Expected Returns Through the GFC

[enigmatic]

Hey everyone Been at ASF for a while now still consider myself a beginner. However my 4th year of investing is about to come to an end and with this passing of time I'm trying to gauge were I'm at as an long term investor / casual short term trader.

I'm sure there are plenty of things i should be doing like stop losses that I'm currently not although not all of these will fit my investing style i guess.

Currently I try to maintain an rough portfolio split of 70% shares who are businesses over $1billion dollars Market Cap with good revenue and preferably low debt.
The Remaining 30% which does fluctuate from 25%-35% due to the nature of the shares. Are speculative shares ranging from Near term too New Explorer.

General practice and maybe its the wrong approach, however for New explorers ill invest roughly 1% of my portfolio if they double i sell half and try to free carry the rest.
If investing in Near term Producer generally ill Start investing 1% of my portfolio, buying up to 2.5% over the coming year or two on market dips.
maintaining the idea that i should sell my loses at the top of each 5-7month cycle and buy back into some of my winners have been recently been generating roughly 20-30% short term gains.

There are a few Blue chips that i most likely should dispose off and these are mainly in realestate which have done nothing for me over the last few years and WOW which only qualities is it diversify my portfolio and gives some divy

Any how I basically started investing as of the 05/04/2007 remaining 100% high risk until a year later were i finally Purchased BHP since then i have been changing my portfolio to match my current 70:30 split and it has currently generated a 11.5% Annual return, although the current year has seen roughly 30% and 40% the year before on any capital the GFC put me in a position were i was roughly 70% down.

Any way I would finally like to thank a few of the members who's posts i have followed over the 4 years so far. YOUNG TRADER, Kennas, Tech/a , nunthewiser and to the many others who have provided extremely useful information which I used to direct my own research.

Cheers for helping me to get to my first goal within 4 years rather then 5 years next goal is 15% annual growth rate.. I have a feeling it will be far more difficult to maintain

 

[suhm]

Congrats on the results so far enigmatic, I do find the contributions on this board a lot more intelligent than can be found elsewhere and useful to float ideas and learn things I hadn't considered before. I used to float ideas with my family but after analysing my trade I found that it was having a negative effect on my returns and while they mean well the most proftable option was often to do the exact opposite of what they said. I am also hesitant to discuss with friends as it usually turns out more into me giving advice rather than a discussion and not really the most exciting topic to discuss anyway.

I'm coming up to year 8 of investing myself and still feel I have so much to learn, besides all the reading I think the things that helped me improve my returns the most were.

1. Analyse my trades- I keep a record of the result of all my trades open and closed and and went through them to see what I did when I lost money and what I did when I made money and how long those trades took to play out and what would have been a more profitable result.
The change in style was that I now sell when the rationale for my trade has been dispproved and try to let my profits run for longer.

2. Lose the fear of realising a loss- It sill hurts as a) you've lost money, b)it means you were wrong and c)you feel twice as bad if the sp goes back up, but if the rationale for your trade has gone away its unlikely to be your best idea.

3. Position sizing- This has more to do with me now having the capital base to adequately do this now as I have an idea of what my better ideas are but previously I was unable to put enough money into each trade without a) reducing the number of positions I took so only what I thought were my best ideas got a run this was not ideal as I would not be profitable without the best fifth of my trades, I am not exactly the best arbiter of what my best trades are.
To me if you are only putting 1% of your capital into a blue sky stock you would need to decrease your holding time for these to become multibaggers to improve your return and also spreading this over 25-30 ideas seems like a recipe for mediocre returns.
If a stock doubles which is a very good return it will only increase your return by 1%, I only have 4 ideas at present where I can see a prospect of a >100% return where the downside risk is more limited. Others I hold may still go up that much as well and I play multiple ideas as it is up to the market to decide whether you are right or wrong.
So unless you are entering and exiting positions quite rapidly a 1% capital allocation seems a bit low unless your capital base is huge as the dollar amount of a 100% gain would not be worth the effort involved as i would earn the same amount working for a couple of weeks.
I would never put as much capital into my 30th best idea as I would into my top 5, I would actually allocate it 0 but that is horses for different courses. There are many ways to make money in this market.

Psychology is also important, your mind becomes rooted if you propose a figure i.e. 15%pa, there are many multibaggers each year so the possibility of higher returns exist, if you don't achieve them that does not matter as long as you are happy with your return but if you are going to spend all this time investing your money I don't see the point of a) doing the same sort of thing as a fund manager would do and b) aiming for only a few percentage points extra return.

 

[So_Cynical]

Hey everyone Been at ASF for a while now still consider myself a beginner. However my 4th year of investing is about to come to an end and with this passing of time I'm trying to gauge were I'm at as an long term investor / casual short term trader.

Currently I try to maintain an rough portfolio split of 70% shares who are businesses over $1billion dollars Market Cap with good revenue and preferably low debt.
The Remaining 30% which does fluctuate from 25%-35% due to the nature of the shares. Are speculative shares ranging from Near term too New Explorer.

Any how I basically started investing as of the 05/04/2007 remaining 100% high risk until a year later were i finally Purchased BHP since then i have been changing my portfolio to match my current 70:30 split and it has currently generated a 11.5% Annual return, although the current year has seen roughly 30% and 40% the year before on any capital the GFC put me in a position were i was roughly 70% down.

Any way I would finally like to thank a few of the members who's posts i have followed over the 4 years so far. YOUNG TRADER, Kennas, Tech/a , nunthewiser and to the many others who have provided extremely useful information which I used to direct my own research.

Cheers for helping me to get to my first goal within 4 years rather then 5 years next goal is 15% annual growth rate.. I have a feeling it will be far more difficult to maintain

WD enigmatic, good to see you profiting and doing well following your own strategy.

We started about the same time enigmatic and i suppose as expected i have a similar story to you, i didn't sell during the GFC and saw my portfolio value fall by around 70% i just kept buying into my losing stocks (selectively) with what little money i had and it helped save my bacon.

I developed a strategy approaching the bottom of the GFC and made a couple of good choices (LGL & IAU) approaching the bottom so luckily found myself with 15K to reinvest with in Feb 2009, since then my strategy has been mostly successful and today i just carry on doing what has worked for me since that time.

My portfolio is about 50/50 stocks worth over/under a billion (the small/micro caps have really done well) and when i exit a small cap trade i generally want to re-invest that into another small cap, however i do like to stick to my basic rules and look to re-enter portfolio stocks as a priority be they big or small.

I only sell my total losers and average down into my other stocks that have gone against me, i sell my winners when i deem that to be appropriate (like ILU last week)
im a yield chaser as i plan to live off my dividends in about 7 or 9 years time.

My portfolio returns at current total $ value.

• 10/11 fin year Div/Dis yield will be about 5%
• 10/11 fin year trading profit is about 13%
• Reinvested yo on yo (April) portfolio growth is 44%
• 

My Portfolio (includes div/dis/roc reinvestment) Vs ASX200 from July 2007 below
(chart not 100% accurate as the software wont allow me to sell parcels)
~

 

[enigmatic]

Cheers for your reply Suhm
concerning the 15% year on year growth i wouldn't say it's a restriction and I'm investing a few shares which i believe over the next 2-4years will give me 100-1000% returns although this is offcourse my belief in the stock not what will be happen.
one of my investments was BRM which has gained me 600% so far and i will likely hold until i see the profit declining.
I currently aim for a 30-40% return each year however like So_Cynical I was not able to get very good returns from early 2007 to late 2008 so to get to 15% growth i require about 20%+ which far exceeds a Fund manager most i see have arround 3% over the last 5years if they are lucky.

Very much appreciate your reply and your posts in general So_Cynical
been reading your stuff for quite some time and actually thought you had more experience then 4years good to know your doing very well.
I think ill get back to arround 60/40 soon i just got burnt to much and want to try and walk before I run.
Took advantage of the drop in share price of a few shares during the Japan crisis..
Manage to sell my losers a week before it happened and then bought in on a few of my long term specy prospects at the bottom made roughly 20%, 20%,30%,55% on those investments.

Cheers again too both of you good to see that I'm on the right path just need to analyse more and keep to my own strategy modifying it often but not deviating from it.

I think I'm currently about 26% up on my capital investment although most of my capital has been put into the market late 2009 2010 and early 2011 so thats why the overall gain is low compared to the year on year of 11.5%