Stock investment resources

As Austing has said, it can be as simple as VAS + QVE

And just tick DRP box. Weight 70/30 and rebalance with inflows or untick DRP when they get a bit out of balance and re weight manually.

My preference to VAS is large LICs at a discount when available. Otherwise VAS ok. Slim pickings at the moment. MLT was at NTA yesterday morning and WHF still good discount but that's about it. BKI is a LIC that has a young management team and a long road ahead, after meeting Tom Millner and having a good chat I would be very comfortable loading up on them and holding, they are also one of the better ones at communicating with shareholders. Likewise AFI and ARG are safe hands. If you want to follow the Thornhill industrials mantra then give preference to WHF/MLT/BKI.

 

Thanks for that. When i lòoked up his books they looked very familiar. I now have a few to get through! Cheers mate

 

Interestingly Tom said that they don't start with an industrials sector preference, it just works out that way when they assess via their criteria, being reliable earnings, dividend yield, dividend growth. "Industrials" is a useful heuristic though I reckon!

 

I read Motivated Money last night and it has left a huge impression on me. Almost to the point I want to sell one or two of my properties, that really haven't made any real returns. Thanks for sharing.

 

So following on from Austings good advice, @Northy85 start with something simple and in time if you get a real interest you might want to start adding direct stocks that meet the criteria you are looking for. I now do this primarily rather than use LICs but I'd say that you really need to have the interest to do this - otherwise you can just sit back and let someone else do the work.

 

Latest on Robo Investing:

2016 Australian Robo Adviser Roundup

 

I may have missed it, and have done a few google searches to no avail.
Whats the best way to compare the SP and NTA? Particularly if there are a list of LICs on a potential 'watch list'. Argo and AFIC have quite a premium at present, and could only find old information on the likes of QVE, WHT, MLT etc.
Whats the easiest place to set up a watch list that can be checked as often as needed?

 

This has been covered a few times previously in the "LIC" thread. On page 4 (#70) of that thread The Falcon's covers this. Might be worthwhile reading all pages.

Cheers

 

Thanks austing - I thought I was missing it. I've not spent much time on that thread, I remember losing the plot when I first read it... but no is the time!

 

Some more detailed coverage of selected LICs:

https://dpsi7pmz5b6vt.cloudfront.net/uploads/media/2474/LMI_December_2015.pdf

 

Working my way through Falcon's original book list and was wondering what people think of "The Intelligent Investor"? Graham's ideas seem to be the base of a lot of the others so far and was curious to know if it is worth the read or if everything in it is well covered in the other books.

Just got "The most important thing illuminated" in the post today, still haven't got through Buffett so I better get back to it.

Thanks to everyone so far, opened my eyes to a lot of ideas and new ways of thinking about things

 

As you have identified, The core themes of the Intelligent Investor are the foundations of modern "value" investing, and you will pick them up from other sources.

What you will find is that the Graham focus was very much "value" rather than "quality" based on picking up baskets of net/net stocks (stocks that are trading at a price below net current assets) with the expectation that some will go broke and some will succeed and in the mean they will outperform the market, relying on mean reversion and value effect). This worked for a very long time (and probably still does - but I'd imagine there are sectors you would need to exclude, ie. mining services!). With this method there was no consideration to any quality factors at all, and stocks would be bought solely on financials, without any interest in the business beyond the numbers below net current asset value, and sold at a point the stocks had been re-rated at a price higher than current asset value. This was very much Buffets method in the early years, the famed "cigarette butts". (businesses that the market has discarded but have one puff left).

In time, the focus changed to "great businesses at a fair price", I think that the purchase of See's candy was a catalyst for the revelation of the importance of quality factor (in See's Candy case it was the pricing power that the brand had - it could raise prices each year without any decrease in demand).

So, if you want to get indepth, by all means read Intelligent Investor, but understand that although its a foundation stone text, its not (to my mind) super critical for most to read, given that the themes will be picked up elsewhere, and to some extent the thinking has been superceded.
This is all quite debateable of course, my thoughts only.

 

That's the main thing

 

I am questioning how much time and effort I really want to put into my education in this area. Mostly because I'm looking at buying LICs and ETFs with the idea of holding them for the long term with nil active participation from me.

The other side of the coin is that it is interesting and part of me wants to try my hand at some kind of value based investing in individual shares with the goal of out performing the market. (Unfortunately) The more I read the more I think I am likely to under perform and be better off sticking with the initial approach. I guess this is where I need to be careful to allocate only a reasonable portion of my portfolio to individual shares.

Accepting average is hard.

 

I'll just add this comment from a private conversation re LICs vs Direct stocks ;

Very interesting points on direct industrial stocks vs. LIC's when it comes to yield. As an example, looking at WHF ;

WHF will declare full year divs of 17cps on a SP of say 427cps (current). Yield 4% FF.

Now, lets take a look at WHF's top holdings...CBA/WBC/TLS/ANZ/NAB, as a group I'd say 6% FF average recently. (confidential info redacted) - asked if WHF was going to increase div anytime soon. The answer was that not for a while as they had run down cash reserves during the GFC where they increased DPS from 15-17cps 2007-2009 and they needed to rebuild cash position.

So what is going on here is that the existing holders (since 2006 at least) have had a great run, but entering now when the yield available from the direct stocks is 50% higher doesn't make much sense to me!

Bear in mind we are talking about essentially opportunistically buying large industrials as held by the big LICs when opportunity presents and then holding - as they do (read through their annual reports and see how often they sell down their largest positions - they don't). Something interesting for those that don't mind putting in the work, and giving some thought to portfolio construction. Doesn't have to be that time consuming, but you would need the interest.

 

Hodor

We came across some books that may interest you that are very similar to how we were taught to value a company called Buffettology written by Mary Buffett ex daughter in law.

Please remember Buffett really cleaned up his act when he met Charles Munger he was the one that got him to buy good companies at a fair price.
As far "Intelligent investor" I haven't read it all, but make sure you read Chapter 8 , 20 and also the back about the superinvestors.

 

Thanks Intrigued, I'll take a look at Buffettology when I get the chance. Seems I'm been given two books for every one I read.

What resources does everyone use to gather information like EPS, P/E ratio, dividend, share price history etc etc? Is there a site you recommend? I use commsec at the moment, not the paid subscription if that provides any insight into what I might have available.

I think I am starting to get an idea of how to go about looking at companies in general. I was wondering which are the best books looking more closely at fundamental analysis of a company. The books I've look at some far don't seem to focus on numbers too closely.

On the initial list I haven't got the below, is either of these more what I am after?
The Economist guide to Investment Strategy , Peter Stanyer
The Education of a Value Investor, Guy Spier

 

I've just started re-reading Stanyer. I found myself skipping big chunks of it as it felt to US-centric, but I've since read Random Walk and Motivated Money, and am going to give it another chance. I think I read the first few chapters last night. From what I recall (Which is limited), it doesn't give the information you are after, it's more an overview of classes again.

 

Commsec has all the financials and ratios. I also cross check against company reports.

None of the books suggested will tell you how to value a business - there is no consensus on this, the purpose of those books is to set the scene and give you a broad background for further research. to start getting a feel for balance sheets, P&L, business models etc take a look at

The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market: Pat Dorsey, Joe Mansueto: 9780471686170: Amazon.com: Books

This is the Morningstar approach which is a value/quality shop. Their approach makes a lot of sense to me and I broadly look at things this way.

 

This is a great thread.

@The Falcon do you invest in startups whether angel/seed or follow up rounds?