100% cash or 100% invested ?

Warren Buffett has recently invested 100% of his personal cash in US equities..

Follow the leaders I say!

(Note: this thread split from here: http://www.invested.com.au/7/going-100-cash-35659/ )

 

But Warren Buffett doesn't have kids in school, mortgages and have to put food on the table. He can afford to be brave

 

I think he has more to loose than all of us!

 

You really think Warren Buffett is planing on leaving a legacy which says "He became the worlds wealthiest man, but lost it when he died"?

I don't think so.

Warren Buffett isn't controlling all the companies he invests in. Do you really think such a old man takes a active role in managing the companies? Not even warren buffett can avoid financial turmoil for companies in bad times.

http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=1&oref=slogin

 

and one more thing Sim.. no offense, but you were investing in shares, when warren buffett was in 100% American government bonds, now your in cash when he is in 100% American equities?

lol

 

Pretty much fully invested in aussie industrial stocks. As more money comes in I keep buying.

Rules are simple and probably in line with some of Buffet's views (for the average investor):

1. Let go of all the analysis paralysis, getting paranoid about timing the market and start thinking long term.
2. Diversify to minimise stock specific risk or better still invest a sizeable core in index ETFs and LICs.
3. Spread your buying over time with an emphasis on Buffet's motto of "be greedy when others are fearfall and fearfall when others are greedy.
4. Focus on income - capital growth will sort itself out over time as it always does.
5. Minimise costs - hold long term or forever and hence avoid active trading unless you want a christmas card from the broker.
6. Keep debt at a conservative level (I never let my LVR get past 40% and generally keep it a lot less). All loans are against property - I don't use margin loans.

Personally I have invested a considerable sum into the market since May. After taking dividends into account I'm down bugger all as of today. Sure it could go down a lot further but the short - medium term capital volatility is of no concern. And even if dividends are slashed it will still be a very attractive income which will enable me to continue to afford quality beer.

Also the above takes next to no time to implement - basically set and forget.

Just my strategy developed over time after trying most things in my younger days such as technical trading of stocks and futures etc and certainly this is not meant to be a recommendation for others.

Cheers - Gordon

 

very good post Gordon. I agree with your stratergy. I'm doing simular things to you.

Are you buying stocks or funds persoanlly?

 

Hi crc_errror,

About 60% in top 200 quality industrial stocks paying good dividends (held in disc trust) and the other 40% in LICs and local ETFs (held in SMSF). Over time I expect to hold a greater percentage of ETFs and LICs.

Today I'll be adding to STW etf.

I don't now and never will buy "unlisted" managed funds - only LICs and ETFs.

Except for a relativelty small holding of SLF in the SMSF I have no interest in LPTs (REITs) now or in the future.

Cheers - Gordon

 

Hi Sim,

I hope that my posts are never interpreted as having a go at anyone or trying to big note myself. I'm merely stating what I do after having made just about every mistake you could possibly make in the past. This is what works for me and provides a wonderful SANF. Hopefully someone might find it useful or wish to constructively add to the topic.

Cheers - Gordon

 

Gordon, have you considered international exposure at all?

I have about 1/2 my holdings in international funds. Platinum Brands been one which is doing quite well lately.. offsetting losses in Colliers International Property.

 

Yes - but won't by looking to buy international etfs/funds until some time into the future. Right now I'm focusing on dividend paying local listed funds which provide those wonderful franking credits offsetting tax (and more) in the SMSF.

To contradict my earlier post I might be tempted to consider a couple of low cost unlisted funds such as Vanguard or DFA to take advantage of hedging. But for emerging economies I would use unhedged ETFs (eg Barclays) so as to take advantage of the potential increased strength in the currency as their economies grow.

But given I'm an income focused investor it's very difficult for me to get too interested in international funds. It's the income that gives me choice and freedom to do what I want to do.

Cheers - Gordon

 

Hi Gordon

As someone who has not followed LIC's or ETF's could you please give a rundown on them (codes will do)

Cheers

 

SLF

"Except for a relativelty small holding of SLF in the SMSF I have no interest in LPTs (REITs) now or in the future."

Gordon - I too now hold a relatively small holding of SLF. Sadly it used to be a rather large holding!!

I thought I was on a safe bet playing the field with SLF rather than trying to pick a winner. I also thought it was a good diversification to STW which is my main holding.

I'm still holding on to the SLF in the desperate hope that LPTs will have their day again one day but it just seems to be sinking lower and lower and lower.... (another 7% down today!).

You must have some good LIC's because I've held STW and SLF for 1.5 years now and I am way down on both!

Can anyone suggest any solid low correlation options to a portfolio long on STW, SLF, BHP/Rio??

 

I tend to stick with the older and larger LICs: eg AFI, ARG, MLT, AUI but also the likes of WHF and MIR for smaller coys etc.

Research on LICs and ETFs found at ASX website:
Managed Funds & ETFs - ASX - Australian Securities Exchange

And from that page:
http://www.asx.com.au/products/pdf/state_street_funds.pdf
http://www.asx.com.au/products/pdf/asx_aegis_lmi_quarterly_review_june_2008.pdf
http://www.asx.com.au/products/pdf/bell_potter_lic_research.pdf

Cheers - Gordon

 

Good, i hope so, but more of the performance as of late has come from individual stocks and being somewhat fortunate with timing. I just watched for big falls on Wall Street in recent months and looked for buying opportunities of local stocks on those days (greedy when others are fearful basically). I only bought if a particular stock looked a screaming bargain. Focusing on quality stocks with great dividends has seen the income certainly add to overall performance. Note also that I don't hold resource and energy stocks. Many of the industrial stocks I hold are well up from when I purchased them. It is the resource sector that is now feeding into the downward spiral of the overall index. As for LICs a significant amount of them have been purchased recently so capital losses aren't all that great.

But as stated in a previous post, in the short to medium term, I couldn't care less about price volatility. As long as the overall portfolio keeps paying good income I'll let price sort itself out overtime as it always does.

Please note that I don't consider myself an expert on stock analysis by any means. I just try to use some some common sense, stick with conservative proven performers and spread my risk with diversification. Boring would pretty much describe my stock portfolio.

Cheers - Gordon