Your stratergie to join the Millionaires Club.

Discussion in 'Share Investing Strategies, Theories & Education' started by crc_error, 16th Aug, 2008.

Join Australia's most dynamic and respected property investment community
Page 2 of 4
  1. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 17th Aug, 2008
    #21
  2. BillV

    BillV Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,555
    Location:
    Sydney
    Young gun,

    In property I have an idea of what something is worth but with stocks I can't tell.

    I know that BHP at below $45 represents good value but what I don't know is how much it will fall and if I could choose between buying it at $35 or at $45 I know which price I prefer...:D
    Don't get me wrong, shares are a great investment vehicle but right now there is too much fluctuation for me to get in. You and others have your own different investment strategy and I respect that.

    I am watching the market closely.
    Some stocks did very well last week DJS, COH,CSL, AGK, etc but others didn't. As an example, I have a list of stocks I'd like to have and if I was holding those for the whole of last week I would have been neutral or slightly negative. If I was holding them for the whole month I would have been negative.

    I'd love to build my own share portfolio in my SMSF but considering the volatility of shares today I am not doing it. I've decided to gear at 60% and buy 1 property instead. I will be using my super as a deposit and the rent will cover the interest repayments.

    Also, everyone is different, I've decided that for me a large share portfolio will be too much to manage and to be able to sleep at night.
    I think investing in managed funds would suit my profile better.

    Cheers
     
    BillV, 17th Aug, 2008
    #22
  3. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 17th Aug, 2008
    #23
  4. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    602
    Location:
    Brisbane
    crc,

    When are you going to start spelling 'strategy' correctly?

    Mark
     
    Mark Laszczuk, 17th Aug, 2008
    #24
  5. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    602
    Location:
    Brisbane
    Hi BV,

    How do you know BHP is good value at $45? Have you done the research?

    Mark
     
    Mark Laszczuk, 17th Aug, 2008
    #25
  6. Young Gun

    Young Gun Guest

    the benefit of managed funds is that you don't have to know what represents good value and know what shares to buy, thats what you pay a fund manager for. Thats what's so good about managed funds, you just have to like the idea of investing shares and you let the fund manager do the rest.

    I know everyone on this site is all very DIY and tight a** on fees, but what other way can you get a very well diversifed portfolio managed by a team of experts starting with a small amount invested?

    Focus on what your good at and outsource the rest.

    So if property is your thing, focus on that and outsource your investment in the stockmarket to a fund manager. Don't worry about timing the market, your not an expert, just DCA as CRC suggests...

    Personal I'm good at building strong share portfolios so thats what I do, but I'll outsource my international share exposure to a fund manager.

    If there was such a thing as a residential property fund I'd invest in that as I'm clueless when it comes to property.

    oh and fair value of BHP is around the $50 mark so it is good buying at the moment, but I wouldn't expect it to hit that mark soon with commodity prices coming off the boil.
     
    Young Gun, 17th Aug, 2008
    #26
  7. D&K

    D&K Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    198
    Location:
    Canberra
    CRC, it's a bit about simplicity and visibility. The investment is geared, so I'm happy with Navra managing it rather than me, and it's going to pay out each quarter. They also list the positions, it's not like investing in a fund that's invested in another fund, and another fund, etc, resulting in some arbitary percentage of market sectors behind a string of commissions. And my superannuation plays in that space anyway.

    Like Young Gun says (re: outsourcing), the strategy with Navra lets me focus on the stuff I know about and have time to watch. In this respect my strategy is to keep it simple.

    I have used other funds. Platinum Asia, got out around $2.60. A commercial property trust with $2000, worth $300 a decade later. Before that was an investment through Farrow Finance Corp, but that's a lost history lesson.

    Dave
     
    Last edited by a moderator: 17th Aug, 2008
    D&K, 17th Aug, 2008
    #27
  8. lorrimer

    lorrimer Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    154
    Location:
    Brisbane, Queensland
    Interesting discussion.
    My thoughts : DCA into an index fund is an excellent idea.
    However although some diversification makes sense, if you over diversify, your losers and winners will cancel each other out and you will end up with average returns.
    The idea of drawing down profits from growth funds is in theory also an excellent idea.
    The problem however is that you can't rely on a growth fund growing. Some of mine are down 50% or more.
    This is where Navra comes into it's own. The one thing that we can rely on is that the stock market will always move up or down every day.
    Therefore Navra will always produce income reliably every quarter. The capital value will of course also move up or down, but this can also be managed by conservative gearing and having a proportion of distributions reinvested, in effect dollar cost averaging back into the fund.
    It's this reliable cashflow that is the foundation of my strategy of building a quality IP every few years and extracting the equity to buy more funds or another IP.
    The negative gearing and high depreciation of a new property also equates to a minimal tax bill.
    I've given up trying to make a fortune solely from the stock market.
    I've made a small fortune on two occasions now and subsequently lost it all and more.
    I'm happy to use it now simply as a vehicle for producing income.
     
    lorrimer, 18th Aug, 2008
    #28
  9. BillV

    BillV Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,555
    Location:
    Sydney
    Mark

    I've read it in an article a couple of months ago but it wouldn't have taken into account that commodity prices would drop.

    So you are right to question the $45, what's good value today might not be good value in 12 months time.

    I'ts still a big player though.
    I've read in another article that they will make $15 Billion this year.

    Cheers
     
    BillV, 18th Aug, 2008
    #29
  10. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 18th Aug, 2008
    #30
  11. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 18th Aug, 2008
    #31
  12. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 18th Aug, 2008
    #32
  13. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    Actually there is a huge difference.

    Distributions are paid out of profits, not out of capital.

    Selling down units from growth fund comes from capital. In theory, you should have more capital than from an income fund - but if you experience negative capital growth, selling down units for cashflow compounds the effect of the loss quite dramatically.

    That's not an accurate comparison at all.

    Centro is a listed property trust - they invest in real estate and used extremely high levels of leverage to get their returns. When their credit crunch caused them problems with debt refinancing and caused their assets to be revalued - that's when they lost lots of money.

    Navra is a fund manager which invests in 20+ of Australia's largest and safest shares. They do careful due dilligence on what they hold, and if one went under, you wouldn't lose the lot - and Navra would most likely not have held them in the first place if they were at risk (eg high debt levels). Navra do not use leverage themselves - they have no direct exposure to interest rate fluctuations, nor to credit availability issues.
     
    Simon Hampel, 18th Aug, 2008
    #33
  14. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    There's a huge difference between various levels of diversification.

    What most people here would tell you is that if you diversify too far, then all you will ever do is achieve average results (or less than average, after fees are taken into account).

    If you don't believe that you can ever achieve better than average, then you may as well only ever invest in the index.

    I don't think anyone would ever suggest putting all of your money in the one share.

    Don't forget that managed funds and listed managed investments will typically invest in a wide range of shares - there's a natural level of diversification there.
     
    Simon Hampel, 18th Aug, 2008
    #34
  15. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 18th Aug, 2008
    #35
  16. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 18th Aug, 2008
    #36
  17. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    You can easily do due-diligence about a listed company by having a close look at their annual report. They have to publish full details about debt levels, income and other information.

    Safety is a relative thing - but it does basically come down to what is called fundamental analysis. Looking at the way a company is run, its management structure and history, debt levels, income projections, capitalisation levels, and such.

    The key is that all the examples you listed were isolated events, and in every case there were criminal proceedings and convictions for fraud, deception and other crimes. They were single companies who went under due to dodgy management practices and illegal activities. In many cases, some careful due diligence should have smelled a rat, but in any case - they would have been just single shares in what is a multi-share portfolio.
     
    Simon Hampel, 18th Aug, 2008
    #37
  18. crc_error

    crc_error The Rule of 72

    Joined:
    1st Jul, 2015
    Posts:
    1,267
    Location:
    Melbourne, VIC
    withdrawn due to comments by mark suggesting my contribution is a waste of time and to be ignored. Please close this thread.
     
    Last edited by a moderator: 18th Aug, 2008
    crc_error, 18th Aug, 2008
    #38
  19. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    Huh? Australian mining and resources shares - plus some of the engineering and other services companies ... are linked to commodities, and this has certainly helped with our recent sharemarket boom.

    However, these are not the only part of the Australian sharemarket - indeed, resources had struggled for years before the recent boom, yet the market managed to do quite well.

    Here is a list of Australia's top 50 companies by market cap:

    I've highlighted the ones which are directly involved in the resources or energy sectors ... and some of these have only actually come in to the top 50 as a result of the boom.


    Bhp Billiton Ltd .... Materials
    Cmnwlth Bk Of Aust .. Financials
    Telstra Corp Ltd .... Telecommunication Services
    Westpac Bkg Corp .... Financials
    Natl Australia Bk ... Financials
    Aust & Nz Bank Grp .. Financials
    Rio Tinto Limited ... Materials
    Woolworths Ltd ...... Consumer Staples
    Wesfarmers Ltd ...... Consumer Staples
    Westfield Group ..... Financials
    Woodside Petroleum .. Energy
    Csl ................. Health Care
    Qbe Ins Group ....... Financials
    St George Bank Ltd .. Financials
    Macquarie Gp Ltd .... Financials
    Origin Energy ....... Energy
    Amp Limited ......... Financials
    Suncorp-Metway Ltd .. Financials
    Brambles Ltd ........ Industrials
    Newcrest Mining ..... Materials
    Santos Limited ...... Energy
    Fosters Group ....... Consumer Staples
    Fortescue Metals G .. Materials
    Incitec Pivot ....... Materials
    Orica Limited ....... Materials
    Stockland ........... Financials
    Insurance Aust Grp .. Financials
    Bluescope Steel ..... Materials
    Transurban Group .... Industrials
    Qantas Airways ...... Industrials
    Agl Energy .......... Utilities
    Asx Ltd ............. Financials
    Worleyparsons Ltd ... Energy
    Leighton Holdings ... Industrials
    Macquarie Infras G .. Industrials
    Oz Minerals Ltd ..... Materials
    Alumina Ltd ......... Materials
    Onesteel ............ Materials
    Lihir Gold Ltd ...... Materials
    News Corporation .... Consumer Discretionary
    Amcor Limited ....... Materials
    Telecom Corp Of Nz .. Telecommunication Services
    Goodman Intl Ltd .... Financials
    Dexus Property Gp ... Financials
    Oil Search Ltd ...... Energy
    Sims Group Ltd. ..... Materials
    Tabcorp Holdings L .. Consumer Discretionary
    Sonic Healthcare .... Health Care
    Toll Hldgs Ltd ...... Industrials
    Axa Asia Pac Hlds ... Financials
    Computershare Ltd ... Information Technology



    Fundamentally, resources stocks are quite volatile - they always have been, since they are are largely linked to commodity prices rather than intrinsic value.
     
    Simon Hampel, 18th Aug, 2008
    #39
  20. ffc1883_1996

    ffc1883_1996 Member

    Joined:
    1st Jul, 2015
    Posts:
    22
    Location:
    Melbourne, VIC
    Hey Sim, I’ve been thinking about your post and I don’t quite understand the difference.

    As I see it, if you sell a growth fund, you’re converting capital to cash. Navra also converts capital to cash.

    Regards – Ben
     
    ffc1883_1996, 18th Aug, 2008
    #40
Page 2 of 4