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  1. #61
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    I have no consistent rules. I collect a wide range of companies I like. Generally I like companies that generate lots of positive cashflow, and have a clear global growth strategy but I also own companies focused on NZ (but if they can't generate cash, I'm not interested, so maybe one rule).

  2. #62
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    Quote Originally Posted by Biscuit View Post
    I have no consistent rules. I collect a wide range of companies I like. Generally I like companies that generate lots of positive cashflow, and have a clear global growth strategy but I also own companies focused on NZ (but if they can't generate cash, I'm not interested, so maybe one rule).
    I don't have strong FA skills....so....
    1) I consider if the companies will still be around in 5-10 years. I don't want to lose my capital. I consider the business the sector they are operating in. Will it still be there in 5, 10, 20 years ? High level consideration. And have made a few mistakes....non serious so far.
    2) Although my focus is dividend...I will buy companies that are more risky and don't pay a dividend.
    These are always a much smaller % of my portfolio (e,g, Serko: 2.2 %) this is annoying at times.
    3) I get nervous if anything is much more than 10% of my portfolio...Currently nothing is but HGH has been in the past...hopefully again in the future.
    4) I read everything I can find on a company. All the share trader stuff (Gotta be careful with those who flip-flop eloquently or who are ramping), any reports I can get from Craigs..others.
    5) I always try to always buy on a dip. Hate buying and having it drop. This requires patience. Put the order in and forget about it. Don't chase the price up.
    6) I try to cover many sectors....and I think this has worked out OK....but is probably a fortunate outcome of opportunistic purchases rather than a deliberate plan.

    Hold about 40 stocks I guess. Takes a lot of work to keep up with. So as a few bonds are being repaid, I am considering adding to existing holdings rather than adding new ones.
    Having said that...I did buy $50K of Spark a few weeks ago..... Fingers crossed.
    Good thread...I'll add as I think through my ad hoc process.

  3. #63
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    Key issues in my books when evaluating investments:

    1) Diversification is bad!:

    The more stocks you own, the more you go towards the average returns of the market index. Naturally this is not possible to buy every stock and why would anyone? Nearly ALL registered managed funds (not hedged funds) operate in a way of diversification to the max. So how many stocks in a portfolio one should hold? Well to answer this question I look to Warren Buffet & Charlie Munger's view. Here's is word:

    https://finance.yahoo.com/news/charl...161820502.html

    He also describes the problem of fund managers thinking they're hot shot for merely doing nothing (because any dummy can do it... it's not a skillful move). I see direct parallels with how NZ Kiwi Saver funds operate this way by taking contributions, use their US broker account (which pays no commissions on trades) and buys say the Vanguard ETF S&P500 'ticker VOO' which has a 0.08% pa mgt fee but at the NZ end, they tack on a lofty 10 or 20 times figure on that % for the Kiwi Saver investors.

    2) Hold USD - after all it's the global trading currency and the standard metric that everything is compared to. So if you're going to buy stocks traded on the US exchanges (of those that are global companies that are listed there) - they only accept USD. Keep it in USD and don't try to exchange it back to NZD etc. Canadian brokers have long provided dual currency reporting for their clients to avoid the need for exchange rate conversions.

    3) Tax TAX TAX! matters big time. You look at all these fancy prospectus from fund managers to corporate listings on the NZX. They throw in figures like EBITDA (which again, Munger claims to be the most stupid thing ever taught in business class at universities around the world).

    https://finance.yahoo.com/news/charl...164228068.html

    NZ equity market maybe 1% of the global market? Why restrict your investment choice to NZ and carry on higher risk ; thinking you're doing a great job? When you look at investments around the world, you have to factor issues like taxation for which EBITDA distorts things by excluding it. BTW, when Berkshire does their annual report, they report figures NET of taxes.

    There's a lot of factors I can pick out - but then again I can assure you most people that contribute to Kiwi Saver have never heard of Warren Buffet before. Even financial advisors i've spoken to in NZ don't care about what Buffet says as 'they are beyond the scope of how NZ residents can invest'.

  4. #64
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    Quote Originally Posted by SBQ View Post
    Key issues in my books when evaluating investments:

    1) Diversification is bad!:.....
    I wouldn't go overboard on that idea. We all try to select companies we think are going to do well and allow us to outperform the market - that's part of why we invest in shares rather than just funds. Diversification is is just acknowledging that no matter how good you are, you are not a perfect selecting machine.

  5. #65
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    Quote Originally Posted by Biscuit View Post
    I wouldn't go overboard on that idea. We all try to select companies we think are going to do well and allow us to outperform the market - that's part of why we invest in shares rather than just funds. Diversification is is just acknowledging that no matter how good you are, you are not a perfect selecting machine.
    Diversification is a lame excuse by all the fund managers, that they don't know how to pick certain stocks, that will outperform the market so instead, they buy everything up and call themselves an expert because by chance, their fund portfolio marginally beats the market index return. and here we are, countless of individuals (like yourself) thinking they can do a better job than the fund managers can do.

    As both Buffet & Munger have expressed over the decades, you have a whole industry in Wall Street that preaches this kind of behaviour; those in industry thinking they can beat the market returns for their clients. But do you know what's worse? The NZ financial industry preaching this nonsense to a higher degree. The FMA says trading derivatives is bad (like it's a sin out of the Bible and no NZ resident should be practicing that habit if they have an overseas foreign brokerage account because they aren't 'Nanny' licensed approved by the FMA). Instead of educating the public, they rather POLICE the public.

    If you're going to go the diversification route ; just buy an index ETF like the S&P500. But even here in NZ, there's a habit of gouging by fund managers that do nothing more than just buying the S&P500 and jack up the management fees. For eg the Vanguard ETF range has an average mgt fee of 0.08% per year - lowest in industry. Yet Kiwi Saver funds buy their VOO, then then come out charging like 0.5% to as high as 1% a year for merely doing??? C'mon FMA, why aren't you going after these funds in NZ?

    I have friends in both Singapore and Sweden. Their gov'ts don't nanny them on the dangers of investing overseas. They freely buy & sell stocks and options on their US based brokerage accounts and side on education being the key to achieving financial freedom. A LOT more can be done in NZ but gov't isn't serious and doesn't seem to care ; keep the $ flow into NZ real estate.

  6. #66
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    Quote Originally Posted by SBQ View Post
    Diversification is a lame excuse by all the fund managers, that they don't know how to pick certain stocks, that will outperform the market so instead, they buy everything up and call themselves an expert because by chance, their fund portfolio marginally beats the market index return. and here we are, countless of individuals (like yourself) thinking they can do a better job than the fund managers can do.

    As both Buffet & Munger have expressed over the decades, you have a whole industry in Wall Street that preaches this kind of behaviour; those in industry thinking they can beat the market returns for their clients. But do you know what's worse? The NZ financial industry preaching this nonsense to a higher degree. The FMA says trading derivatives is bad (like it's a sin out of the Bible and no NZ resident should be practicing that habit if they have an overseas foreign brokerage account because they aren't 'Nanny' licensed approved by the FMA). Instead of educating the public, they rather POLICE the public.

    If you're going to go the diversification route ; just buy an index ETF like the S&P500. But even here in NZ, there's a habit of gouging by fund managers that do nothing more than just buying the S&P500 and jack up the management fees. For eg the Vanguard ETF range has an average mgt fee of 0.08% per year - lowest in industry. Yet Kiwi Saver funds buy their VOO, then then come out charging like 0.5% to as high as 1% a year for merely doing??? C'mon FMA, why aren't you going after these funds in NZ?

    I have friends in both Singapore and Sweden. Their gov'ts don't nanny them on the dangers of investing overseas. They freely buy & sell stocks and options on their US based brokerage accounts and side on education being the key to achieving financial freedom. A LOT more can be done in NZ but gov't isn't serious and doesn't seem to care ; keep the $ flow into NZ real estate.
    I agree with you up to a point. Just buying an index is pretty lame. But there is a middle ground between buying an index and buying just a couple of companies you think you know everything about. I have 20-30 NZX companies that I know more-or-less something about and have some sort of holding and half a dozen in which I have large holdings.

  7. #67
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    Pretty sound advice here
    "The 60-30-10 Rule Of Investing"
    https://seekingalpha.com/article/443...=seeking_alpha

  8. #68
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    Quote Originally Posted by Biscuit View Post
    I agree with you up to a point. Just buying an index is pretty lame. But there is a middle ground between buying an index and buying just a couple of companies you think you know everything about. I have 20-30 NZX companies that I know more-or-less something about and have some sort of holding and half a dozen in which I have large holdings.

    People need to know about currency risk. Otherwise I agree.

    Investing overseas is good for NZ as it brings new money in when the gains are realised etc.

  9. #69
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    Quote Originally Posted by Panda-NZ- View Post
    People need to know about currency risk. Otherwise I agree.

    Investing overseas is good for NZ as it brings new money in when the gains are realised etc.
    Buying something like the S&P500 takes care of the currency risk. 40% of the revenue of the companies in that index is from outside of North America. This fact is often overlooked.

  10. #70
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    Most of the smartshares investors are sitting in non currency hedged funds which will lead to losses when the currency increases.

    It's not really explained at all how that works to people who are novices.
    Last edited by Panda-NZ-; 03-06-2021 at 12:45 AM.

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