Hypothetical share purchases.

Discussion in 'Share Investing Strategies, Theories & Education' started by Steven Ryan, 18th Jun, 2015.

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  1. The Falcon

    The Falcon Well-Known Member

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    Still liking these at 10yrs in equal weight :)
     
  2. johnpendlebury

    johnpendlebury Well-Known Member

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    Interesting. Personally, not sure i could do it with 25% of my net worth. 5% maybe. But as you said, each to their own.

    I agree with your picks with regards to industries that are likely ot be taking off. we can be pretty much assured that there will be some penny stocks that will offer 100x returns within those sectors. the problem is which do you pick? failure rates are so high. in hindsight it will be easy to look and wish we had picked the company that went on to dominate a particular industry, but now, when they are nothing more than a pie in the sky dream? better off going to the cas imo.
     
  3. johnpendlebury

    johnpendlebury Well-Known Member

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    @Steven Ryan

    Without attempting to derail your thread, allow me to ask you which 5-7 companies you would invest in in terms of safety as well as continued solid (not necessarily spectacular) growth. They dont have to be from ASX. Stocks must be invested for at least 10-15yrs.

    Companies that you would invest in if you were forced to put 100% of your net worth in so protection of your capital was really important and obviously growth, and lets say it was for your children which they could access when they turned 21.
     
  4. The Falcon

    The Falcon Well-Known Member

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    The problem with sexy ideas is that everyone agrees how great they are, so the value is arbitraged away, nosebleed PEs present lead in the saddle bag that few "great" ideas can overcome. Whereas conservative, boring stuff that nobody is interested in has a habit of surprising on the upside. This is the nature of markets.

    @johnpendlebury , you want non cyclical wide moat businesses with reliable earnings and some growth. Consumer staples are a good place to look.
     
  5. Steven Ryan

    Steven Ryan Well-Known Member

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    @johnpendlebury, regarding those disruptive industries, a safer way would be to seek out EFTs (though last I looked, only biotech had a range of EFTs on NASDAQ). Let me dig up a list I made for myself a while back:

    BBH (USA 25 largest biotech only)
    XBI (USA biotech only - approx top 70 companies)
    PBE (USA biotech and genomics)
    BBP (USA biotech companies with FDA approvals)
    FBT (USA companies using biotech to produce products and services)

    Regarding your second question about having to invest everything with preservation of capital a high priority, I would NOT invest in companies. Period. There is too much risk, especially over a 10-15 year horizon. I would buy index funds only.
     
  6. johnpendlebury

    johnpendlebury Well-Known Member

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    completely agree
     
  7. The Falcon

    The Falcon Well-Known Member

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    Cap weighted indices are not defensive, they are more a large + momentum based strategy. Construction of a diversified portfolio of utilities and consumer staples with an income bias will produce much lower drawdowns than cap weighted index. Plenty of modelling around on this. Note, portfolio in this case means 20-30 stocks, not 3 or 4.
     
  8. johnpendlebury

    johnpendlebury Well-Known Member

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    yeh true
     
  9. willair

    willair Well-Known Member Premium Member

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    As long as your still a unit holder the price wise,they seem to have done well for a company i have never heard of..
    [​IMG]
     
  10. Steven Ryan

    Steven Ryan Well-Known Member

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    Meanwhile, SpaceX just made history. I don't think their private valuation of $12bil USD will remain so for long..
     
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  11. The Falcon

    The Falcon Well-Known Member

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    How much money does SpaceX make? I see an Edifice complex money burner in the making but will follow with bemused interest ;)
     
  12. Steven Ryan

    Steven Ryan Well-Known Member

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    @The Falcon,

    Being a private company, they have not disclosed revenue/profit details but are cashflow positive, have ~$5billion USD in current contracts, and do launches for $60mililion USD (approx 1/4 the cost of their nearest competitor).

    The launch cost will drop two orders of magnitude if they're done with reusable rockets–one of which was demonstrated successfully today.

    Food for thought.
     
  13. willair

    willair Well-Known Member Premium Member

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    What do you think?,is the face value price going up,or they are over positioning too much in areas that future value would be hard to value..imho..
     
  14. The Falcon

    The Falcon Well-Known Member

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    Hi mate, sorry if I am coming across a smartarse :)

    I guess its all academic, as we cant see any financials. The question is always "who doesn't know that?" particularly when it comes to these kind of sexy ideas, there is an immense weight of money interested in this stuff and legions of analysts following these kind of ideas.

    I hear your point about them being far ahead of their competitors technologically. However history shows us that these kind of technology derived advantages over competition seldom last long. This is the power of the free market system. excess returns are competed away.....and there are no shortage of current and future competitors in that space (pardon the pun) or money to fund them. Its the same kind of reason I have never considered AAPL as an investment.

    Now, the real issue with SpaceX is this Mars transporter, surely that has all the prospects of being a sinkhole for capital and cant help but feel it will be Musk's Icarus moment. I'm not going to die in a ditch over it mind you, I may well be wrong.

    All of this stuff is in the "too hard" basket for me :)
     
  15. Steven Ryan

    Steven Ryan Well-Known Member

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    @willair,
    • 50 launches currently in the pipeline at $60-$90mil each (~$200-$300k is fuel, rest is rocket which cannot be re-used)
    • Just successfully landed a reusable rocket.
    • See above.
    @The Falcon, no denying a competitive edges don't last–particularly in this case when Musk's primary goal is not to make money but develop technology to impact mankind. We saw all the Tesla patents (except battery) released a while ago.

    Musk's mars plan will require staggering innovation at every stage, many of which will have enormous commercial demand. The successful landing today was the first of many innovations toward that goal. If more follow, SpaceX are likely to do alright.
     
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  16. johnpendlebury

    johnpendlebury Well-Known Member

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    No doubt SpaceX could become a hugely valuable company.

    2-3 disastrous results and it could also go bankrupt.

    The equivalent of a biotech company that is trying to find a cure/treatment for a particular disease. It's purely a bet on whether they'll find it or not.
     
  17. johnpendlebury

    johnpendlebury Well-Known Member

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  18. Speede

    Speede Well-Known Member

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  19. cdchi1

    cdchi1 Well-Known Member

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    Refer Datto's post above yours, he got it in one :)
     
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  20. johnpendlebury

    johnpendlebury Well-Known Member

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    Nice!

    still worth jumping on?