High Yielding Shares Again
- Thread starter MTR
- Start date
Hi MTR,
Although, in theory it sounds logical to go down that path of individual stock picking from experience I can tell it's not easy when you have a full time job and managing other investments (aka investments properties) etc to spend required time and effort to pick quality companies that will continue to outperform over the long term. The biggest challenge in IMHO
1) To identify companies with strong competitive advantage that will continue to have pricing power going into the future. This is not easy to do. Lot of companies in the past had strong competitive advantages but with advances in technology they have lost such advantage. Think of newspaper/television media companies/camera roll (kodak) etc etc.
2) Once you identify such companies you need to decide how much percentage of your portfolio do you invest? It has to be sizeable amount to make difference to your overall returns.
3) Once you identify such companies you need to decide your entry point. Even the best companies can turn out to be lousy investments if you pay too high a price for it.
4) After purchasing you have to consistently monitor the progress of the company. If the shareprice tumbles for whatever reason you need to make decision as to whether it is structural or temporary problem.
5) There will be years (sometimes consecutive years) when you underperform, you need to have the conviction and temperament to hold off selling and be confident in your stock picks to eventually come good and outperform. Not easy to do.
6) Finally, be honest with yourself and measure your net portfolio performance with the index to make sure the hard work is really worth it when compared to the index.
All of the above takes time and you only get better with experience. So I repeat it all sounds well and good in theory but in practice its not easy. Make sure you are prepared to put in the hard work / hours to make it worthwhile. Majority of professionals (fund managers) who do it for a living have not been able to beat the index consistently over long period of time.
Not trying to discourage you, just want you to know how it is based on my experience doing it.
Cheers,
Oracle.
Everything that is being said still scares the crap out of me. This whole researching where to put your money in the hope for growth and continued viability of the company in its field to continue its dividend payout by leaving the company's direction and efforts in the hands of a board of people I dont know.....I dunno, gimme leverage and a short trigger anyday.
Its still a game of hope and pray all the dominos stay vertical.
Its still a game of hope and pray all the dominos stay vertical.
It always has been. There will be booms, there will be busts.
Whats corporate Austraia's profit going to be when our population reaches 40 million? I dont know but I am willing to bet higher than it is now.
The sharemarket is measurement of human endeavor, that is as long people get ot of bed every day go to work and try to get a promotion to earn more money, productivity and therefore corprate profits will increase in time. Self interest at work.
And when those workers get that pay rise what do they usually do with it?
And the complete opposite approach may scare the crap out of another
there is no wrong way or right way to investing in whatever asset your mind fancy .. the key things is you are comfortable with those decision and can sleep at night ..if stock market scares you stay the hell away ...
there is no perfect approach to any of the asset class or strategy...everything has pros and cons
putting your money where you can sleep soundly at night is the best outcome.
I am learning a lot from this thread... thanks 
For those who have been investing in shares whether its hold or trading, am curious when you are researching a particular company what do you focus on. The tools for finding the company that ticks the boxes.
For me an amateur, I would just be looking at the top 20 blue chip and then just researching information on the particular company, yields, assets very basic stuff I guess. Then again, I am purely looking at it as long term hold with view of accessing the income
Cheers
MTR
For those who have been investing in shares whether its hold or trading, am curious when you are researching a particular company what do you focus on. The tools for finding the company that ticks the boxes.
For me an amateur, I would just be looking at the top 20 blue chip and then just researching information on the particular company, yields, assets very basic stuff I guess. Then again, I am purely looking at it as long term hold with view of accessing the income
Cheers
MTR
I?ll give you an example of 2 companies that I?ve bought very recently
With a bit of research you can find highly profitable companies at a discount. These are not recommendation but examples of the last 2 stocks I?ve bought and why I bought them. I have a very long term investment approach and I?m not interest in short term gains (although they would be nice). Both of these companies are priced at a discount because of cyclical falls in commodity prices.
BDR ? Beadell Resouces
Gold Miner in Brazil.
Bought it for about $0.62
Earnings per share of about 14 cents which makes the P/E of the company about 4.4. Been priced down recently due to the decline in the gold price.
Very little debt, low cost producer, makes money now, talk of their being a dividend by the end of the year.
The basically just dig up the gold from the ground and sell it for a profit.
BCI ? BC Iron
Iron ore producer, been hammered down recently due to the drop in Iron ore prices.
Bought it for about its current price of $3.20
Has money in the bank, very low debt, low cost producer, makes money, pays a huge dividend of circa 14%. Earnings per share of about 63 cents gives this a P/E of about 5.
With a bit of research you can find highly profitable companies at a discount. These are not recommendation but examples of the last 2 stocks I?ve bought and why I bought them. I have a very long term investment approach and I?m not interest in short term gains (although they would be nice). Both of these companies are priced at a discount because of cyclical falls in commodity prices.
BDR ? Beadell Resouces
Gold Miner in Brazil.
Bought it for about $0.62
Earnings per share of about 14 cents which makes the P/E of the company about 4.4. Been priced down recently due to the decline in the gold price.
Very little debt, low cost producer, makes money now, talk of their being a dividend by the end of the year.
The basically just dig up the gold from the ground and sell it for a profit.
BCI ? BC Iron
Iron ore producer, been hammered down recently due to the drop in Iron ore prices.
Bought it for about its current price of $3.20
Has money in the bank, very low debt, low cost producer, makes money, pays a huge dividend of circa 14%. Earnings per share of about 63 cents gives this a P/E of about 5.
I am learning a lot from this thread... thanks
For those who have been investing in shares whether its hold or trading, am curious when you are researching a particular company what do you focus on. The tools for finding the company that ticks the boxes.
For me an amateur, I would just be looking at the top 20 blue chip and then just researching information on the particular company, yields, assets very basic stuff I guess. Then again, I am purely looking at it as long term hold with view of accessing the income
Cheers
MTR
Shares market is very diverse, endless possibility and combination and strategies you can use or discard...work out where you sit that you are comfortable
and refine those skills..
I only employed 4 techniques and unlikely to go outside those 4 areas of my expertise
1. Buy and Hold shares that I have confident that deliver well above average return over a long period of time
2. Write options for income (pretty much I am the insurer ..I take on other people risk and fear for a premium) ..you need deep pocket
3. Opportunity trades
4. Short stocks I think are trade at unsustainable level and wait for the correction and exit for profit.
if you want to learn about shares go to http://www.aussiestockforums.com/ lot of people with all sort of experience hang out there....
options..warrants..shares...trading..TA..FA...Forex...index... etc..etc..
I mainly write naked put, I occasionally hold large cap and if I do I write covered call for them after they have a ok run and I think they run out of puff..
incoming covered call I shall write...
premium is linked to implied volatility, I usually have a dozen or two stock and a few are bound to have wild swing every so often and that when the premium is good and I start opening up to all the fearful people.
QBE is a decent stocks for premium as they experience high volatility every so often, and I have strict criteria as an insurance under-writer.. If I don't get the right premium I don't take on the risk...that mean I have to get 3-4% premium for 3 months contract... I only do 3 months ...long enough to get good premium short enough for stock to range bound and go worthless....some exceptional very low volatilities and rock solid business like CCL or WOW I may willing to accept 2% but it all depend on the environment
Also I don't use any of the fancy option pricing model or calculator I have my own way of calculating my own premium and risk
how I get 3-4% is got nothing to do with the options pricing model...
Great work Oscar
I've only the Vanguard Australian Index in the SMSF rather than the high yield
The Growth in my US Index has outperformed both the Australian Index and High Yield funds though
For those of you using margin. Who are you with? And what sort of rates are you getting? - I am guessing oracle is with IB... but sadly I don't have a trust or similar and can't get their amazing rates :'( haha.
Very great read so far guys. Having a great time reading this and learning more from everyone about their particular views.
Posts from oracle on LICs seems very similar to the kind of theory that we learned at uni in Finance
Very great read so far guys. Having a great time reading this and learning more from everyone about their particular views.
Posts from oracle on LICs seems very similar to the kind of theory that we learned at uni in Finance
No, I am with ANZ E-Trade. I don't trust IB either especially with large sums of money that will break or make my retirement. Not worth the risk.
Posts from oracle on LICs seems very similar to the kind of theory that we learned at uni in Finance
I haven't got any finance education. My background is in IT. Everything I know about investments/finance is through self study and experience.
Theories aside, would love to hear your views on LICs and index funds in general.
Cheers,
Oracle.
For those of you using margin. And what sort of rates are you getting? -
One of the global investment banks.
Interest rate around 4.8% on margin loan and 4.2% variable on the investment residential loans (but with required 70% max LVR).
Can also borrow for foreign shares and use margin loan in foreign currency. The margin loan rate depends on the interest rates in the foreign country, for example in the US I think its about 2.75% or there abouts (haven't used it so cant remember exact figure)
Does anyone subscribe to the Daily Reckoning?
PM Intrinsic_Value if you can share some insight into Intrinsic_Value of shares.
I'm looking to hedge a % of my bets and if you would be kind enough to share some info,that would be great.
PM Intrinsic_Value if you can share some insight into Intrinsic_Value of shares.
I'm looking to hedge a % of my bets and if you would be kind enough to share some info,that would be great.
Hi Redwing
Thanks for asking.
I have basically just opened a comsec account.
After I posted this thread someone pm'd me and asked me why I would buy shares when I can make better returns from developing property, and "if it aint broken, why fix it".
Thought about it for a while and there is some truth in this, however, developing requires more effort, sourcing the right block, sourcing the finance and then its a waiting game to completion of project which could be upto 12 months.
My point is I think diversification into another asset class like shares gives me an investment where I can just buy and hold, less work, less stress. Obviously I am no expert when it comes to shares and would not be trading, just buying blue chip ie bank shares etc when perhaps the market takes a little dip.
Also, I like the idea of buying fully franked shares and receiving dividends which I would use as income. It also does not mean I have to stop developing, perhaps this is a good balance for what I am trying to achieve.
Cheers
MTR
