LIC & LIT Most favourite LIC in the current market

You can’t say you weren’t warned @Snowball:

 

I dont know about others, but as well as looking at discount to NTA, I also use two other pricing targets such as:
(1) what my 'average share cost' has been to acquire the holding. I always try to purchase additional shares only when they are cheaper than my average cost base.
(2) what the 52wk low share price range (plus 25% of the price difference between 52wk low and 52 wk high)
so that I am always trying to buy stocks cheaper than I have previously acquired them thereby further reducing the cost base and maximising the yield. The hard part is having the discipline to delay purchasing because a stock is priced above one or more of those calculations.

 

I couldn't decide, so bought ARG and a little BKI just before the election. Then this week I really couldn't decide, so again bought ARG, MLT a little BKI.....and finally decided on some MIR so just have $13k of it now.

 

Love your work @Coconutwheels.

No getting tied up in knots aiming for perfection or deep calculations on which or which isn't better.

Like.

 

In recent years especially with ASX given market conditions this might have worked ok. Trouble is I suppose is that sharemarkets go up over time so such a system may see you sitting on the sidelines for years at a time depending on the market environment.

 

I agree @Nodrog but with holdings in BKI, MLT, WHF, AMH, QVE, MIR, SOL/BKW, RINC, URB, RFF as well as with VAS, VGS, there always seems at least one or two holdings that are at a cheaper price.

 

Bloody hell. Interesting to see some of the timing / valuation strategies employed by some. Kinda lost for words

 

Thanks.......I've certianly never been accused of being an over complicated bloke

 

You’re just jealous.

 

Having a number of LICs in the portfolio is likely helpful in that NTA variations sometimes throw up opportunities when using timing strategies.

Personally I’ve never taken any notice of 52 week highs / lows. If anything a quick look at a 10 year chart puts it all into perspective for me.

 

I used to do this.

Until I realised that only buying something when it is below your average cost, whilst expecting price growth, doesn't make any sense.

What relevance does our average cost have to the relative value of a stock in the current market?

None whatsoever.

Willy

 

Anchoring is one of the biggest mistake people make. It is usually better to buy shares that are rising. How do you know what the tangible assets are at a discount and that the company hasn't exaggerated it. May be the shorters and sellers are right and it is not really a discount . If you are going to use high risk methods you may be better to buy something that gives returns that justify the risk. You may want to study Blue Sky, buying into that as it was falling and increasing the perceived discount would was disastrous. Looking in the rear view mirror doesn't show whats ahead. Beware of falling knifes.

 

I agree with the benefit of reading a 10 year chart left to right. I guess I should ignore advice such as "LICs can trade at a premium or discount to NTA -... Don't underestimate the long term benefit from effectively buying the underlying assets of the LIC at a discount."

 

I wasn’t suggesting that and sorry if I came across as sounding critical. Buying LICs at a discount especially relative to their longer term average NTA is not a timing strategy but simply taking advantage of a unique valuation attribute of that investing structure.

I suppose I’m a market timer although being retired and not really needing more shares I take more of a risk / reward approach especially being in the earlier stage of retirement.

As long as you’re happy with your approach that’s all that matters. As time goes on and I continue to learn more and more I’ve adjusted my approach. So what I said in the past may not be what I do now. One thing though is that any changes are along the lines of the simpler the better.

 

I'm all for rule based decision making - emotion is the enemy of investment. However, ARG hasn't fallen below my initial purchase price, breaking rule 1.

A value approach has merit if you can accurately value assets, but remember that strategic asset allocation can only be ignored if you can accurately value markets. For example, you may accurately calculate MLT as the best value equity at a few points in time and continue buying it, but if your AUS/global allocation is 99/1, at some point you need to buy some VGS or PMC etc.

 

Thanks @Zenith Chaos, @Nodrog , @Fargo for all your wise words on investing. I really appreciate them. Investment decisions can never be easy and I wasn’t trying to intimate that. The recent kerfuffle about franking credits has highlighted for me the need to also look outside LICs and into other arenas such as VGS and RINC.

 

Investment decisions are not simple but the fact you realise that your willingness to learn will be your greatest assets.

 

How's that work under the never sell, live off dividends approach?

I thought the loss can only be offset against gains (from a sale/CG event) i.e. you've made a sale incurring CGT and you just so happen to have a loss from which you can offset those gains

 

Used this when simplifying the portfolio and restructuring etc.

It’s more useful to those who will need to draw down capital over time. By harvesting losses when opportunities arise these can offset capital gains later on when selling shares to fund living expenses.

 

nice aussie related post here

Tax loss selling for Australian investors | Sharesight