Personal Investment Strategy

[Miner]

Re: Personal Investment Strategy Help

Why does this have to happen time and time again?

If you find someone objectionable for some reason, as some clearly do, then just ignore them. There's even an ignore list you can use to filter out their posts. Simple.

What I personally find irritating - far more irritating than the posting style of any particular ASF member - is the way threads are taken off topic like this. What has been achieved by making personality and posting style an issue in this thread? Nothing, of course, other than taking it off topic.

If you find another ASF member irritating, tell your Mum, or your cat. I'm sure they'll care, or at least pretend to. But posting about it here serves absolutely no purpose whatsoever. This thread is evidence of what happens when people lack the self control to bite their tongue, take the high road, and move on.

If you have something of value to contribute, feel free to do so. Otherwise please have the courtesy to allow the discussion to continue unhindered by off topic remarks and personal slights.

Thank you!

Dear Joe

Thanks for your intervention.
My is I already have followed to have one poster in my ignore list and when have an issue / or query which could be off topic with a particular poster then I write the poster a PM. It works and people are very courteous to reply and that includes you Joe . Thanks a lot.
One suggestion I may make to Mr God Father Avatar rolleyes that todays world is very sensitive on non issues. So if I am you, then will not make comments like 'mums and cats' . It could be seen as sexist, male chauvinist while comparing mum with cats leaving the other parent absent. Saying that for fun but my experience says we need to be carefully in referring genders. Sorry for the lecture .

 

[Joe Blow]

Re: Personal Investment Strategy Help

Dear Joe

Thanks for your intervention.
My is I already have followed to have one poster in my ignore list and when have an issue / or query which could be off topic with a particular poster then I write the poster a PM. It works and people are very courteous to reply and that includes you Joe . Thanks a lot.
One suggestion I may make to Mr God Father Avatar rolleyes that todays world is very sensitive on non issues. So if I am you, then will not make comments like 'mums and cats' . It could be seen as sexist, male chauvinist while comparing mum with cats leaving the other parent absent. Saying that for fun but my experience says we need to be carefully in referring genders. Sorry for the lecture .

Hi Miner, I was a little cranky when I made that post and I think it shows. However, I am pleased to see that this thread is now back on topic and I don't wish to be responsible for it going off topic again. Apologies for any offence caused.

 

[Julia]

Re: Personal Investment Strategy Help

P.S. Stop arguing you all, it's only a game

It might be only a game to you, but it's very much not a game when you have the responsibility of generating a full living from invested capital in retirement.

If someone is, after a working life of saving and profitable investment, able to retire at, say, 50, they'll have around another 30 years where that capital has to go on providing an income.
How long do you think it will last if you don't prioritise protecting that capital, ensuring sufficient capital gain, in addition to yields, to account for inflation?
If you don't have an income stream from public Super or other source, and you continually burn through your capital with losses, ultimately the option is going to be the government pension, an amount most of us would find pretty hard to live on, not to mention the lack of independence.

While i could care less about "value" investing we do have some things in common.

• No Stops
• Patience
• Long Term Outlook

i have found that over the last 7 years, given a 12 month time frame i have consistently chosen 1 loser for every 4 winners, so your 8 winners and 3 losers from 11 stocks is about right...cant win em all hey.

What is the relevance, in itself, of ratio between winners and losers? If you have, say, ten stocks in your p/f and nine of them are winners, but one loser outweighs the combined profit of the nine, you're not overall profitable.

Surely what counts is the overall % gain or loss on capital invested.

 

[galumay]

Re: Personal Investment Strategy Help

Surely what counts is the overall % gain or loss on capital invested.

Ultimately, of course that is correct, perhaps the approach outlined by So_Cynical, myself and others is akin to the point that Peter Lynch makes so often in his books, if you buy for the long term, invest in owning a share of well managed, profitable businesses that dont have too much debt etc. then you can afford to be wrong about a few of them because over time you will do so well out of the winners.

After all the worst that can happen is you lose all of your capital in a bad choice, whereas one multi bagger in a portfolio covers the total loss in another plus delivers a capital gain. (assuming same position sizes.)

Please understand this is my reflection of the intent of So_Cynical's comments and is not a hard and fast investment strategy!

 

[tech/a]

Re: Personal Investment Strategy Help

Burglar
Why do you insist on drilling your opinion in when Julia has adequatly explained why it's not a game to her and people like her.
Perhaps you mean---to you it's a game.

 

[KnowThePast]

Re: Personal Investment Strategy Help

Burglar
Why do you insist on drilling your opinion in when Julia has adequatly explained why it's not a game to her and people like her.
Perhaps you mean---to you it's a game.

Relax people, Julia especially. It was a joke, no hidden meaning intended. Subtleties often get lost behind the keyboard, but come on, I thought this one was obvious enough. Again, look at my avatar - that is my serious self.

Tech, thanks for reviving the stop loss thread. I'll post up some backtest results when I get some time, we can continue the discussion there.

 

[darkhorse70]

Re: Personal Investment Strategy Help

just got me self some popcorn haha. At least im not getting my head bashed in this time haha.

 

[KnowThePast]

Re: Personal Investment Strategy Help

just got me self some popcorn haha. At least im not getting my head bashed in this time haha.

Hey, you, over there, with popcorn. What do you think you are laughing at?!?

 

[DeepState]

Re: Personal Investment Strategy Help

Tech, thanks for reviving the stop loss thread. I'll post up some backtest results when I get some time, we can continue the discussion there.

Sh!take mushrooms. Gather ye popcorn.

 

[darkhorse70]

Re: Personal Investment Strategy Help

haha

 

[galumay]

Re: Personal Investment Strategy Help

oh dear, my poor old thread is torn to bits!!

 

[KnowThePast]

Re: Personal Investment Strategy Help

oh dear, my poor old thread is torn to bits!!

Sorry galumay.

But to be fair, after almost two years of investing, your thread was only 6 pages long. Boring.

Either trade more, or provide other forms of entertainment for us masses

 

[Julia]

Re: Personal Investment Strategy Help

After all the worst that can happen is you lose all of your capital in a bad choice,

1. So what would you do then? You're retired, no alternative source of generating income.
2. Why would you so put all your capital at risk?
3. How are you guaranteeing all those multibaggers to make up for such a material loss?

Have a read through the Storm Financial thread for some understanding of the absolutely awful impact on investors of their losing everything. According to some of these people, there have been suicides, and long term severe depression.
Similar results in various publicly broadcast accounts of people who have, via crap investments, lost all their capital. Hardly something to regard lightly.

There's probably not much point in attempting to further contribute here, when the notion that generating an income for 30+ years from existing capital is not going to happen without proper management is dismissed as being too serious or irrelevant .

 

[TPI]

Re: Personal Investment Strategy Help

1. So what would you do then? You're retired, no alternative source of generating income.
2. Why would you so put all your capital at risk?
3. How are you guaranteeing all those multibaggers to make up for such a material loss?

Have a read through the Storm Financial thread for some understanding of the absolutely awful impact on investors of their losing everything. According to some of these people, there have been suicides, and long term severe depression.
Similar results in various publicly broadcast accounts of people who have, via crap investments, lost all their capital. Hardly something to regard lightly.

There's probably not much point in attempting to further contribute here, when the notion that generating an income for 30+ years from existing capital is not going to happen without proper management is dismissed as being too serious or irrelevant .

Julia, when you talk about protecting capital, with your approach, if a stock you have been holding for many years and that has been providing you with a growing income stream falls in price by 10-20% over a 6 month period, for no fundamental reason other than a short-term change in sentiment or no obvious reason at all, would you have sold that stock in the interest of protecting capital? Either via a stop loss or just manually as you saw the change in share price trend? Just interested in your process.

 

[Julia]

Re: Personal Investment Strategy Help

Julia, when you talk about protecting capital, with your approach, if a stock you have been holding for many years and that has been providing you with a growing income stream falls in price by 10-20% over a 6 month period, for no fundamental reason other than a short-term change in sentiment or no obvious reason at all, would you have sold that stock in the interest of protecting capital? Either via a stop loss or just manually as you saw the change in share price trend? Just interested in your process.

TPI, it would depend on the stock and the broad national and global environment at what % down I sold but I'd never let it go to 20%.

The brokerage is a very small consideration and I'll always prefer to take the option of buying back in later if /when it turns round.

What you might initially assess as a short term change in sentiment might extend for some time, the downtrend becoming more pronounced in which case a small loss becomes a large loss.

 

[tech/a]

Re: Personal Investment Strategy Help

If I remember rightly you did exactly that with a zinc stock
Can't remember what it was.

 

[TPI]

Re: Personal Investment Strategy Help

TPI, it would depend on the stock and the broad national and global environment at what % down I sold but I'd never let it go to 20%.

The brokerage is a very small consideration and I'll always prefer to take the option of buying back in later if /when it turns round.

What you might initially assess as a short term change in sentiment might extend for some time, the downtrend becoming more pronounced in which case a small loss becomes a large loss.

Ok, so what is the longest period of time you have held a stock with this approach?

Given the natural level of volatility most stocks display, does this approach preclude you from holding a stock for many, many years?

Also, by doing so aren't you losing the income stream provided by the stock and then at least partly relying on savings or interest on savings to provide that income stream, and interest on savings may be at a much lower rate of return?

 

[galumay]

Re: Personal Investment Strategy Help

1. So what would you do then? You're retired, no alternative source of generating income.
2. Why would you so put all your capital at risk?
3. How are you guaranteeing all those multibaggers to make up for such a material loss?

I think you have chosen to take the comment slightly out of context, i talked about one position becoming worthless, in a worst case scenario if some catostrophic event befell the company, not all my capital.

Have a read through the Storm Financial thread for some understanding of the absolutely awful impact on investors of their losing everything. According to some of these people, there have been suicides, and long term severe depression.
Similar results in various publicly broadcast accounts of people who have, via crap investments, lost all their capital. Hardly something to regard lightly.

Totally agree about the impact of these sort of events, not sure what that has to do with the point I was making, though!

There's probably not much point in attempting to further contribute here, when the notion that generating an income for 30+ years from existing capital is not going to happen without proper management is dismissed as being too serious or irrelevant .

Surely the point is that there are different forms of "proper management", and you need to use one that both matches your personal investment strategy and personality.

As I started with using Peter Lynch as an expample of the thinking that understands that not all our stockpicks will or have to be winners, consider his incredible record over many decades - without the sort of management that you use Julia. I am certainly not dismissing your approach as "too serious" or "irrelevant" - its just not for me!

 

[Julia]

Re: Personal Investment Strategy Help

If I remember rightly you did exactly that with a zinc stock
Can't remember what it was.

Probably ZFX: Zinifex. It went from $1.80 in 2004 to over $18 in December 2006.
Merged with Oxiana, I think it was, to become Oz Minerals around 2008. Soon after that I think there was a refinancing problem (probably part of the credit squeeze around then) and I got out which turned out to be the right decision.

Given the natural level of volatility most stocks display, does this approach preclude you from holding a stock for many, many years?

I'm not interested in the time. Just the price and the factors affecting it.

Also, by doing so aren't you losing the income stream provided by the stock and then at least partly relying on savings or interest on savings to provide that income stream, and interest on savings may be at a much lower rate of return?

Example:
You take a position in XYZ of $100K.
Grossed up yield is, say, 7%.
A 20% fall in your capital investment is $20,000.
I wouldn't have to think too hard about which way to go.

And if you 'lose the income stream', you're not going to allow the released funds to just fall into a black hole.
You'll reinvest elsewhere. Always more opportunities, not necessarily in the share market.

When the GFC happened you could get 8% on a term deposit.
I'm presently looking at a commercial development of professional medical suites, 8% net yield plus potential capital gain.
Also forced sale of residential house where they urgently want the money. A cash offer will likely see it sell well below market price, get it tidied up, in the process getting rid of a tree that's a problem to me, and sell it on.

.....relying on savings or interest on savings to provide that income stream,

As long as total income is around twice what I need to live on, I have plenty of flexibility.
As long as capital and profits are properly protected, I'm not focused on growing the capital. Enough is enough.

What gives me pleasure and a sense of purpose is being able to use some of it for people with fewer opportunities. This Christmas five women and their respective children will each be in a place of their own (albeit rented) rather than huddled in fear in a refuge because they have had the bonds and advance rental paid on a house or apartment.
And the RSPCA will have a bit more support for all the abandoned animals.

Totally agree about the impact of these sort of events, not sure what that has to do with the point I was making, though!

It had to do with your statement about losing all the capital.

I am certainly not dismissing your approach as "too serious" or "irrelevant" - its just not for me!

I have said over and over that we will all do what suits us best.

One of the purposes of a stock forum should, imo, be to provide anyone who might be interested with the range of strategies people employ rather than conveying the impression that there is just the one holy grail and that everything else is without validity.

 

[Ves]

Re: Personal Investment Strategy Help

As long as total income is around twice what I need to live on, I have plenty of flexibility.
As long as capital and profits are properly protected, I'm not focused on growing the capital. Enough is enough.

Have you ever considered capital protected annuities? I don't know much about them... but a rough idea of what they are seems to fit a lot of the issues that you are focused on mitigating.