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The 2 stock portfolio.

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
Pastcaring
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The 2 stock portfolio.

#212372

Postby Pastcaring » April 3rd, 2019, 12:59 pm

CBA ( ASX) and MQG ( ASX) .,its close enough to a year as MQG financial year ends on 31/3.A few days late but laziness and do nothing floats my boat.

MQG,as I said if I had to pick one stock that would be it,not a bad year$105 when I used it to explain the one day short strategy,closed at $132.80 today,throw in a $5 .35 dividend and around 31% return for the year.This is all mental arithmetic and I am a decent age now so figures might need checking.

CBA not so good,as I said bought at $ 72.50 after a 3 ish year downward trend from $96, well added to the portfolio as I have held them since around 1991. Closed at $71.40 today,throw in a $4.31 dividend and 4.4% return for the year.

Across the two a 20% return for the year,a good start.Of course time is money,and you need to spend a lot of money to get rich.Needed to buy 1000 of each for a cost of 177.5K.Just over 2 years average wages,yes I know it scares the crap out of 99.9% of people to do that ,but needs must.

Leave it alone for 30 years and reinvest all dividends.This gives around 6000 shares in each company after 30 years,that is variable,could be a few more ,could be a few less.

Do a simple compounding calculation at various returns.Don' t dream that 20% annual will continue,it will not.

At 8% that is$1.79 million.

At 9% $ 2.38 million.

At 10% $3.43 million

Those figures can really be destroyed by the crash,depending when it comes,and how many over the 30 year period.

That takes everybody from the age of 35 to the age of 65.At age 35 it will be ( TAa Data)

(Insert name of company) here went bust.

How come everybody else doesn' t do that.

The salesperson said you must have a well diversified portfolio,everybody agrees with it,it must be true

For MQG I have the annual report at hand ( jeez I hate having to do any work at all for investing,let the money do the work,my motto)/
Anyway as explained before on page 185 the shareholder breakdown.A very exclusive club,16,741 people own 1000 shares to 5000 shares..A grand total of 0.06% of the population.Reaching the grand total of 5000 to 10000 shares a grand total of 1,100 people,or 0.0044% of the population.I sleep so well at night knowing how many people disagree with me,I' m not following the crowd YAHOO.Millionaires aren' t exactly thick on the ground.

Now,as I said,APT ( ASX) one for the momentum traders,certainly got that right,up from around $14.50 when I highlighted it to $23.30 today,let's call it 60% shall we.I had no intention of buying them then,I have no intention of buying them now .

BHP as I said ,momentum might carry it up to $40,closed at $39.90 today,close enough for me

This is far too much work for me,I really hate doing anything at all concerned with investing,so back to hands under the arts end for me.

Go to work,work hard to pay down that debt as quick as you can.Always think for yourself,DO NOT follow the crowd.
To pay it off quickly use the one day short strategy for CBA and MQG.

The sky is not going to fall down because you sold a share yesterday and bought it back today after going XD.

Don' t try to make it complicated,it really is very easy this investing lark,ALWAYS use common sense

I deserve a beer now,that's the most work I' be done in years,I 'm knackered.

BrianL51
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Re: The 2 stock portfolio.

#220281

Postby BrianL51 » May 8th, 2019, 11:08 pm

I used to be on the board of a US defence company. One of my colleagues was a retired US Navy Captain, then in his 70s. He had a one stock portfolio that he swore by and which wound up making him a lot of money. When he'd first had some spare cash to save, he'd started buying shares in GE (General Electric), and over the decades he'd never bought shares in any other company. I can't quote numbers because I never knew the details, but he was extremely happy with his outcome. Investing a lot in just one stock carries an obvious risk, but he had his civilian business success and his Navy pension so he was never going to be destitute. He sadly died a few years ago now, in his late 80s, never having wasted more than five minutes now and again on his 'portfolio'. Sometimes, when I've spent time messing about with diversifying and rebalancing my portfolio of ITs, ETFs, equities, bonds etc I think of him and wonder if I'd have done better to follow his example. Then again, knowing my luck I'd have invested in Woolworths.

Pendrainllwyn
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Re: The 2 stock portfolio.

#220286

Postby Pendrainllwyn » May 9th, 2019, 12:20 am

The same GE that trades at the same price it did in 1995 :shock:

If I was going to have a one stock portfolio it would be in a diversified conglomerate like Berkshire Hathaway or a pre-tainted GE. But you need to pick the right management team and management team's change. Alternatively in a single globally diversified Investment Trust if that qualifies as a "stock".

Pendrainllwyn

tjh290633
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Re: The 2 stock portfolio.

#220359

Postby tjh290633 » May 9th, 2019, 10:44 am

I knew a number of people who worked for the English GEC, later to become Marconi. They had lots of bonuses in GEC shares and lost a lot when the crash came.

Likewise ICI employees got annual bonus shares. They would have benefitted from the splitting off of Zeneca.

TJH

GoSeigen
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Re: The 2 stock portfolio.

#220372

Postby GoSeigen » May 9th, 2019, 11:13 am

tjh290633 wrote:I knew a number of people who worked for the English GEC, later to become Marconi. They had lots of bonuses in GEC shares and lost a lot when the crash came.

Likewise ICI employees got annual bonus shares. They would have benefitted from the splitting off of Zeneca.

TJH



I think I'd put it all into Lloyds, a good solid British bank with a proud history. Couldn't possibly go wrong.

JS

;-)

SalvorHardin
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Re: The 2 stock portfolio.

#220406

Postby SalvorHardin » May 9th, 2019, 12:35 pm

1) If I was restricted to putting everything into two companies then both would have to be investment trusts (operating companies involve too much risk in comparison).

Finsbury Growth & Income – the manager’s philosophy is close to mine (basically Warren Buffett’s idea of the “moat”, plus I already have large holdings in four of this trust’s ten largest holdings)

Foreign & Colonial – massive international diversification, been in existence for 151 years

2) If I can’t use investment trusts, then I want something with a huge moat and has a wide product range. Look for something that’s pretty certain to be operating in twenty years with higher sales and profits than today.

Brookfield Asset Management (Canadian alternative asset manager specialising in infrastructure, real estate and energy assets around the world, for itself and its clients). Founded in 1899, it’s one of those companies which gives more useful information in its quarterly reports than most companies do in their annual reports.

Berkshire Hathaway

If I was still working rather than retired, I’d swap Berkshire Hathaway for Disney (a bit more of a punt but it has an excellent long-term record and it's currently being re-rated due to its recent announcement of a streaming service) or Union Pacific (dividends paid for 120 years).

3) If I was restricted to the FTSE100 it would have to be Diageo and Unilever.

JamesMuenchen
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Re: The 2 stock portfolio.

#220431

Postby JamesMuenchen » May 9th, 2019, 1:51 pm

Pastcaring wrote: Leave it alone for 30 years and reinvest all dividends.This gives around 6000 shares in each company after 30 years,that is variable,could be a few more ,could be a few less.

That implies a yield of ~6.5% being reinvested. Your MQG yield is ~4% which would compound to only 3118 shares. More than "a few less" in my book.

Pastcaring wrote:
MQG,as I said if I had to pick one stock that would be it,not a bad year$105 when I used it to explain the one day short strategy,closed at $132.80 today,throw in a $5 .35 dividend and around 31% return for the year.
...
CBA not so good,as I said bought at $ 72.50 after a 3 ish year downward trend from $96, well added to the portfolio as I have held them since around 1991. Closed at $71.40 today,throw in a $4.31 dividend and 4.4% return for the year.

Across the two a 20% return for the year
...

Do a simple compounding calculation at various returns.Don' t dream that 20% annual will continue,it will not.

At 8% that is$1.79 million.

At 9% $ 2.38 million.

At 10% $3.43 million

I think your simple calculation is double counting the divi in both the return and the number of shares?

Otherwise your minimum expectation is 30 years of 8% share price appreciation +6.5% divi?

pds2008
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Re: The 2 stock portfolio.

#220444

Postby pds2008 » May 9th, 2019, 2:25 pm

From SalvorHardin

"3) If I was restricted to the FTSE100 it would have to be Diageo and Unilever."

Funnily enough these are the only two stocks/IT's I own that do not have a high yield. Never the less they are the two Companies that I have the most confidence in. I am sure I am not the only one

Yell

Alaric
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Re: The 2 stock portfolio.

#220452

Postby Alaric » May 9th, 2019, 2:58 pm

pds2008 wrote:Funnily enough these are the only two stocks/IT's I own that do not have a high yield.


They don't have a high yield because the growth in the share price has exceeded the growth in dividends. Arguably the shares are priced at a premium perhaps because of the continued prospects of dividend growth.

PinkDalek
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Re: The 2 stock portfolio.

#220475

Postby PinkDalek » May 9th, 2019, 4:08 pm

Pastcaring wrote:CBA ( ASX) and MQG ( ASX) ...


As this Topic has developed, I'm still none the wiser what shares you are talking about so, if anyone else is in the same boat, they would appear to be:

Commonwealth Bank of Australia

Macquarie Group Ltd

My one stock choice would be NESN (VX) but I've no idea about the metrics and most certainly wouldn't consider it a Portfolio, even if I added one other.

On that basis, I've no idea why this Topic has been started here on Investment Strategies.

Dod101
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Re: The 2 stock portfolio.

#220504

Postby Dod101 » May 9th, 2019, 5:49 pm

NESN (VX) = Nestle I assume. I wonder why you would choose that particular share? I have looked at it several times but although I see its attractions it would never be my one and only share.

My one and only would have to be something like Berkshire Hathaway or one of our ITs.

Dod

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Re: The 2 stock portfolio.

#220770

Postby Muddywaters » May 10th, 2019, 9:59 pm

I did some consultancy work for Rbs not long after the crash (they’d got rid of the employed experts in various fields and then had to pay for consultants to cover the skills gap :roll: ). Anyway there were a lot of staff there that had one stock portfolios and they were using that stock as the repayment vehicles on their mortgages :shock: . Many of them lost hundreds of thousands. They should have known better mind

You can certainly make a lot but I’m afraid I don’t have to the balls for it (or the knowledge tbh)

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Re: The 2 stock portfolio.

#220788

Postby gbjbaanb » May 11th, 2019, 1:25 am

I think many people will not remember JimSusan and his one-stock portfolio that was Lloyds bank. Just before the 2007 financial crash took 90% away. Even today he'll be looking at 60p from a £2 to £3 start.

You always have to think of the downsides to a few stocks, you never know when external factors will screw you completely, or mismanagement will do so eventually

But, for fun., The stock I'd buy forever would be Compass Group - a caterer. Did well for me for ages, quietly plodding along doing its thing without anyone really noticing.

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Re: The 2 stock portfolio.

#220807

Postby GoSeigen » May 11th, 2019, 9:03 am

gbjbaanb wrote:I think many people will not remember JimSusan and his one-stock portfolio that was Lloyds bank. Just before the 2007 financial crash took 90% away. Even today he'll be looking at 60p from a £2 to £3 start.
.


JimSusan and his like did far far worse than this. Yes, the shares he bought with this dividend reinvestments cost him 350p or more, whereas now they are worth 60p.

However in those days the shares he was buying were undiluted, so adjusted for subsequent dilution he was entitled to his share of 100% of Lloyds in those days, whereas the shares he bought entitle him to less than 20% of the company today. So by my estimation he has lost more than 95% of his investment -- unless he subsequently coughed up in the various capital raisings so as not to be diluted.

GS

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Re: The 2 stock portfolio.

#220812

Postby kempiejon » May 11th, 2019, 9:12 am

gbjbaanb wrote:I think many people will not remember JimSusan and his one-stock portfolio that was Lloyds bank. Just before the 2007 financial crash took 90% away. Even today he'll be looking at 60p from a £2 to £3 start.

You always have to think of the downsides to a few stocks, you never know when external factors will screw you completely, or mismanagement will do so eventually

But, for fun., The stock I'd buy forever would be Compass Group - a caterer. Did well for me for ages, quietly plodding along doing its thing without anyone really noticing.


If JimSusan had the conviction he might have taken up the offers, continued buying Lloyds including at 30p so 60p looks good, and of course he's had a dividend stream more recently though at 3p it is still well below the 23p in 2006.
Nah it's a bad idea unless you're lucky.

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Re: The 2 stock portfolio.

#220844

Postby dealtn » May 11th, 2019, 12:05 pm

Muddywaters wrote:I did some consultancy work for Rbs not long after the crash (they’d got rid of the employed experts in various fields and then had to pay for consultants to cover the skills gap :roll: ). Anyway there were a lot of staff there that had one stock portfolios and they were using that stock as the repayment vehicles on their mortgages :shock: . Many of them lost hundreds of thousands. They should have known better mind

You can certainly make a lot but I’m afraid I don’t have to the balls for it (or the knowledge tbh)


One stock portfolios amongst bank staff were very common.

Towards the bottom of the pay scales would be staff with stock from various employee schemes (and some bonuses) that weren't financially in a position to buy others.

At the top you would have many employees with shares from such schemes but also, in some cases, a very large number of shares from bonuses. However, for many of these, there would be significant lock in periods. A number would have additional investments in other shares (or alternatives), though.

When things started to go wrong, and with no ability to liquidate equity (or options) in your employer, there was considerable wealth destruction. Plenty of people lost 6 (or 7) figure sums from their wealth, a number of whom lost their jobs and incomes too. (Many discovered who their friends, wives, partners really were at this point too!).

The ones that remained employed often had to work harder, and with considerably increased stress, and on occasion under the threat of investigation too.

It is easy enough with hindsight to say such people shouldn't have been naïve enough to be invested in such a way, or that they deserved to suffer in such fashion, but that masks at least some of the reality.

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Re: The 2 stock portfolio.

#220988

Postby Walkeia » May 11th, 2019, 9:54 pm

For fun, I'd go for Aquaventure holdings as I think desalination is already important globally and this trend will continue. I don't own, as I don't trade single names but have been tempted a few times because it's been difficult to find exposure to this theme.

Lastly, with Vanguard life strategy and the suit of ETF trackers available a two stock portfolio is pure gambling.

Pastcaring
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Re: The 2 stock portfolio.

#221016

Postby Pastcaring » May 12th, 2019, 8:28 am

BrianL51 wrote:I used to be on the board of a US defence company. One of my colleagues was a retired US Navy Captain, then in his 70s. He had a one stock portfolio that he swore by and which wound up making him a lot of money. When he'd first had some spare cash to save, he'd started buying shares in GE (General Electric), and over the decades he'd never bought shares in any other company. I can't quote numbers because I never knew the details, but he was extremely happy with his outcome. Investing a lot in just one stock carries an obvious risk, but he had his civilian business success and his Navy pension so he was never going to be destitute. He sadly died a few years ago now, in his late 80s, never having wasted more than five minutes now and again on his 'portfolio'. Sometimes, when I've spent time messing about with diversifying and rebalancing my portfolio of ITs, ETFs, equities, bonds etc I think of him and wonder if I'd have done better to follow his example. Then again, knowing my luck I'd have invested in Woolworths.


A perfectly normal strategy.The sheer insanity of the masses,as long as they can think of the name of a company that went bust.

A young(ish?) man, all info to hand.A pension from the US govt,a pension from the navy.GE a bulletproof company.Say 30 years of investing,built up a reasonable shareholding that has huge diversification.

Retire ,with pensions and dividend income.Live well for 20? years.Die,advise child,hang on to these,reinvest dividends for next 25 years.Child has his her own portfolio.I picked Wal Mart and JNJ. when a yank asked me years ago.Child did that,bullet proof companies,pension,401K plan

Child retires today,very wealthy,pension,401K,and dividend income.Did nothing at all.A fortune in 3 companies simply because of compou ding.Dies,grandchild is wealthy,picks two companies,shall we say Microsoft and whatever.

Has 5 shares compounding away for the next 25 years.Anytime at all can walk away and sell them.Anytime in the previous 55 years same thing,sell any time and walk away.

Grandchild now has 25 years to leave them to compound.

Wealth is created by doing that,anytime at all sell and walk away

Infinite stupidity is caused by exactly what people are always going to do

( Insert name of company here) went bust.

Ask somebody that owned shares in a company that went bust

They know somebody that owned shares in a company that went bust.

They don' t know there arts end from their elbow.

Companies don't disappear overnight.Nobody is going to wake up next Tuesday to the news that all those big companies no longer exist.They will have plenty time to get out.

The word hindsight,really dumb word,always used by people with no idea of reality.

In hindsight,nobody has ever got rich by saving up,having a well diversified portfolio,following the crowd etc.

So what are they going to do,save up,$ cost average,be well diversified,get nowhere,just keep repeating,all obvious in hindsight .

Itsallaguess
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Re: The 2 stock portfolio.

#221019

Postby Itsallaguess » May 12th, 2019, 8:57 am

Pastcaring wrote:
So what are they going to do, save up, $ cost average, be well diversified, get nowhere, just keep repeating...


This lady doth protest far too much....

These boards are chock full of people who take a much more diversified approach to their investments, and have clearly done, and are doing, very well.

Where you might be seeing yourself as doing 'better' is neither here nor there if you can't see the extra risk that you're clearly taking on by doing so.....

You say that people 'know of companies that have gone bust', and then go on to also say that 'companies don't disappear overnight', and that investors can 'get out whenever they like', which I think underplays the seriousness of some company situations where price-collapses can and do occur in very, very short order sometimes....

Cheers,

Itsallaguess
Last edited by Itsallaguess on May 12th, 2019, 9:03 am, edited 1 time in total.

Alaric
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Re: The 2 stock portfolio.

#221022

Postby Alaric » May 12th, 2019, 9:02 am

Pastcaring wrote:Companies don't disappear overnight.Nobody is going to wake up next Tuesday to the news that all those big companies no longer exist.They will have plenty time to get out..


The argument in favour of diversification and against concentration is that whilst "all" won't fail, one might. There have been examples in the UK. A usual cause is suspect or fraudulent accounting. Financial statements indicate all was well, until suddenly it wasn't. It might not even be the Company you hold that's directly the problem. Lloyds Bank ran into considerable difficulty when its management accepted a government request to take over HBOS only to find that the state of HBOS's loan book was much worse than they expected and as a consequence they themselves were in difficulty.


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