My Strategy has remained the same since the collapse of the stock markets in 2008, which is to buy on dips. The main reasons I remain long are:
1. Valuations look attractive long term, low P/Es and high dividend yields vs. cash and govnt bonds
2. Dividends 2 or 3 times the return of cash and government bonds which is no more than 3%
3. Bernanke will print money no matter what it takes, to put growth into the economy. This will create inflation and stocks are the best place to be when inflation picks up. Those investors holding money in cash are received a negative return after inflation at the moment
4. Trillions of dollars/£s of hedge fund and pension’s money is sitting on the sidelines even after the recent rally.
However I do know that the stock markets can fall, as well as rise and therefore I have a diversified strategy. The main pillar of my portfolio is high income shares like Vodafone, AstraZeneca, BP, Glaxo, United Utilities, National Grid. I hold a lot of safe utility stocks for the income and capital preservation. I also have alot of corporate bonds for high income of up to 8% gross.
Then on top of this I hold economic sensitive stocks, such as the banks and insurance companies, which are significantly undervalued, especially Lloyds Banking Group. I am also long China, Russia, emerging markets for the long term.
Recently I have increased cash as a proportion of my Portfolio, ready to buy on dips in a correction in the stock market. Averaging down is an important part of increasing returns over the long term.
Tuesday 27 March 2012
Wednesday 20 July 2011
Still long BskyB, added more to Lloyds at 42.7p
I am going to stay in Bskyb(they are currently £7.42) from £6.96. £7 looked like support to me and now there is talk of a special dividend of up to £1.30, as they generate so much cash.
I have now added to my holding in Lloyds at 42.7p. I have taken a beating on them this year but they are trading well below even book value, due to the Europe debt fears. My target is 50-55p before I think about selling. This is a very risky trade to be in but I am a contrarian and go against the trend, when I think a company is undervalued.
I have now added to my holding in Lloyds at 42.7p. I have taken a beating on them this year but they are trading well below even book value, due to the Europe debt fears. My target is 50-55p before I think about selling. This is a very risky trade to be in but I am a contrarian and go against the trend, when I think a company is undervalued.
Monday 11 July 2011
Friday 1 July 2011
The bull market remains intact (for now)
Hi all,
Sorry I have not blogged for a while. I am still a buyer of dips. The long term S&P bull market channel is still intact, valuations are not stretced and I have been adding longs into the dip. Particularly still favour high yield stocks like Vodafone, AstraZeneca, National Grid etc. But I have also been adding holdings in growth sectors, mainly large caps in the US, like Cisco and Intel.
I will update further over the coming week
Sorry I have not blogged for a while. I am still a buyer of dips. The long term S&P bull market channel is still intact, valuations are not stretced and I have been adding longs into the dip. Particularly still favour high yield stocks like Vodafone, AstraZeneca, National Grid etc. But I have also been adding holdings in growth sectors, mainly large caps in the US, like Cisco and Intel.
I will update further over the coming week
Saturday 16 October 2010
Buy on dips
Hi all,
The market has continued to rally strongly since my last post. I am still a buyer of dips but most of my investment went in, when the ftse was 4800 to 5000 and the Dow 9800 to 10000. As you can see from the chart below, I think we are in a bull market channel at the moment. And even though equities are starting to look overvalued in certain areas, money printing from the US and other central banks could push this market higher to the top of the channel above even 1300 on the S&P.
However from my own investment perspective, I become more cautious as we go higher. So far my investment portfolio is up 9%(after tax) YTD, vs. my cash holdings which are only going to make 2.5%. I want to protect my gains and look to buy on dips into shares that are undervalued by Mr Market.
I sold half of my BP holding at £4.40, as it became 7% of my portfolio - it rallied from £3 to £4.40. Although I think BP is a buy at its current price, I do now want to have all my eggs in one basket because that is where I have suffered in the past.
So I then bought HSBC, with the money from BP. I think they are undervalued and the strongest European bank. They have both growth in their core markets, mainly from Asia and they offer the prospect of growing their quarterly dividend payments. Of course there is still a risk the financial crisis will come back but I think they have the best chance of surviving a 2nd round, if it happens.
I have also invested more into Japan. This is my contrarian pick for the next few years. Japan shares are written off and have been for almost 20 years. But I think this is the time to buy. Everyone ignored gold and wrote it off and look now? This is why I buy when everyone else is selling.
I will update further in the next few weeks. Stay nimble and be careful out there. Do not risk more than you can afford to lose.
The market has continued to rally strongly since my last post. I am still a buyer of dips but most of my investment went in, when the ftse was 4800 to 5000 and the Dow 9800 to 10000. As you can see from the chart below, I think we are in a bull market channel at the moment. And even though equities are starting to look overvalued in certain areas, money printing from the US and other central banks could push this market higher to the top of the channel above even 1300 on the S&P.
However from my own investment perspective, I become more cautious as we go higher. So far my investment portfolio is up 9%(after tax) YTD, vs. my cash holdings which are only going to make 2.5%. I want to protect my gains and look to buy on dips into shares that are undervalued by Mr Market.
I sold half of my BP holding at £4.40, as it became 7% of my portfolio - it rallied from £3 to £4.40. Although I think BP is a buy at its current price, I do now want to have all my eggs in one basket because that is where I have suffered in the past.
So I then bought HSBC, with the money from BP. I think they are undervalued and the strongest European bank. They have both growth in their core markets, mainly from Asia and they offer the prospect of growing their quarterly dividend payments. Of course there is still a risk the financial crisis will come back but I think they have the best chance of surviving a 2nd round, if it happens.
I have also invested more into Japan. This is my contrarian pick for the next few years. Japan shares are written off and have been for almost 20 years. But I think this is the time to buy. Everyone ignored gold and wrote it off and look now? This is why I buy when everyone else is selling.
I will update further in the next few weeks. Stay nimble and be careful out there. Do not risk more than you can afford to lose.
Monday 13 September 2010
"I am a huge bull on this country" - Warren Buffet
I`m still not yet able to share Warren Buffets enthusiasm for the future of the US stock market but I still believe that stocks are the better asset class to hold, whether or not there is a double dip or weak growth in the global economy. Government bonds are at yielding at near 30 year lows, at 2%, cash is no better but still shares can give you a yield of 5-6%, even with the latest rally.
Vodafone are a good example. I tipped them on this blog at £1.32. They are now £1.60 and their dividend is over 5%. that’s a total return of 26% currently, 12 times what you would get in cash!
One of my best tips on this blog is AVIVA, they are up 34% since I tipped them at £3.05. With the dividend on top, it’s near 40% return.
As we have seen my biggest mistake was BP. I have managed to reduce my avg buy price to £4.50 and still optimistic that they are undervalued and will sit tight for the long term. The oil spill was what I call a "black swan" event. It happens to every investor and this is why you need a strategy, to be able to cope with disasters like this.
This is why I never hold more than 5% in one investment, so in the unlikely event that BP had gone bust, I would have still had 95% of my Portfolio remaining.
YTD the investment portfolio is up 7.5% vs a 3% gain on the FTSE100. A couple of disappointing investments such as BP and absolute return funds, have held back the performance of my Portfolio but there is still 3.5 months of the year left and many of my holdings still look undervalued and overlooked by "Mr. Market"
GlaxoSmithKline, AstraZeneca, BP, Vodafone (the Big safe blue chips) particularly have further to run in my view....
Good luck all!
Vodafone are a good example. I tipped them on this blog at £1.32. They are now £1.60 and their dividend is over 5%. that’s a total return of 26% currently, 12 times what you would get in cash!
One of my best tips on this blog is AVIVA, they are up 34% since I tipped them at £3.05. With the dividend on top, it’s near 40% return.
As we have seen my biggest mistake was BP. I have managed to reduce my avg buy price to £4.50 and still optimistic that they are undervalued and will sit tight for the long term. The oil spill was what I call a "black swan" event. It happens to every investor and this is why you need a strategy, to be able to cope with disasters like this.
This is why I never hold more than 5% in one investment, so in the unlikely event that BP had gone bust, I would have still had 95% of my Portfolio remaining.
YTD the investment portfolio is up 7.5% vs a 3% gain on the FTSE100. A couple of disappointing investments such as BP and absolute return funds, have held back the performance of my Portfolio but there is still 3.5 months of the year left and many of my holdings still look undervalued and overlooked by "Mr. Market"
GlaxoSmithKline, AstraZeneca, BP, Vodafone (the Big safe blue chips) particularly have further to run in my view....
Good luck all!
Friday 20 August 2010
BP and Severn Trent/Imperial Tobacco update
Hi all,
Although I don`t generally do this, I have resorted to some short term trading in BP, to bring my average buy price down. I sold some of my £4.22 holdings for break even a few weeks ago and have now just re - bought at £3.79. So I have 2 lots under £4 but offset against the ones I bought at £5.68 and £5, my average is £4.30. Although this was not the original plan, I am happy to hold BP for the long term at that price, looking for £5 again next year.
Severn Trent is now £12.85, from £13.41 when I sold. I am very happy I took some profits in the Portfolio. Never be scared to take profits, even on a good asset such as Severn Trent. Imperial Tobacco look good value and holding above the £18 support line currently, even as the market falls. A very good defensive asset to hold in times like these.
The world markets are very weak at the moment, as fears of a double dip continue to persist. My view is that equities, especially high yield ones look too cheap relative to other assets such as govt bonds, cash or property. Even with a double dip scenario, I think defensive companies such as GlaxoSmithline, AstraZeneca and National Grid with yields of 5-6.5% will outperform cash(with rates unlikely to go up anytime soon)
Just make sure you have a diversified Portfolio and "hold at least your age in cash". That is the absolute minimum weighting I would have in cash because you never know what black swan event is round the corner. Then if the market tanks further from here, I you will have cash remaining to buy into further weakness and average down your holdings for the long term.
Although I don`t generally do this, I have resorted to some short term trading in BP, to bring my average buy price down. I sold some of my £4.22 holdings for break even a few weeks ago and have now just re - bought at £3.79. So I have 2 lots under £4 but offset against the ones I bought at £5.68 and £5, my average is £4.30. Although this was not the original plan, I am happy to hold BP for the long term at that price, looking for £5 again next year.
Severn Trent is now £12.85, from £13.41 when I sold. I am very happy I took some profits in the Portfolio. Never be scared to take profits, even on a good asset such as Severn Trent. Imperial Tobacco look good value and holding above the £18 support line currently, even as the market falls. A very good defensive asset to hold in times like these.
The world markets are very weak at the moment, as fears of a double dip continue to persist. My view is that equities, especially high yield ones look too cheap relative to other assets such as govt bonds, cash or property. Even with a double dip scenario, I think defensive companies such as GlaxoSmithline, AstraZeneca and National Grid with yields of 5-6.5% will outperform cash(with rates unlikely to go up anytime soon)
Just make sure you have a diversified Portfolio and "hold at least your age in cash". That is the absolute minimum weighting I would have in cash because you never know what black swan event is round the corner. Then if the market tanks further from here, I you will have cash remaining to buy into further weakness and average down your holdings for the long term.
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