Long term small investor would like to improve portfolio performance. Had thoughts of creating a means to simulate results and creating purchasing rules from old data. I suppose being able to see about 10 years worth of market price and div would give me a good start. I am probably reinventing the wheel but I am open to advise and suggestions,
Improving stock portfolio performance
- Thread starter Wirrklunk
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Go have a look in Dump It , he is the expert for you .
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welcome to ASF
well there is this mantra of ' buy the dip ' and sell the rally/rip ' but being a long term player you might not be so ready to sell ( or even reduce ) that holding
this relies on random drops in share price ( but you should always analyze the reasons behind the drop before adding more )
you might have to create 'rules ' for each individual stock in your portfolio some stocks react counter-intuitively to regular stimulus ( buy the rumor , sell the fact theory ) but not every stock plays the same way
sadly history only rhymes ( and doesn't repeat so often ) , but heck if your stock is fairly regular with a certain move , have a plan ready just in case
depending on which stocks are selected not all wheels are interchangeable ( and that can be a good thing )
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Value Collector
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I think the only true way to improve an investment portfolio‘s performance is to raise the average quality of investments that are held in that portfolio.
I don’t think 10 years worth of market price and dividend data will really assist you with that.
in my opinion the best way to think of it is from a business like perspective, where you look at each share you purchase as being a an ownership interest in a business, and just fill you portfolio with great businesses That you have researched and understand and would feel comfortable owning if you were buying the whole thing.
An interest thing to do is to put half your money in an ASX300 or SP500 index, and the other half under your own management, and see if over the next 5 years your investment choices beat the indexes, if they don’t give up and just put all your money in the index, if you can beat the index keep going.
Had a look at a few pages. Not sure what you had in mind. There are 100 pages of responses?
That is similar to what I have in mind but will think of more sophisticated scenarios hopefully as I go. What started the Idea is the fact that I hold about 20 stocks and have only added one or two each some years and only sold a couple when I needed some cash. Now that I have time on my hands I have thoughts like what if I purchased more of the best performing stock and sold the worst one each year plus pick a new one. What would that look like after 10 years?
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20 stocks is too many for most people to comfortably follow unless investing is your full time job. You are a better off owning no more than 6 or 7 stocks at most. If you are owning lower risk companies you can even own as few as 3 stocks and still be fine (assuming you have investments in assets outside of stocks also). If you go into higher risk companies you need to be a little more diversified but 10 is really the absolute maximum unless you are a chartist or system trader, etc.
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that is harder than it looks
some of my best choices have been taken-over , resulting in a handful of cash ( and inferior places to park it )
but other folks might be better at that strategy ( than me )
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there is a theory about buying the worst-performing stocks ( of the previous year ) i do not use this tactic , but if you do please refine the choices rigorously , there will be some genuine gems , but some will continue down
but keep wading through ideas some will be perfect for you ( but maybe not for every stock you hold )
regarding 'time on your hands' how about studying business financials , so you can spot a dubious report ( and dodge a few bullets )
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not all companies maintain that 'quality ' for 10 years or more , sometimes that is caused by management changes , or general economic changes , i suggest 'testing the quality factor ' regularly some go from hero to zero , very quickly
No I well remember when the head lines in the financial review said "SELL ORICA" when the stock got to $5 I still have them
A good Idea. We are obviously Looking at things wearing slightly different hats. I am happy to look at my shares once a year.
Value Collector
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Yep, that’s why it’s great to measure your self against and hedge with a decent chunk of your capital in the index, not just over one year, but in rolling 5 year blocks.
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20 stocks is a lot.
I think it was Buffett that said if you really know what you are doing you don’t really need to own more that 6 stocks, and should probably have 50% in your favourite.
As I said I would recommend probably putting 50% of your capital in the index, and the other 50% in your top 6 companies, with higher weighting in your favourites.
But I don’t know your skill level, and how good you are at actually identifying companies that will out perform, is a skill that takes many years to perfect and requires you learning the right things. But that’s why I am suggesting having the index holding as a counter weight.
its also kind fun to own indexes, like VAS and VGS, because just with those too you can feel like you kinda own a little piece of the entire world.
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No I well remember when the head lines in the financial review said "SELL ORICA" when the stock got to $5 I still have them
i never bought them , i grabbed some Dulux for a reasonably short but profitable ride i thought Dulux was the way to go , and so did the predator
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there is a sarcastically humorous article by Marcus Padley that gives some short cuts on which reports get the microscope treatment firstA good Idea. We are obviously Looking at things wearing slightly different hats. I am happy to look at my shares once a year.
i watch and watch ( and look at various opinions ) but i have plenty of time on my hands
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Companies normally have at least 10 years annual reports on their website.
