Forum Archive Index - May 2004

[Matt & Vanessa <vibez@paradise.net.nz>]

Greetings Snoopy (and all).

 

Ah, the old "Goal-to-Strategy" conundrum.  I think the real answer is as it is in most things: learn as much as you can about the subject, find what resonates with you, and follow what seems most logical........

 

Here's my loosely defined goal:

 

"build a portfolio of shares which will, over time (long certainly, short optimistically), return in the order of 15% per annum".

 

You could add to that these general considerations:

* the goal is to buy and build, not sell, making this a long-term portfolio;

* fees need to be kept to a minimum, to maximise the amount invested;

* it should make use of the opportunities that exist in the NZ market;

* it should comprise in the order of 8 to 10 different companies.

 

These three particular characteristics I ascribed to the market (there are of course others):

* it pays a consistently high degree of dividends;

* it has a number of well-defined market leaders - either in their fields or the so called "Blue Chips";

* a number of companies are either "in play" or on the rebound from a hammering, making good  

  sized gains possible.

 

<Excuse the brevity of the description.>

 

After a look through the Share Indexes in the paper, and an ear to the hubbub of the business and investment publications, a result:  an eight-stock portfolio covering each of the three opportunities described:

 

* Income Shares:     WRI, PWC, CNZ

* Balanced Shares:  CEN, FBU, WAM

* Growth Shares:     BCA, TWR

 

 

The portfolio started in February 2003, accumulating shares in one company per month.  The second round of purchases has deepened a selected number of these holdings.  It has gained a decent 13.2% in that time, which must be within one standard deviation of my target!

 

Individually?  BCA and TWR (entry at $1.65 and $1.27 respectively) have performed in a big way, though BCA looks tapped out until something new happens, like a profit; PWC and CEN have been solidly higher; CNZ, FBU and WRI haven't moved; and WAM, a modest gain.

 

You can see that three of my top performing stocks appear to be "in play", which underpins a lot of that performance.  Also, I haven't lost ground with my Income stocks, showing they are trading pretty consistently.

 

I have noticed that there's always opportunities to time things well in this market (TWR for instance for purchasers, WRI for predators), if you just keep watching.......and being patient.

 

 

I'm pretty comfortable with this set of companies (getting an itch to punt on a oil & gas explorer tho'), and all the time I spent looking at them has helped me feel I know what's going on - which is a great help when you're building something for the long term. 

 

Goal-to-Strategy.

 

But then, what's 12 months aye? 

 

 

smasha