Black Monday

[Traderx]

Something else that I take from this is that to lose $100k in one stock means you either have a large portfolio or you were not well diversified in the first place. I don't like to keep choosing Couta's examples but he does put himself out there so hopefully doesn't mind the discussion.

For me that would be a massive chunk of my portfolio and I can't imagine myself ever putting so much on the line on one company no matter how good the prospects look. I typically have about 8-12 stocks, half of which are international. I do consider my portfolio to be buy and hold although if the circumstances change, I'm not opposed to selling. For those 8-12 stocks, I don't like any of them getting above 12% of total portfolio although that does sometimes happen and its more of a guideline than a firm rule. I'm not suggesting this is the way to go but for me, its something I feel comfortable with and allows me to focus on their results and forecasts.

Diversification is the only free lunch in finance, and I would suggest that 8-12 should be bare minimum, 20+ would be more acceptable. If that can't be done economically then the majority of your holdings should be in widely diversified funds (i.e index funds) with perhaps a small amount of individual holdings if you must.

My 2c based on my research of what actually works.

[Nasi Goreng]

That's a fair call. I should have said that 2 of my 12 are currently etf's which don't get talked about a lot on here but are a great investment vehicle for certain sectors. I hold IXJ and XLF which were both doing really well until a few weeks ago. I recently sold IEU, European ETF during the Greek crisis. I thought selling that was a mistake as NZD and AUD both tanked and Euro stocks were rebounding which made me look a bit silly but the last few weeks have made me feel better about that decision.

[benjitara]

If you subscribe to the Buffet/Graham philosophy you would only be buying stocks at substantial discounts to value - which is impossible in current markets. !

There have been a number of companies trading at well below their intrinsic value over the past two years in the New Zealand stock market. Value investors still have had ample opportunities to acquire value at large discounts lately.

[h2so4]

Something else that I take from this is that to lose $100k in one stock means you either have a large portfolio or you were not well diversified in the first place. I don't like to keep choosing Couta's examples but he does put himself out there so hopefully doesn't mind the discussion.

For me that would be a massive chunk of my portfolio and I can't imagine myself ever putting so much on the line on one company no matter how good the prospects look. I typically have about 8-12 stocks, half of which are international. I do consider my portfolio to be buy and hold although if the circumstances change, I'm not opposed to selling. For those 8-12 stocks, I don't like any of them getting above 12% of total portfolio although that does sometimes happen and its more of a guideline than a firm rule. I'm not suggesting this is the way to go but for me, its something I feel comfortable with and allows me to focus on their results and forecasts.

You have some portfolio rules that sound ok. Stick to it.

Something I think Mohnish Pabai does is dump all his excess funds money into one stock if he can't find any suitable investments. That stock is Bershire Hathaway.

[twotic]

That's a fair call. I should have said that 2 of my 12 are currently etf's which don't get talked about a lot on here but are a great investment vehicle for certain sectors. I hold IXJ and XLF which were both doing really well until a few weeks ago. I recently sold IEU, European ETF during the Greek crisis. I thought selling that was a mistake as NZD and AUD both tanked and Euro stocks were rebounding which made me look a bit silly but the last few weeks have made me feel better about that decision.

Yup, ETFs IMO should be discussed more. They are a great way to diversify, particularly for investors that don't have a whole lot of money to diversify by buying lots of individual stocks. I held several ETFs from roughly 2010 to 2014 and did really well with limited stress. I did my research on them all, picked the sectors/countries I liked (health, property, IT, US) and just sat back and watched them for 4 years. The fees are a downside, but if you get in during a solid bull market you can handle the fees no probs. The other issue I had is that Direct Broking didn't offer many and I had to go off shore for a few (increasing the fees even more).

[Hoop]

Twotic i sold at $2.10 not $1.30 anyway the principle still stands that those holding long would have lost nothing.(I'm not going to rehash the whole sorry saga step by step again) PS-Remember also that the National Govt had strongly indicated that they would overide the ComCom if they cut the Copper price giving many of us reason to hold onto the stock that bit longer.

Couta you did the right thing getting out of your long term investment at $2.10..It was a sudden drop so getting out would've be hard to do...For many people ushing the sell button is a very hard thing to do..so well done Couta....TA had earlier sell signals but I won't harp on about TA here as the modified more active Buy and hold long term strategy mentioned below succeeds without using TA..Couta you achieved the capital preservation mission of getting out and let CNU continue falling without you...

Where you failed was forgetting your previous objective which was wanting CNU as a long term stock in your portfolio...therefore, you didn't have a plan to get back into CNU.

After about 20 years of long term investing using buy and hold strategy and getting nowhere.. I refined my buy and hold principles but kept to my long term objective as still having these shares at some future date..However when those rare bear cycles came around I sold and then later bought back in. Back then without using TA ...I never tried to time a top to sell out and never tried to time a bottom to get back in...That didn't matter so much in the very long term..

With the money from the previous sell I managed to buy all my shares back at a cheaper price and end up with more shares than before

E.g Chorus..Ok sell all 100,000 @ $2.10 as the share price is diving, as you did Couta....CNU flattens out at $1.40 is this the end? maybe, maybe not..you wait for a possible next wave of selling it doesn't happen so you buy in with the money you sold out with at lets say $1.70 and instead of having 100,000 shares this time you now have 123,500 shares and a better future yield rate for your original capital outlay as your original long term buy and "hold?" objective is now back on track.....

[benjitara]

Or are those companies trading below value because they are dogs with poor future prospects? Just because something is cheap doesnt make it a good investment either.

There's a big difference between a dog and value. and it's generally easy to see. I'm also against diversification in a portfolio. That's ridiculous in my book. a limited amount of stocks, bought under intrinsic value with sound future prospects is a solid position to find yourself in.

[ratkin]

Yup, ETFs IMO should be discussed more. They are a great way to diversify, particularly for investors that don't have a whole lot of money to diversify by buying lots of individual stocks. I held several ETFs from roughly 2010 to 2014 and did really well with limited stress. I did my research on them all, picked the sectors/countries I liked (health, property, IT, US) and just sat back and watched them for 4 years. The fees are a downside, but if you get in during a solid bull market you can handle the fees no probs. The other issue I had is that Direct Broking didn't offer many and I had to go off shore for a few (increasing the fees even more).

Have been having a good look at some of those listed in oz. Many of the commodity ones will be very interesting once they actually bottom out

[Daytr]

Yeah the ones that survive. Ones that aren't loaded up with debt are likely to survive to state the bleedin obvious.

A couple of holidays to note coming up with Labour day in the US on Monday and I think China is out for most of next week to celebrate victory over Japan day and as its a big anniversary they are doing week long celebrations I think this year rather than just a 1 day observance.
So markets could get interesting if they aren't already in the next couple of nights. Cash will probably be king, so it may depend if the market is currently short or nervous longs want to cash up.
Typically in the US markets this ti e of year are a snooze, not this year!

Have been having a good look at some of those listed in oz. Many of the commodity ones will be very interesting once they actually bottom out

[twotic]

Have been having a good look at some of those listed in oz. Many of the commodity ones will be very interesting once they actually bottom out

Good luck I don't know anything about commodities but I presume tides will turn again eventually. When they do I guess there will be a bunch of $ top be made.