Peter Thornhill 2018

Two rules, another disqualification.

 

Ok I think I’ve got it:

Ask Peter Thornhill

 

You’ve obviously had too many G&T’s last night. Sound grumpy and confused. So that rule is eliminated from the contest as a result. Take some aspirin, come back when recovered then Try again.

 

So unkind.

No G&T. Changed my mind to for White Rabbit and only one. A nice dark beer.

 

Great choice the WR, one of my favourites

 

Noooooo, you're a glutton for punishment, and asking for 101 threads of 'what should I buy'....

 

"The first rule of LIC Fight Club is: you do not talk about LIC Fight Club. The second rule of LIC Fight Club is: you DO NOT talk about LIC Fight Club! Third rule of LIC Fight Club: if someone yells “stop!”, goes limp, or taps out, the fight is over. Fourth rule: only two guys to a fight."

 

The summary guru has spoken...

 

No problems


GGUS up 35%
IJP up 10% since Aug
IVE up 18%
IEU up 19%
MPL up 18%
PLS up 17% since Oct (I got into it very late)
TECH up 12% since June

..and a few more that have done <10% and these numbers exclude dividends

 

Noticed most of the old big LIC's have similar holdings. Was thinking during accumulation phase ( 2k every quater etc ) buy those common individual stocks and when there is an opportunity ( LOC money or market is down due to some bad news ) pump in big money to purchase LIC's.

The main advantage is ,would save the management Fee from LIC's and when I buy in big chuck get good diversification.

Does this strategy make sense ?

 

NOPE!

 

The purpose of the managers is so that they manage the share allocations for you - set and forget. From what i understand of yYour approach, you're doubling up on the shares that are inside the LICs - no real benefit there? ?

 

When the markets down your chosen LICs may be trading at a decent premium, in which case VAS could be a better option.

As @Nodrog says, LICs when premium/discount is reasonable, othrrwise VAS, regardless of the market status. That makes sense to me.

 

Also means you are going to get even greater exposure to the stocks they all hold.

 

Increasing the risk these shares/companies may bring. The LIC managers know what's happening in the market way before us plebs do, and buy/sell accordingly.

 

More than anything it comes down to the amount of work involved and a heap of transaction costs.

 

thank you for your valuable input guys. Every day learning something new.

 

Latest My Say from Peter Thornhill:

Reprise. - My Say No 56
24-01-2018 17:33:36

Welcome - Motivated Money

 

In regards to Peter Thornhill's suggested use of line of credit for investing in shares on pages 92-93 of his latest book, could I have some assistance from those good with excel or maths in working out the financial dynamics for a suggested example?
Say I have a home loan of $150,000 at 3.79% interest with P&I repayments at $8,400pa.
I also have a LOC of $200,000 at 4.47% interest with interest only repayments at $8,940pa.
I believe that these are both separate.
Total repayments would be $17,340pa or $1445 per month and would initially need to be funded from salary (and other sources)as the payments are normally required monthly.
The line of credit of $200,000 could purchase roughly 43,572 x Milton shares at $4.59 per share. Those 43,572 shares would normally return
1. Dividends of ($0.187 per share) $8,147.96 +
2. Franking Credit of ($0.043 per share) $1,873.59 plus
3. Tax deduction of loan costs of $8,940 (say at $0.325) equaling $2,905.50.
The dividend, franking credit and tax deduction would total $12,927.05.

After deducting the LOC loan interest repayment of $8,940 a surplus of $3,987.05 exists and is deducted from the home loan.

A similar amount of MLT shares is purchased via Line of Credit at $4.95 being 868 shares to start the process for start Year 2.

Is this how Peter's proposal example works? I guess in practical circumstances, as the Line of Credit is limited to $200,000 in the example, it would initially need to start at a figure less than $200,000 (say $150,000) as $200,000 would be the upper limit of funds available for use - is that correct?

Any help is appreciated.

Ynot