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Buy Quality and Hold forever

Discussion in 'Investing Strategies' started by Alwayslooking, 20th Jun, 2008.

  1. Alwayslooking

    Alwayslooking Well-Known Member

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    HI all
    like some comments on the buy and hold strategy, do you think this is still the way to go in current climate... (shares/property etc)??

    I am having problems jumping in, don't see much growth ahead and interest rates are no longer attractive.

    Would like to know how you are all moving ahead.

    I am managing my debt at present using LOC.

    I was at one point looking at shares with high yields as a way of moving ahead, one in particular was BBI, fortunately I did not jump in. It is a worry when Blue chips start to turn to shxx.

    Would like your thoughts.

    Cheers, AL
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    With interest rates as high as they are - you need to be pretty sure you will get the returns to justify the expense of gearing.

    If you don't think you can get more than 7-8% return on your investment (ie better than a high interest savings account), why would you take the risk? I'm not saying you can't get a better return - I'm just pointing out what your risk benchmark is.

    Depends on your timeframe. If you are prepared to invest now and hold for 7+ years no matter what, then today's cheap prices are pretty compelling and you can average your way in to smooth out the volatility a bit.

    If you prefer to time your entry, then it's a matter of holding on until you think the market is going to turn.

    For real estate - you need to ask yourself whether interest rates have really peaked - and what will the increased costs of funding and a slowing economy with rising fuel/food prices do to the value of housing over the next few years. I think it is too difficult to generalise about property prices everywhere - I think we will see the market become much more fragmented, with certain sectors/locations continuing to do well (or even very well), while others struggle and maybe even go backwards a bit more.

    I think the key for both stocks and property is to know your market - focus your attention in one area, get to know it intimately so that you'll know it when you see a bargain.
     
  3. Alwayslooking

    Alwayslooking Well-Known Member

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    Hi Sim
    thanks for your comments, I think you are pretty much spot on.

    I am still getting my head around shares and which way to move ahead, this is proving quite challenging. I hope to eventually be able to work out what is real value in today's market.

    As far as property goes - well I have learnt alot over the last couple of years. I now realise its one thing making money in the middle of a boom cycle, however when its over you want to make sure you are holding enough equity as you have no hope of selling when the market is flooded.

    Don't wish to be too negative as I am sure opportunites will arise along the way.

    Cheers, AL
     
  4. Billv

    Billv Getting there

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  5. Young Gun

    Young Gun Guest

    if your looking at something to buy and hold forever why not look at ANZ, CBA, NAB & WBC?


    with grossed up yields of close to 10% they would be positively geared at this stage.

    However I wouldn't expect much capital growth out of any bank for the next 18 months.
     
  6. Alwayslooking

    Alwayslooking Well-Known Member

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    Thanks for help.
     
  7. Glebe

    Glebe Well-Known Member

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    I think the idea of buying whenever and holding forever is great. Problem is, I've rarely come across someone that has been able to keep to that. The future is so hard to predict - new houses, illnesses, divorce, sports cars - there are so many opportunities to sell down the track.
     
  8. AsxBroker

    AsxBroker Well-Known Member

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    Usually, for takeovers the target goes up and the acquirer down, in this current market both have gone downwards. Realistically if it all goes through your going to end up with WBC anyway, it's more a matter of how many shares. If SGB takeover bid goes up you'll be happy. The first bid is not usually the last.

    Cheers,

    Dan

    PS I don't own any SGB shares but am employed by SGB Group, don't believe any of the above. Before making an investment decision speak to a licensed stockbroker or FPA registered Financial Planner.
     
  9. Billv

    Billv Getting there

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    Dan
    You work for SGB but don't hold any SGB shares?
    That's strange
    Cheers
     
  10. AsxBroker

    AsxBroker Well-Known Member

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    Hi BV,

    I've been at SGB since October last year (which is SGB financial year). Before that I was working at a privately owned financial planning business. I will want to take up the annual $1,000 of shares that publicly listed companies can offer to staff members when it occurs this year.

    When I was at MQG it worked well (when the price was going up), though I imagine staff who took up last years offer might be less than enthused.

    Cheers,

    Dan

    PS This is not a recommendation to buy, sell or hold any security.