Forum Archive Index - March 2003

[Travis Morien <travismorien@yahoo.com>]

--- Robin Benson <rob@hammerheadmedia.co.uk> wrote:
> Hi Travis
> 
> I've found your posts a good read. Variety and
> differing perspectives 
> make for a rounded and interesting discussion.
> 
> However, respectfully, I wonder how useful your
> comment below is, given 
> only you (presumably) know how many (?%) of your
> clients made more or 
> less than the 20% (2002).
> 
> I'd be interested in knowing ...

I don't make the same recommendations to each client
because of reasons i state in
http://www.travismorien.com/directstocks.htm

A little way down is a quote from Ben Graham regarding
appropriate investment strategies for sophisticated vs
unsophisticated clients.

My unsophisticated clients have mainly been in managed
funds.  I keep true to my value style and choose funds
according to the strategies listed at
http://www.travismorien.com/investment.ppt and
http://www.travismorien.com/FAQ/activefunds.htm

Value styled funds had another good year and as a
result every fund I recommended to clients was top
quartile in the asset class in 2002.  I was probably
flattered by the big swing toward value and can't
claim credit for short term performance, but I've
always been a value guy.

My typical agressive portfolio for unsophisticated
investors is 1/3 property trusts, 1/3 aus shares and
1/3 global shares.  property did well, Aus shares were
flat on the whole and global shares were down.  They
balanced out to a year when basically most portfolios
in that class went nowhere.

For sophisticated investors on the other hand I am
more inclined to adopt a direct stock strategy.  A
number of stocks that I recommended haven't done a lot
in the time since the clients bought them, but
dividends for a value strategy are above average.  On
the other hand, in Dec and Jan i was telling clients
to back up the truck o Challenger (CLI), then trading
at a PER of 3.  One client went a bit overboard and
put half his portfolio in that one stock, though I
cautioned him that no single company should exceed
20%, or preferably 10%.  

With direct stock investors already up slightly, those
that bought CLI made about 25 - 30%, giving them an
annual gain on the whole portfolio of about 20%.

Less aggressive investors were in a highly diversified
portfolio that included plenty of mortgage funds,
property trusts & cash.  They did ok but only as ok as
one might expect such an investor to do.  (Though
probably a lot better than most investors!).

So its tricky to discuss percentages.  The number that
made a really strong profit this year is just the
number that I rate as aggressive and sophisticated.

I define someone as "sophisticated" if they understand
the mechanics of stock valuation and know how to read
an annual report with a critical eye.  I have a more
sophisticated client base than most (if you read my
web site you'll see why), about half are reasonably
sophisticated.  About a third in total are both
sophisticated and aggressive, so thats about how many
had double digit returns.

The returns are highly variable though since each
account is individually managed.  I don't do cookie
cutter portfolios and no two clients held the same
investments except those in a 100% dimensional value
fund strategy.

Travis
www.travismorien.com


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