Well it is time to reflect once again on some of the stock positions I have taken over the last 6 months or so. Although this is often a painful experience, I would suggest to anyone who invests in shares to regularly reflect on how their portfolio is tracking and revisit the reasons why they purchased (or sold) a particular stock. Often we can learn a little about our own investing style if we have a brutal look at our past investments and this may help us make better investment decisions in the future.
So once again I will outline some of the actual direct or indirect trades I have undertaken to demonstrate that I do act on the basis of my assumptions, and pay the price when things do not play out how I expected! (as opposed to just writing endless articles but never actually detailing any investment position like many other investment related websites)
At this point please make sure you have read the Site Disclaimer. Remember I am not suggesting anyone buy, sell or hold anything, I am just indicating what I have done so that perhaps other investors can learn from my errors!
From August 2008 up until May 2009 these have been the key changes in the portfolios I am involved with:
BNB – Yes, believe it or not I actually made a few speculative forays into Babcock & Brown shares. At the time I fell into the trap of putting too much faith in analysts reports and fell for the “the stock is oversold” story. Mind you I have done this sort of thing before and done quite well, so sometimes you win with these sorts of trades and sometimes you get wiped out. Thankfully I followed my own rule of not putting too much into a high risk/potential high return stock.
BHP – I wrote last year in The Reserve Bank, rates cuts and a possible nasty turn that I was fearful that commodities would come off the boil so to cover myself a little, I continued to sell small parcels of BHP Billiton shares above the $41 -$42 mark. This turned out to be a good move. I am still a long term fan of BHP stocks though.
Then came along the collapse of Lehman Brothers…time for a change of strategy.
WIL – When stocks prices started to tumble again in September 2008 I started to pick up shares in core long term holdings. Wilison Investments is one of my favoured Listed Investment Companies (LIC) so It made sense to me to take the opportunity that a stock market rout throws up and gradually pick up some more shares in this LIC. On average I have paid around 0.88 per share for the WIL stocks but I am confident these will bounce back. In the meantime I am happy to take the dividends and wait for happier days.
WES – I have had my eye on Wesfarmers for about 2 years but they were always a bit pricey for my liking. But then came along this bear market and so when the shares got to around the $22 mark I started to buy small parcels. Thanks to the retail share offer the average buy price for these stocks is around $18, so as of today they are up 25%.
BXB – Brambles is blue chip/ASX 200 company that I have wanted to have a stake in for a few years. When the stock price went below $8 in September 2008 I started buying. I am still behind of course as the stock prices is currently $7 but never fear, I am still in BXB buying mode. Brambles is my bet that the global economy will get back to growth again in the next 12 months or so.
HSP – Healthscope stocks in one of the portfolio was sold in November 2008 at $5.00 for two main reasons. Firstly I was nervous about what the Rudd Government will do in terms of private health fund rebates etc. and secondly because there was a nice profit to be made, and in a bear market I figure it is good to take profits when you can.
GMI – Even though I sold some BHP shares it did not mean that I think quality mining stocks are a bad long term investment. Quite the opposite actually, so I have been trying to pick up small parcels of shares in Global Mining Investments from time to time to add to my existing holdings in this stock. The average cost for these shares so far is around $1.24 so I will have to wait a while before there are any gains here.
AGK – Sold all holdings in AGL Energy in December 2008 simply in order to take some profits. The sell price was just over $15.50 and quite a tidy prifit was made. Sure these shares might go up again, but better to have taken a profit then watch them go down and into the red. In a bull market I would have probably held onto these shares but in a bear markets I tend to take profits when I can.
STW – I started to buy into the SPDR S&P/ASX 200 200 Fund after the collapse of Lehman Brothers. It has taken a while and some continued buying, but I am finally seeing shares in this Exchange Traded Fund (ETF) in the black. In a few years time I am pretty confident that the around $36 a share I paid for these holdings will look pretty good. Meanwhile I will sit back and take the dividends as they roll in.
AAU – Adcorp Australia is one of my small company stocks and I have been been picking up a few shares from time to time over the last six months or so, but this strategy is yet to reap any reward. On the positive side the company is debt free, well managed (in my view anyway) and pays a pretty tidy dividend. It is one of those stocks where patience is indeed a virtue.
PAG – Prime Ag is one of the ways I am hoping to gain from exposure to soft commodities. So far the average price paid for these shares has been around $1.78, so my position is not looking too flash at the moment. But it is still early days and I am quite comfortable owning shares in a company like PAG.
Overall most of the positions I have taken during the turmoil are showing signs of life although it will be a while I expect, before I see widepread healthy returns. On a positive note however, the taking of some profits via the sale of shares and via dividends, has allowed me to snap up some battered down stocks. Hopefully in the years ahead these stocks will provide some decent returns.
Of course a bear market is not for the faint hearted and some losses should be expected as my little dabble into Babcock & Brown stocks clearly illustrates! So if you are thinking buying stocks be careful and be wary of people trying to pump and dump stocks via online forums etc.