The Random Portfolio: August 2009
August 17th, 2009 · Greg Atkinson · 19 Comments
Back in June the Shareswatch Random Portfolio was down by just over 4% but as I wrote in the update for that month, I felt confident it would be in positive territory within 2009. Thanks to the sustained rally this financial year the portfolio is now well into positive territory and I doubt it will be in the red again for many years, if ever.
Over the last few months most of the stocks in the portfolio have surged ahead with the exception of Monadelphous Group (MND) which has just moved up a few percent but the stock price is still heading in the right direction. Unfortunately there are also quite a few stocks still in the red but some of them will probably recover over the next year or so.
Some of the stand out performers since near the end of June have been Challenger Financial Services Group (CGF) which has gone from $2.41 to $2.91, Platinum Asset Management (PTM) whose stock price is now above the original purchase prices by over 30% and Riversdale Mining (RIV) which continues to power ahead and closed at $6.27 on the 14th August.
If we look at the entire portfolio it is clear that although 4 stocks are in the red the overall portfolio is now up by 11.677% and this highlights the importance of having a diversified portfolio. Some people may be great stock pickers and pick just a couple of great stocks, but for the rest of us mere mortals having a small bag of good stocks spread across a few sectors is probably the best long term strategy.
Shareswatch Random Portfolio (as of 14th August 2009)
|ASX Code||Buy Price||Last Price||Units Held||Market Value||Profit/ Loss||% Change|
(I have changed the format of the table because the previous version was not very clear when using some browsers)
So the Shareswatch Random Stocks Portfolio now has a respectable unrealised gain of over 11% and that means it has already out performed cash and gold in $AUD terms since it was created on October 23rd. (it may have also outperformed residential property as well?)
Just think about that for a second. This group of stocks was selected totally randomly and yet has out-performed a lot of the investment strategies tossed around by some self anointed market experts. To get an over 11% return in around 10 months you did not need to sign up for a stock picking newsletter or try and time the market, you just needed to have a long term belief that eventually the stock market would rise again.
At this stage I would be tempted to take some profits from CGF and RIV but to keep things very simple I will stick to holding all stocks for at least some years to prove my theory that over the long term, buying in bear markets and taking profits some years down the track will provide good investment returns.
Comments and Notes:
- The portfolio dog stocks: Duet Group (DUE) and Macmahon Holdings (MAH) are still in the red but in a lot better shape than they were back in June.
- Platinum Asset Management (PTM) and Challenger Financial Service Group (CGF) are proof that the financial world has not been sucked into some vortex and that only gold will be accepted at your local shops. Some time ago many exprts were saying that financial stocks would be a bad investment for years to come, well guess what? They were wrong!
- The weakness in the share price of Macmahon Holdings (MAH) suggests to me that the mining boom is not coming back in a hurry. Yes exports are holding up relatively well for now, but prices for iron ore etc. are down and so the miners are not adding capacity or pushing ahead aggressively with a lot of new projects.
Remember that this random selection of stocks was put together before the stock market bottomed out in March 2009, so if my timing has been better then the portfolio may been doing even better now. But getting the timing right is a hard thing to do and in my view the best strategy is to just buy quality stocks in bear markets whenever they look like good value.
Anyway it will be very interesting to see how this portfolio will be doing on it’s first anniversary. My current view is that I doubt it will continue to surge ahead and that the overall market will have a tough time breaking through the 4800-5000 level. However I certainly do not expect to see stocks fall below 4000 again for the rest of 2009. (fingers crossed!)
Please note this Random Portfolio is NOT meant as an endorsement or recommendation of any of the stocks contained within it.
The Shareswatch Random Portfolio is a random selection of stocks from the ASX 200 range of companies. For further details regarding how it was constructed please see: The Random Portfolio
The current stocks prices of the companies on the portfolio can be viewed here: Stock market quotes and stock prices