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The Shareswatch Random Portfolio: June 2010

June 14th, 2010 · Greg Atkinson · 3 Comments

Back in October 2009 the Shareswatch Random Portfolio had racked up over 25% in unrealised capital gains in just 12 months. But May 2010 was not a good one for the stock market so how is this random selection of stocks holding up after the correction?

It is easy to get carried away by much of the substandard financial reporting in the mainstream media, one day we are being told that the markets have slumped, crashed or tumbled and the next day we read that stocks have surged, rallied or soared.

During May the media tended to pump out stories of gloom and doom because well, scary headlines grab readers attention. In actual fact all that happened in the month of May was that a stock market correction took hold and as readers of this blog will know, it was a correction I had expected.

So has the correction sent stocks prices tumbling towards new lows or have some recent gains within the Random Portfolio simply been wiped out?

In October 2009 on the first anniversary of the Shareswatch Random Portfolio the S&P/ASX 200 Index was just over 4800. But since then it has fallen approximately 6% to around 4500 due mainly to the sell-off in May.

But surprisingly as we can see from the table below, the total value of the portfolio is basically the same as it was in October which means capital has been protected and overall there is still an unrealised capital gain of $26,557.68 or 26.56%.

Shareswatch Random Portfolio June 2010

So far the best performing stocks in the portfolio are:

Riversdale Mining (ASX:RIV)

This mining stock has risen by around 202% since it was included in the portfolio and has even managed to avoid the fallout from the proposed mining tax because although it is an ASX listed stock, it’s mining assets are located in South Africa and thus it’s profits from operations there won’t get the RSPT treatment.

Challenger Financial Service Group (ASX:CGF)

Many financial stocks were beaten down during the gloomy days of 2008/2009 and some never recovered. But CGF has risen just over 83% since Oct 2008 and is helping to keep the Random Portfolio in the black.

Coca-Cola Amatil (ASX:CCL)

This stock has bounced back well after the correction in May and is now up over 46% since it was included in the portfolio. In fact CCL is now trading higher than it was in October 2009 and is now outperforming the ASX 200 by a significant margin.

Monadelphous Group (ASX:MND)

MND is still up just over 35% but has been hit hard by the correction in May and by the impact of the proposed RSPT (Resources Super Profit Tax). However the share price appears to be trending up again now and hopefully it will be providing the portfolio a good boost when the 2nd anniversary comes around in October this year.

Platinum Asset Management (ASX:PTM)

PTM is another financial stock that was beaten down during 2008/2008 and like CGF is has bounced back well. It has fallen back during the recent correction but is still up a touch over 62% since it was included in the portfolio in October 2008.

Of course not every stock in the portfolio has performed well and the following stocks are proving to be a drag on the portfolios performance.

Gunns Limited (ASX:GNS)

The GNS stock price has basically been heading down for most of 2010 and has now fallen just over 53% since inclusion into the Shareswatch Random Portfolio. The GNS share price started to move upwards recently but it seems unlikely that this stocks will be giving the portfolio much of a boost for quite some time. (if ever)

MacMahon Holdings Limted (ASX:MAH)

This stock was also hit hard in May and is now down by just over 38%. This is another company with significant exposure to the Australian resources sector and so the RSPT is giving investors more reasons to sell than buy into this stock at this stage.

Duet Group (ASX:DUE)

DUE has been a drag on the portfolio for some time and even back in October 2009 it was down around 35%. It did rally strongly in late 2009/early 2010 but the May correction has wiped all those gains off and it is now down around 37%.

So in conclusion the recent correction has basically put the portfolio back to where it was in October 2009 which is not pleasant, but nothing to be particularly worried about at the moment.

In October this year I will look at this portfolio again and see how it is tracking. Personally I expect it to contain unrealised gains of +30% by then as I expect mining related stocks in Australian will rally once the RSPT is either scrapped or heaving modified.

Please note this Random Portfolio is NOT meant as an endorsement or recommendation of any of the stocks contained within it nor is anything in this above article intended to act as any form of financial advice.

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


3 responses so far ↓

  • 1 Anon // Jun 14, 2010 at 1:03 pm

    Nice Greg.
    It shows what outliers do to your portfolio. A few shokkas but all you need is one outlier (RIV) and your results become great.
    Also diversifying is important, as you show…unfortunately alot of people went overboard with their mining related weightings and would have severely underperformed this year. I’ve seen some people down 20-30% 🙁
    Hopefully these people can learn from their mistakes and manage risk better.
    I personally dont diversify…i concentrate my good ideas with alot of leverage. But I dont think anyone should be trying this, given how dangerous and risky it is.

    None of my posts constitute financial advice – so do not act on it in that manner. Its just chit chat. Always see a financial advisor for decision making / advice / info.

  • 2 Greg Atkinson // Jun 14, 2010 at 1:34 pm

    Thanks Anon. My purpose is putting together this fictional portfolio was to track how the market moves using an actual bunch of stocks rather than talking just about the All Ords/ASX 200 which tends to get a little abstract at times.

    Indeed RIV is a star performer and this stock also shows how investors can get exposure to overseas assets via ASX listed stocks.

  • 3 Biker // Jul 12, 2010 at 9:45 pm

    Had to laugh when I read an item in today’s Courier Mail, p. 42. Justine Davies, a Gen Y Investment Advisor, reports that she recently played the ASX Share Market Game. She ranked in the top 20% of players nationally.

    Her strategy?

    * She made no purchases

    * She made no sales

    * In fact, she “…did nothing whatsoever…”

    Elsewhere in the CM, I read a claim that cash has beaten shares in the last seven years(!) Heresy!~

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