( with gambling money ) into gold miners and oilers and so forth . These days , still do not possess much courage but one of the very few advantages of being on the highest marginal tax rate is : it gives me the incentive to take on more risk . Unlike normal folks , I never needed to grow more financially conservative as I got older . Money to burn , here . So , let 'er rip !

If I could start out all over again , I' d learn to " Trade" before devoting all that time and effort required for " Investing " . I had to spend hours every day trawling through the Australian Financial Review . In those days , brokerage was hellishly expensive and there were no ETF's , so shortcuts were impossible. No internet either . And most importantly of all , there were no forums such as ASF where you can now follow some of the really astute traders and quickly learn how they do it . Some of the really good ones don't post much anymore but you can still search their history and figure out how to do it .

The best financial education is right here on this wonderful forum . And ......it's free.
 
i class 'speculative ' as a share price under $1 , to complicate you often have some stocks earning revenue ( without government grants/rebates ) and even some that pay a dividend

however i think the OP ( @BossMan. ) was thinking of was stocks still in their first two years after listing , where there is a lot to discover ( managerial and financial wise )

and these can do all sorts of things ( wonderful and terrible )

some careful selections can end up a nice little bonus ( or near-total capital loss )

but around 20 years of age , and a fairly steady employment , maybe that is a good time for small dabbles and learn with skin in the game ( at least most stock trading platforms let you take your winnings out )
 
Yes, for me speculative is classed as small caps and under a $1.00 share price where I see potential growth, these will be smaller positions and there will be a number of picks.

I fully anticipate the speculative investment to be the riskiest element of my portfolio, with the greatest variance, however by staying true to my target weightings above I see myself being able to substantially offset a lot of the risk.

I'm aiming to rebalance my portfolio to hit the targets outlined above every six or so months unless something crazy happens where an immediate rebalance is required. This should enable me to reduce the overall risk substantially, and as the capital value grows of the portfolio ill likely look to add an element of conservative bond based ETF to further offset risk.

In terms of property while this is something I will have a definite interest in directly investing into I am still far to young to lockdown a physical real estate asset. I am still not sure if I wish to live in Australia for the foreseeable future and want to keep the door open to make a move to London / New York / Paris without any baggage left in Australia, if an applicable option arises.

However I will definitely not fall into a lifetime renting trap. I have ambition to buy property and will definitely do so prior to turning 28, just not in the immediate 2 - 3 yeas.
 
BossMan. said:
Yes, for me speculative is classed as small caps and under a $1.00 share price where I see potential growth, these will be smaller positions and there will be a number of picks.
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i have done very well using that concept ( but sure-thing there were some total losses as well , they aren't all winners when i select them )

when you find one of these winners in this area , the next big issue is when to reduce ( or sell completely ) and lock out a capital loss

they other more pleasant choice is where to park that rescued cash
BossMan. said:
unless something crazy happens
Click to expand...
yes , always have a plan for 'crazy ' ,half ready is better than unprepared
BossMan. said:
ill likely look to add an element of conservative bond based ETF to further offset risk.
Click to expand...
please study the Greek/Cyprus bailouts , before deciding in this area also i prefer corporate bonds to sovereign/government bonds ( corporations have more reputation to lose than governments ) but currently i have trivial exposure in this area ( less than 1% )

they just aren't paying me enough for the risk taken
BossMan. said:
I am still not sure if I wish to live in Australia for the foreseeable future and want to keep the door open to make a move to London / New York / Paris without any baggage left in Australia, if an applicable option arises.
Click to expand...
yes that is a current trend for young , employable people , and with frequent changes to regulations for landlords buying now and renting it later , might be baggage you wished you didn't have ( even if only moving interstate )
 
Thought I would share something I have been working on today, my primary hobby as embarrassing as it is, is coding

Through university I've mucked around with a few different finance concepts focusing on portfolio risk, to help make responsible investment decisions. I am shocked that I have actually retained some of the knowledge from these classes hahaha, never really thought to much about the concepts until recently when I have shockingly been able to apply them.

So I found a way to scrape 12 months of ASX price history, augment the data and calculate the values, here is an example of the data output (once I have cleaned it and ran calculations etc. etc.).



This is something I intend to continue to develop and will additionally add the ability to calculate the above stats for my different investment categories:
  • Diversified Growth ETF's
  • Property Growth ETF's
  • Resource ETF's
  • Speculative Stock Investments

The knowledge from the above should help me make informed decisions regarding the purchases and the exposure to potential market shocks/sector shocks/events.

Well.... more informed then I was prior. If anyone has any other factors they look at for there portfolio risk I would be keen to look at coding it in to my project. Looking at also calculating the Value at Risk as well as potentially doing Factor Analysis.
 
BossMan. said:
The knowledge from the above should help me make informed decisions regarding the purchases and the exposure to potential market shocks/sector shocks/events.
Click to expand...
please note , i wasn't watching ( the markets ) in real time , during the GFC , but from reading about it later ,i noticed after they ( investors/public )realized how big a mess it was , 'everything fled to cash , preferably US dollars ' i assume that was to cover margin calls , derivatives , outstanding debt etc. etc

depending on who you believe most of the global economy is currently very fragile , but will the rush be into US dollars this time

who owes what and in what currency , some Central Banks are accumulating gold , some are buying the debt instruments of others ( residential and business loans )

having some cash reserves is probably a good idea , but check on what the latest rules are on 'deposit guarantees' ( by the Government , they don't guarantee all of very large bank balances )

there are several triggers for a market plunge out there , commercial property , personal debt , government debt ( in some nations ) , a stray virus , a major war , , a farcically over-heated market ( in some places ) even a big natural disaster

avoidance tactics , include spare cash ( obviously ) , low personal debt ( paired with a tight budget , even better ) , these two things will be able to be maintained until the major shock occurs , which could be next week , or even next decade

a study of 2020 could give you some ideas , as several events were rather new ( supply -side shocks , lock-downs ) and not typical of a market 'black swan ' event
if you think a crash is imminent , maybe a well-stocked pantry/fridge is a better investment than bonds ( in case even the markets/banks suffer moments of breakages/blackouts )

good luck
 
Update

Additional holdings added and updated Portfolio Weightings

Speculative:

BetMakers Technology (ASX:BET) BetR deal broken off, customer migration fees of $500,000 a month for every month they require BetMakers post October. Customer migrations are never simple, especially when migrating customers from BetMakers technology to a inhouse developed application (BlueBet). I see BetMakers making some long term income off the customer migration and a further reduction in cost base. Holdings Avg Price: $0.093

Resource ETF:

VanEck Aus Resources ETF (ASX:MVR) in line with some risk testing, it looks like the most optimal option, entering into this and accumulating additional units over the course of the next month.

Portfolio Holdings & Respective Weightings

ClassificationAsset% of overall portfolio% of classification
Diversified Growth ETF'sBetaShares Australia (ASX:A200)29.88%49.59%
Diversified Growth ETF'sVanguard Diversified (ASX:VDBA)30.37%50.41%
Property Sector ETFVanguard Aust Prop (ASX:VAP)30.04%100%
Resource Sector ETFVanEck Aus Resources (ASX:MVR)5.52%100%
Speculative Stock InvestmentBetMakers Technology (ASX:BET)4.19%100%

Portfolio Classification Weightings v.s. Target Weightings

ClassificationCurrent Portfolio WeightingTarget WeightingDifference
Diversified Growth ETF's60.251%50%10.25%
Property Sector ETF's30.043%20%10.04%
Resource Sector ETF's5.517%20%-14.48%
Speculative Investments4.189%10%-5.81%

Remainder of April / May Objectives

Goal over the course of the rest of April/May is to accumulate additional assets within the Resource Sector ETF's to bring this weighting to within +/- 5% of the target. Achieving this will naturally move the other assets towards there correct respective weightings (i.e. Diversified Growth + Property Sector not speculative stock investments however).

Will be including a table that outlines the returns YTD for the portfolio at the end of this month, and intend to subsequently post it at the end of each fortnight. Really aiming to get the core weightings inline with my targets by the end of June (Core: Diversified Growth, Property & Resource ETF's)

Cheerio Bossman.
 
Speculative holding of BetMakers is going gang busters. Looks like it was a well timed entry:



55% over the last week or so. Currently carrying, think this has to be the one time I have timed the market well
 
Observation:

My portfolio beta calculated against the XJO index (ASX200) comes to a score of 0.7221 (1 being in perfect correlation with the market). I was also curious to see the weighted standard deviation of the portfolio, using the weightings and the relevant data derived from weekly stock pricing I returned the following score:



a +/- weekly movement of ~3.9% (each week there is a ~67% chance of the overall portfolio moving within that range).

Just thought that was interesting. I anticipate the interest rate decision and the effect that will undoubtedly have on the market. Similarly will be watching the May budget for any opportunities to accumulate under my speculative investment category.

18 days till the may budget
 
BossMan. said:
Similarly will be watching the May budget for any opportunities to accumulate under my speculative investment category.
Click to expand...
in the speculative end ?? ( looking for capital growth in preference to income )

interesting , i would be looking for the other end ( boring/solid stocks being divested to pay anticipated bills )

good luck
 
divs4ever said:
in the speculative end ?? ( looking for capital growth in preference to income )

interesting , i would be looking for the other end ( boring/solid stocks being divested to pay anticipated bills )

good luck
Click to expand...

In line with my current strategy, resources ETF's are set to hit there target of 20% in the coming 2-3 weeks.

That leaves me with a 90% allocation to income assets, I'm comfortable targeting some capital growth with the remaining 10%

The dividends that are also paid from my income assets are currently taken as cash then reinvested proportionally. Currently don't have a need to let the cash leave the portfolio. Based on the movements and outlook of the economy however I may look to park some cash into 2Year bonds, the yield is looking very attractive.
 
divs4ever said:
in the speculative end ?? ( looking for capital growth in preference to income )

interesting , i would be looking for the other end ( boring/solid stocks being divested to pay anticipated bills )

good luck
Click to expand...
I am starting to think maybe we have seen the top for the year here . Banks got nowhere to go while rates getting talked up without even taking into account what wounds are likely to be made known in the reports out in next couple weeks . BHP moving at a TO and a class action which isnt bullish . That covers 30% of asx200 , and trolling through the rest im not seeing any compelling what id call investments tbh . Sure will be some swing trades along that journey . I am the guy who holds a lot of cash at certain times and i think thats going to pay .

Big if rates are hiked only need to look back to '22 to see what the reaction might be . It's a year where dynamic thinking will go a long way adjusting to the wind as it turns ( damn i sound like the captain ) hehe . Need a plan A & B with a C&D possibly required .
 
OK ,when explained like that . i can see your logic

i disagree on short-term bonds i would want at least 8% ( return on investment capital , not face value/par ) , all sorts of twists are possible

going to be tough to select a small cap. that can flourish if there is a credit crunch in the next two years

good luck

the upside is , if you survive the next 5 years ( financially ) you will be very experienced
 



@BossMan. numerous suggestions have been shared for consideration and I would like to contribute an idea that involves actively managing investments, which combines the best of both worlds - trading and investing. This approach is particularly relevant for individuals in their 20s as it utilises their advantage of time to consider and implement such a strategy. Actively managing investments allows for decision-making based on market conditions while still focusing on long-term investment goals. For instance, consider the timing technique for the three highlighted positions utilising a straightforward MACD indicator.

# 1. VAP




# 2. A200




# 3. VDBA



Skate.
 
Skate said:
For instance, consider the timing technique for the three highlighted positions utilising a straightforward MACD indicator.
Click to expand...

Thanks for sharing this, wouldn't of looked in this direction at all if I am to be honest if you hadn't noted the above. Very interesting

The measurement of momentum is something I didn't know existed to be honest. I wrote some code to calculate the value and indicate blue/red on the inflections for the 50 day EMA of A200.AU (I find the best way to understand a concept is to apply it and I enjoy this stuff haha).

I may look at adding some additional elements to take into account the recent volume, expected upcoming news, dividend etc. to see if I can make something to further improve my confidence in picking an entry price. If you have any other technical indicators that you find interesting I am all ears.

 
BossMan. said:
If you have any other technical indicators that you find interesting I am all ears.
Click to expand...

@bossman! I’ve made over 300 posts in the 'Dump it here' thread discussing valuable indicators in my trading. To explore these posts, simply search for ‘Indicators’ by Skate.

Additionally, I recommend reaching out to @DrBourse, who has authored a comprehensive manual on this topic, complete with explanatory charts to facilitate better understanding. Technical indicators are essential tools for traders to analyse market trends and make informed decisions.

Skate.
 
@Skate and @bossman

I submit an alternative to the “Last 3 Entry/Exit Points of the Basic MACD Positions” as shown above..

The above MACD Entries were 30/1/24, 28/2/24 and 25/3/24….
The above MACD Exits were 14/2/24, 15/3/24 and 3/4/24….

By employing more appropriate Indicators, for example CCI & DMI – there was only One Entry on 19/1/24 (Blue Vertical Line with the BLUE Triangle) - & there was only one EXIT on 2/4/24 (Blue Vertical Line with the RED Triangle)….

Of course I have no idea how 2 Indicators could be incorporated into your "Investment Stratagies System"....


Reasons for my Entry & Exit points are explained within the (above) "Rules for DMI/ADXR Indicator"...

There are numerous other TA Examples in my "DrBourse TA Help for Beginners" Forum...
Other Examples are in the Forums "DrBourse General Help for Beginners" & "DrBourse FA Help for Beginners".
All 3 of those forums are in the "Beginners Lounge" here in the ASF...

Happy to answer any Questions...
Happy to email Free .pdf copies of Manuals (as mentioned by Skate), to anyone that feels they may be of help to them...
Anyone interested in the .pdf's would need to Private Message me....
Cheers...
DrB.
 
Last edited:
End of Month Update

As at the end of April the portfolio is currently sat in the following position:



Current Weightings by classification:



Individual Asset Weightings:



I will be updating the returns of the portfolio every 2 - 3 weeks for those that are interested, as well as the weightings.

Portfolio Metrics:

Weighted Portfolio Beta: 0.719 (indexed against AXJO.INDX)
Portfolio Standard Deviation (weekly capital value): +/- 3.719%

Targets

In line with my plan there will be a big push in May to increase my holdings in the resource sector to ~10% really keen to get the portfolio to get the portfolio within the +/- 5% of target weighting by the end of June, the dividends from the ETF's will definitely assist with this.

Additionally trying to bring down my weighted standard deviation to ~3% that has largely been blown out by BetMakers however which is an extremely volatile asset.

If I had my time again I would of purchased all of the assets inline with my weighting targets (however I had not established my asset allocation plan fully at that stage... short sighted I know).

Onwards and upwards.
 
well i certainly wouldn't have picked BET , but i hope it keeps winning for you

now a a question .. is your weighting calculated by cash invested or by current market value ??

short-sighted enhances learning , you may not be able to go back , but you can adjust on the way ( as you learn )

( i made a few mistakes starting out as well )

good luck and stay flexible ( in your thinking )

cheers
 
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