A few months ago I created an watchlist for myself of all the companies I could find that exhibited some qualities I was looking for.
These qualities where:
*Must be currently making a profit
*Must have a PE below 12, or have a 12 month projected PE below 10 that can be reasonably assumed with a margin of safety.
*Low PE must not be for an obvious reason, for example earnings in that industry are expected to decline, or legal cases against the company are ongoing.
*Must have average liquidity of $100k+ a day
*Upon inspect and research, Management must look reasonable.
*Must "feel" like a good investment.
So I came up with 23 stocks that I thought represented a good medium term investment and assigned $2000 to each one in the watch list.
My question for you guys is, how would you expect such a portfolio to perform in the short, medium and long terms?
When I started the virtual portfolio I expected that a few of the stocks would give tripple digit returns, which would probably be evened out by a few stocks going to 0. I would expect allot of the companies to give a 1 year return of perhaps 20-40%, but not as many to drop by that amount. So far losers to winners is 19-4. Perhaps its just a bullish period for small caps? (most of these are small caps, and none of the big caps have posted big gains)
I expected Beta to be high, because the portfolio is riskier than the market as a whole I expected higher volatility. The volatility is there but the beta is low, I have seen some huge gains on big red days for a asx200.
It has not been long enough to make any conclusions, but it will be interesting to see how it pans out after a year. If it was actually money invested I would be selling out on average after 12-18 months so.
So far averaging 3% a week, that's just holding not trading. Seems like a very good run and I would expect some negative action to even it out.
It feels like that with a portfolio like this, your downside is limited, say 2 companies goto 0. That's a 8% loss, and quite unlikely. But the upside outweighs and seems more probable than the downside. It is quite probable that in my portfolio of 23, 2 or more will double in SP in 12 months. If a silver mine is trading at a prospective PE of 4, and they will start production in 9 months, and silver is going up, a doubling of the SP in 12 months is a much higher probability than a company with no debt currently making a profit going to 0. As long as you research and do'nt put anything too speculative in there it seems like a great bet.
Sorry for rambling!
These qualities where:
*Must be currently making a profit
*Must have a PE below 12, or have a 12 month projected PE below 10 that can be reasonably assumed with a margin of safety.
*Low PE must not be for an obvious reason, for example earnings in that industry are expected to decline, or legal cases against the company are ongoing.
*Must have average liquidity of $100k+ a day
*Upon inspect and research, Management must look reasonable.
*Must "feel" like a good investment.
So I came up with 23 stocks that I thought represented a good medium term investment and assigned $2000 to each one in the watch list.
My question for you guys is, how would you expect such a portfolio to perform in the short, medium and long terms?
When I started the virtual portfolio I expected that a few of the stocks would give tripple digit returns, which would probably be evened out by a few stocks going to 0. I would expect allot of the companies to give a 1 year return of perhaps 20-40%, but not as many to drop by that amount. So far losers to winners is 19-4. Perhaps its just a bullish period for small caps? (most of these are small caps, and none of the big caps have posted big gains)
I expected Beta to be high, because the portfolio is riskier than the market as a whole I expected higher volatility. The volatility is there but the beta is low, I have seen some huge gains on big red days for a asx200.
It has not been long enough to make any conclusions, but it will be interesting to see how it pans out after a year. If it was actually money invested I would be selling out on average after 12-18 months so.
So far averaging 3% a week, that's just holding not trading. Seems like a very good run and I would expect some negative action to even it out.
It feels like that with a portfolio like this, your downside is limited, say 2 companies goto 0. That's a 8% loss, and quite unlikely. But the upside outweighs and seems more probable than the downside. It is quite probable that in my portfolio of 23, 2 or more will double in SP in 12 months. If a silver mine is trading at a prospective PE of 4, and they will start production in 9 months, and silver is going up, a doubling of the SP in 12 months is a much higher probability than a company with no debt currently making a profit going to 0. As long as you research and do'nt put anything too speculative in there it seems like a great bet.
Sorry for rambling!
. Is that 3% compounded over a few months or 3% on average overall for the 3 months? I find it strangely comparable to my performance (from October 1st 2010 till December 31st 2010 I returned 3.41% per week on average LOL crazy stuff). That does include some of my MHM returns though, very VERY unlikely to be repeated again. Out of curiosity, could you post the list of shares and results thus far? I've been having trouble finding "easy" investment ideas, and it might throw up a few companies I haven't had a look at yet, and allow for some real money to made out of your idea (if you haven't yet 
