Stock investment resources

Discussion in 'Sharemarket Investing Platforms, Tools & Services' started by The Falcon, 22nd Jul, 2015.

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  1. oracle

    oracle Well-Known Member

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    Yes, love Buyandhold2012 posts. Very blunt but very good advice.

    Here is another one..I am sure it will put a smile on your face @austing

    Cheers,
    Oracle.
     
  2. Nodrog

    Nodrog Well-Known Member

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    This sort of material is enough to bring tears of joy to dedicated dividend investors:D.

    I can certainly relate to this guy.

    In a world of short termism and speculation these messages are more important than ever.
     
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  3. oracle

    oracle Well-Known Member

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    Somewhere in one of his posts he mentions his portfolio dividend yield is about 2.7% and his total dividend income is $520,000 per annum. That means the portfolio is valued around $20 million.

    He went on to say he has not invested more than $520,000 of his own money in the stock market. Which goes to show the power of compounding. His dividends per annum are more than the total amount he invested. Very impressive!

    Cheers,
    Oracle.
     
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  4. Nodrog

    Nodrog Well-Known Member

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    Compounding is an amazing thing. Buyandhold2012 has invested $520k over 47 years. As for the timing we don't know. But an incredible result.

    One of my favourite charts below shows that $100k invested in Aussie Industrials 36 years ago through the power of compounding resulted in $10.288 mil (excluding franking credits). Any wonder they call it the eighth wonder of the world. And people wonder why I'm such a dividend fanatic.

    IMG_0025.PNG
     
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  5. The Falcon

    The Falcon Well-Known Member

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    For those that are interested in "Quality" factor, Pat Dorsey (ex Morningstar US) talk at google covers sources of economic moat, business models and management. This is as good a quick summary as i have seen. Some will find it interesting and perhaps think about businesses in the local context and how they fare.

     
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  6. Anne11

    Anne11 Well-Known Member

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  7. Nodrog

    Nodrog Well-Known Member

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    Thought it worthwhile reposting this here also:

    SUMMARY OF Book "ELEMENTS OF INVESTING" (Malkiel & Ellis)


    OK couldn't resist. Albeit a committed dividend investor due to Australia's unique investing environment in particular I purchased the above book (only $16 for kindle edition) the preceding video was based on. An excellent simple and short book for beginners and experienced investors alike. Here's some comments and a summary. @Redwing, @Ross Forrester and other Index fans here will enjoy this except for the revised bond section toward end of summary.

    It's a basic book as expected and some might think it aimed toward beginners. But the reality is the data supports what these wise old heads say so the message is just as important for experienced investors who as we know get off track due to behavioural factors. This is reinforced by related comments in the book's introduction:
    "How surprising to us that everything of importance on such a heady topic can be reduced to rules you can count on one hand. Yes, investing can be that simple if your brain remains unclouded with taxing complexities. These rules will truly make a difference . Our promise: Reading this book will be the best time you could spend to put yourself on the right path to long-term financial security. Then, over your lifetime, you can pick this book up again to scan its lessons and remind yourself what is elemental if you want to turn a loser’s game into one you can really win."

    Only a rare few Mgrs will beat the Index but impossible to pick them in advance. Buffet is more than just a fund mgr in adding value.

    Prefer Total Stock Market index to S&P 500 as important to own SMALL CAPS for growth.

    Owning International (including Emerging Markets) important.

    Confession from authors (nobody's perfect). Ellis and Malkiel have all their "retirement" savings in index funds BUT Ellis has owned BRK for 35 years (checks its share price daily) and Malkiel delights in buying individual stocks and has a significant commitment to China. He enjoys the game of trying to pick winners and believes “China” is a major story for his grandchildren.

    Diversify across asset classes: shares, bonds (changed in this updated edition, see later comment), property, commodities and gold. But don't own real estate, (other than own home), commodities and gold directly but through related companies in the index.

    Diversify across markets: US, International developed and Emerging Markets.

    Diversify across time = DCA.

    Rebalance annually (or perhaps > 10% out of balance?): keeps risk at original pre-defined level (SANF); equates to selling high, buying low; may enhance performance especially in volatile markets (eg US lost decade was quite profitable due to DCA in particular and annual rebalance).

    There was basic discussion on the extremely important area of behavioural investing issues (eg timing, overconfidence) but essentially solved by buying low fee index fund and DCA (no matter what mood the market is in). Diversification reduces anxiety.

    Maintain a cash reserve.

    Focus on what you can control - low fees and any tax minimisation strategies.

    Focus on major investment categories. Avoid “exotics” like venture capital, private equity, and hedge funds.

    Asset allocation (shares / bond split). Ellis prefers more shares as growth still needed in retirement (living longer, inflation etc):
    Age Group / Percent in Stocks / Percent in Bonds: 20 to 30s 100 / 0; 40s 90–100/10–0; 50s 75–85/25–15; 60s 70–80/30–20; 70s 40–60/60–40; 80s and beyond 30–50/70–50.

    Sample Portfolio (prefer broad market indexes as includes small caps and emerging markets):
    1. Total world stock market + Total US bond market OR
    2. Total US market + Total world (ex-US) market + Total US bonds market.

    Book being revised edition (2013 vs 2009) authors feel bonds now offer way too low returns and higher risk going forward for a considerable time. So other then cash reserve replace bonds with following:
    1. Foreign bonds in countries that have much better fiscal balances than we have in the United States can be attractive today. An example would be Australia, where high-quality bond yields are in the high single digits. Australia has a low debt/GDP ratio (about 25 percent), a relatively young population, and abundant natural resources, making its future economic prospects bright. Its currency has been appreciating against the U.S. dollar. High-quality Australian bonds were available at yields of around 8 percent in early 2012 (well that was then).
    2. Diversified portfolios of high-quality emerging market bonds.
    3. Substitute a portfolio of blue-chip stocks with generous dividends for an equivalent high-quality U.S. bond portfolio (he he, go dividends:)). Many excellent U.S. common stocks have dividend yields that compare very favorably with the bonds issued by the same companies—and their dividends are likely to rise steadily in the future.

    "Finally all wives and all husbands should be sure they both know all the facts about their investments. And because we are each different in our emotions about investments, markets, and money, families should strive again and again to share their thoughts and feelings so they can understand each other and make decisions together."

    Related video:
     
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  8. Anne11

    Anne11 Well-Known Member

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    Howard Marks - The truth about investing



    About an hour to watch. Key takeaways for me:

    • 2nd level thinking: you need to know about something others don't
    • Investing is not a matter if buying goid things but buying things well ; example of the Nifty-Fifty: buying the fastest 50 growing companies in the 50th, some of them no longer in business etc..)
    • No one can predict the future, no point to focus on marco, events often fail to materialise due to randomess. We can make decisions based on what is happening today, asking: is this a good time to be aggressive or defensive.
    • Can enhance returns and reduce risks by buying assets below value, the bigger the discount the larger the margin of safety.
    • It is important to be patient to wait for events with higher returns, lower risks ( such as in a market meltdown).
    • Investment opportunities are not distributed equally over time so you should look at the climate to decide whether to invest agressively or not.
    • You must do the opposite of what others do in the extreme.
    • Need to have a process, conviction and patience.
    • Must be willing to not participate in things that go up, only things that fit your approach.
    • Every investment approach at some points will run into an environment that is ill-suited, period of poor performance.
    • Controlling risks is as important as indentifying opportunities.
    • Oaktree's motto: avoid the losers and the winners will take care of thgemselves.
    • Risk management is not science but subjective qualitative judgements.
    • Only a few hedge funds are run by geniuses. Most hedge funds are not good, and won't beat the index.
    • Need to have reasonable expectation of returns.
     
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  9. Anne11

    Anne11 Well-Known Member

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  10. Hodor

    Hodor Well-Known Member

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    Thanks @Anne11, I haven't watched it yet, Howard Marks is someone I always get a lot from. That is an excellent summary you have made up.

    Correct me if I am wrong, my understanding of "2nd level thinking" isn't needing to know something that others don't. It is having the same information and been able to come to a different conclusion by analysing and thinking about it differently.

    You have to think differently and you have to be right. Which is the crux of the problem where the market is quite efficient and mostly the experts are right (or right enough it is difficult to extract much value), finding the scenarios where the general consensus is wrong based on the same information is where the value is.

    If only I knew how, something that doesn't come very naturally to me at all unfortunately.
     
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  11. Nodrog

    Nodrog Well-Known Member

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    I'm too dopey to ever be any good at second level thinking. So I make the most of the one thing I am good at:
    "You must do the opposite of what others do in the extreme."

    Little skill required for this but the right psychology paramount.
     
  12. The Falcon

    The Falcon Well-Known Member

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    Listened to most on the drive in to the office. I've always been a huge fan of Marks but this may be his best work. Excellent. Highly recommended.
     
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  13. Hodor

    Hodor Well-Known Member

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    Excellent point. Doing one thing well can be enough to turbo charge returns.
     
  14. Anne11

    Anne11 Well-Known Member

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    Hi Hodor, You are right. Howard said "in order to have 2nd level thinking, one has to think differently from everybody else, but in being different, you have to be better"
    His talk at Google :
     
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  15. Hodor

    Hodor Well-Known Member

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    @Anne11 finally watched the entire truth of investing, very insightful. Thanks again.

    Howard inspires me to be better and find a way to outperform, yet drives home just how difficult it is. I am working on a list of things that can be reasonably done (by myself) to improve performance and a list of things that cannot.
     
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  16. The Falcon

    The Falcon Well-Known Member

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    Canadian Couch Potato...good blog.

    Plenty on on factor / smart beta some will find educational.

    Canadian Couch Potato

    Lots of other stuff will have some application.
     
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  17. Anne11

    Anne11 Well-Known Member

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  18. Anne11

    Anne11 Well-Known Member

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    Charlie Munger invests mainly in 3 stocks (BRK, Cosco and something else I could not understand). A bit long but worth listening. He does not believe in diversification as he knows what he is doing.
     
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  19. The Falcon

    The Falcon Well-Known Member

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    Probably Daily Journal co? Thanks @Anne11 will watch.
     
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  20. The Falcon

    The Falcon Well-Known Member

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    Ellis is one of best. Goldman Sachs insider, Investment board advisor for the Yale endowment, wrote that seminal paper "the losers game" etc. anything from him is worth read / listen / view.
     
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