Your top 3 holdings and why you hold them

[Klogg]

How do you know that's not just hindsight? There are plenty of major blue chips trading well below their GFC lows. Why weren't they bargains back in Mar 09?

I wasn't in the market back in Mar '09...
But you're right - I can't be certain that it's not just in hindsight, because I wasn't there to make the same decision.

 

[Julia]

While I like cash holding of some sort, I can't say that I'd approach it the same way (not being critical - each to their own of course).

During the GFC, there were some insanely good bargains that I personally would have jumped at, if I had the knowledge I have now...

You have entirely missed the point of my post.
I said clearly that I didn't want to engage in the present volatility. My first priority is always preservation of capital, and if I can generate about double what I need to live on from interest in a guaranteed investment, why on earth would I risk that capital in times that are uncertain to say the least?

An obvious example (although probably not my prime pick) is BHP @ $25. Yes, the world was in a bind at the time, but BHP is one of the larger companies in the world and very stable, worth well beyond that $25. Even if you bought then and held now, you'd be looking at a 40% increase on your initial purchase over 2years... and that's with a buy and hold strategy.

How do you know that's not just hindsight? There are plenty of major blue chips trading well below their GFC lows. Why weren't they bargains back in Mar 09?

Thank you skc. Klogg, there is absolutely nothing to say that some adverse event could not have badly impacted BHP just as with any other so called blue chip.

Just taking my experiment with buy and hold on RIO, for example, I've held it for a couple of years or so and it's now worth less than it was when I bought it. The meagre dividend absolutely doesn't make up for the capital loss.
So far my buy and hold experiment is well and truly demonstrating to me how much better those funds would have been in cash.

 

[qldfrog]

Hi,
And I would add, why 3 only?
As many pointed here, we are in a very volatile environment, none of the initial GFC issues are actually solved, just band aids applied;
But there is always risky money to be made following the herd....
So I am still in the stock market, some hybrids, some ETF, US /currency exposed but mostly diversification;
As soon as I reach 10k of a specific stock, that is it, and I go to another one;
My own rule to avoid QBE or PDN style drama costing too much;
all stocks are susceptible to unforeseeable specific crisis;
technical incident, act of god, theft, etc

I obviously have some favorite stocks and sector but with diversification, and only what you can afford to watch daily with stop loss;
This way I can benefit from rises and ensure I limit losses
definitively more than 3stocks , 30 different ones currently in my investor portfolio (the laggard long term one)

I also day trade on a second portfolio 20 or so stocks, all on very short term; in and out
and much more $ returned there in the current time...

 

[poverty]

I obviously have some favorite stocks and sector but with diversification, and only what you can afford to watch daily with stop loss;
This way I can benefit from rises and ensure I limit losses
definitively more than 3stocks , 30 different ones currently in my investor portfolio (the laggard long term one)

I also day trade on a second portfolio 20 or so stocks, all on very short term; in and out
and much more $ returned there in the current time...

Just out of interest how much would you estimate you spend on brokerage in a year?

 

[odds-on]

CCV - Regulatory issues aside, the payday loan business looks like it has great potential in the medium term.
REX - Award winning and profitable regional airline.
CTN - Exposure to a range of microcap stocks, in particular the resource sector which I do not follow.

Cheers

Oddson

 

[Klogg]

You have entirely missed the point of my post.
I said clearly that I didn't want to engage in the present volatility. My first priority is always preservation of capital, and if I can generate about double what I need to live on from interest in a guaranteed investment, why on earth would I risk that capital in times that are uncertain to say the least?




Thank you skc. Klogg, there is absolutely nothing to say that some adverse event could not have badly impacted BHP just as with any other so called blue chip.

Just taking my experiment with buy and hold on RIO, for example, I've held it for a couple of years or so and it's now worth less than it was when I bought it. The meagre dividend absolutely doesn't make up for the capital loss.
So far my buy and hold experiment is well and truly demonstrating to me how much better those funds would have been in cash.

Julia - my apologies if my post came across as critical, I didn't mean it to be.

What I was trying to explain though, was that if you buy an asset at the correct price (i.e. what you value it at is greater than what it's selling for, with some margin ofcourse), you will come out better than holding cash - most of the time.
Seems obvious, but from my experience I've seen people go against this concept too many times...

 

[Klogg]

Adding to that - yes, if you don't want to be in the current volatile market, then there's no place better to be than cash.

However, volatility doesn't always mean you can't preserve your capital...

And on your point about living on a guaranteed income - your dead right. I was looking at it from my point of view, where my job allows me to take the risk of being almost fully invested and not be impacted by any short-term unrealised losses.

 

[McLovin]

REX - Award winning and profitable regional airline.

The thing with Rex, from what I can tell, is that they are only profitable because they operate on routes that are too small for anyone else to bother with. It kind of means growth is going to be difficult to achieve. IMO, anyway.

 

[Klogg]

The thing with Rex, from what I can tell, is that they are only profitable because they operate on routes that are too small for anyone else to bother with. It kind of means growth is going to be difficult to achieve. IMO, anyway.

I don't know much about the company, but at face value it also means they should be able to make a great margin because of the lack of interest/competition on those routes.

 

[odds-on]

The thing with Rex, from what I can tell, is that they are only profitable because they operate on routes that are too small for anyone else to bother with. It kind of means growth is going to be difficult to achieve. IMO, anyway.

I invest in REX for the following reasons:-

1. Whenever I have visited Australia (I live in NZ), the geography of Australia made me form the view that a regional airline business will always be needed whether it is for mining developments, satellite towns, ambulance services, and so on. I believe that a regional airline business (in some shape or form) will be around for the long term.
2. It is a cheap stock using Price to Book, Price to Sales etc. Note the use of the word stock not business, I did not attempt to value a regional airline business – too many complex factors (fuel, routes, government, etc).
3. The company wins award and the management seems honest.

Please understand I am under no illusion that this will turn into some market darling, but I am 80% confident that I can obtain a 30-40% return (including dividends) from the stock over the next couple of years therefore I hold – the share price can go up by another 20% and it would still be cheap.

 

[MrBurns]

You have entirely missed the point of my post.
I said clearly that I didn't want to engage in the present volatility. My first priority is always preservation of capital, and if I can generate about double what I need to live on from interest in a guaranteed investment, why on earth would I risk that capital in times that are uncertain to say the least?

Hi Julia, remember me ? I'm baaaaaaack

I agree preservation of capital is paramount, all I've done is lose on the stock market maybe I'm unlucky but I don't think I'm the only one.

 

[Julia]

Hi Julia, remember me ? I'm baaaaaaack

I agree preservation of capital is paramount, all I've done is lose on the stock market maybe I'm unlucky but I don't think I'm the only one.

Well, hello there, Mr Burns. Good to have you back. Sorry to hear about the losses.
It's less important when one has a full time job, but once we're dependent on generating an income from our capital there needs to be a different mindset imo.

 

[MrBurns]

Well, hello there, Mr Burns. Good to have you back. Sorry to hear about the losses.
It's less important when one has a full time job, but once we're dependent on generating an income from our capital there needs to be a different mindset imo.

Yes I've been spending money like it would never run out but guess what

Have to be careful from here on which is not in my DNA, I wanted to find shares for income, thought of Telstra then saw that you'd be mad to jump in there, I read it on the internet so it MUST be true.

So there you go invest for income but on my past record I may as well buy a Tattslotto ticket and I do. I lose there too but not as much.

 

[Ves]

So far my buy and hold experiment is well and truly demonstrating to me how much better those funds would have been in cash.

Or better spread across more stocks, perhaps.

I don't think 100% cash is safe either, if they keep handing out free money across the globe inflation is almost inevitable. You will need to be in assets that can appreciate in value if this is the case. Cash will be a capital killer.

 

[Julia]

Or better spread across more stocks, perhaps.

No. It's only a tiny amount, just $10,000 so I'm not going to be dividing that much across several stocks. Not worth the trouble.

I don't think 100% cash is safe either, if they keep handing out free money across the globe inflation is almost inevitable. You will need to be in assets that can appreciate in value if this is the case. Cash will be a capital killer.

Cash in our banks is a damn sight safer, especially if divided up to qualify for the government guarantee, than pretty much anything else I can think of.

 

[Ves]

Cash in our banks is a damn sight safer, especially if divided up to qualify for the government guarantee, than pretty much anything else I can think of.

What does the government gaurantee have to do with preservation against above average inflation or even hyper-inflation?

 

[Julia]

What does the government gaurantee have to do with preservation against above average inflation or even hyper-inflation?

Everything in life is a compromise. If I'm getting 8%, paying no tax, and still have about double what I need to live on, I'm not about to get upset about the inflation factor.
Happy for you to make your own decisions, Ves. I' ve been around long enough to know what I'm doing for my circumstances.

 

[Ves]

Everything in life is a compromise. If I'm getting 8%, paying no tax, and still have about double what I need to live on, I'm not about to get upset about the inflation factor.
Happy for you to make your own decisions, Ves. I' ve been around long enough to know what I'm doing for my circumstances.

I don't doubt that you have thought long and hard about this.

But I have read stories about people who had $250k term deposits in the late 80s / early 90s after society feared that the "sky had fallen in." They were clever ducklings living off the "high interest" with the sleep at night factor of cash investments.

A decade later they were living off meagre incomes. Inflation ate away any wealth they once had.

I am always curious as to when the people in 100% cash (or large %) say enough is enough and try to become active again? What if the market isn't "safe" for another five years in their eyes? ten years?

Not really trying to point fingers, I am just curious as it genuinely does not make sense to me.

 

[suhm]

bta biota- low ev and a couple of molecules I like. 2 of the 3 flu treatments on market with the us government paying for their 2nd gen flu treatment to go through to phase 3 currently only approved in japan and a phase 2b trial for the common cold releasing results soon

cash - usually don't hold that much of it and actually generally have net leverage throughout the cycle but have been closing out positions.

gun gunson - zircon illmenite project that seems like it will get funded soon.

 

[So_Cynical]

(16th-August-2011) Current top 4 at today's close.

• CPU - Computershare 10.13%
• HDF - Hastings Diversified Fund 9.95%
• ABC - Adelaide Brighton Cement 7.36%
• PTM - Platinum Asset Management 7.25%

Not much change...im still stuck in a heap of trades.

• CPU - Computershare 9.83%
• PTM - Platinum Asset Management 8.70%
• ALF - Aust Leaders Fund 7.62%
• ABC - Adelaide Brighton Cement 7.43%

I did take some profit on my HDF position selling a little over half my shares....some of that money going into another small average down into PTM, the rest of the HDF money went into a new position SGH (Slater & Gordon) plus a small average down into ALF.