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.