Since August 2009 I have not been that active in terms of buying or selling stocks simply because I have not found the share market that interesting. On one hand it is hard to find stocks that offer enough value to make me part with my cash and on the other, the market has not rallied far enough to entice me to sell much.
My overall strategy therefore has been to simply look for stocks that might have good turnaround potential in 2011 and beyond, or try and take some profits where I feel a stock has rallied perhaps just a little too far.
Only two stocks I have been watching have met the above criteria:
Brambles Limited (ASX:BXB)
The global financial crisis has made me respect boring blue chips companies more than I have perhaps in the past. Brambles is not into new high tech gadgets, complicated financial deals or building office towers in Dubai, but it does have a pallet business (CHEP) that provides a fairly reliable source of income and their document storage/management business (Recall) looks fairly solid as well..
I therefore made a small additional purchase of shares in BXB last year and am now close to seeing the holding of these shares actually move into positive territory.
It is nothing to get excited about I know, but after a few years of watching stocks go down and a few holdings being wiped out, it is nice to finally see something work out as I planned..well almost anyway.
Hopefully the trend will be my friend and the BXB share price will continue to slowly climb upwards over the next few years and reward my patience.
Brambles Limited 1 year stock chart (March 2010)
BHP Billiton (ASX:BHP)
Although I believe the global economy will gradually continue to recover I am starting to feel that the commodities boom and the Chinese economic growth story are being over-hyped. Therefore when BHP stocks rally, I have been selling some small parcels of stocks. (and I mean small!)
Maybe in a few years I will look back and regret that I was selling BHP stocks just above $40, but at this point in time I am happy to lock in some tidy profits.
If the demand for hard commodities is not as robust as it seems most people are expecting to be over the next few years than there could be a major oversupply issue once all the new mine operations come online.
Maybe all will be well and China will buy everything that BHP can dig up, but it was not that long ago that many mining companies were struggling and tough times may lie ahead for this sector once again.
In any case I won’t be selling all of my BHP stocks, just enough to make me feel I have covered some of the losses I made in other stocks I invested in over the last fews years.
BHP Billiton (ASX:BHP) 1 year stock chart (March 2010)
It is important to stress at this point that I am not suggesting anyone buy, sell or hold any stock based on my ramblings. I simply outline some of the movements in the portfolios I manage so others can learn from some of my blunders.
So I guess you could sum up my overall stock investment activity since August 2009 as subdued. Once the rally up from the March 2009 market bottom started to fade, I saw very little reason to keep taking long term positions, simply because I believed that the market would not break through the 4800-5200 barrier on the ASX All Ords/ASX 200 anytime soon.
Therefore since I did not expect the Australian stock market to soar towards 6000 I figured I had time to sit back and look for stocks that were oversold and could afford to be patient and wait for the right time to buy.
So this point in time I am still basically in “watch” mode. Although the global economy appears to be on the mend there are still plenty of downside risks out there for stock market investors. In my opinion it still pays to be cautious and I don’t feel inclined at present start buying shares on a regular basis.