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Archcavalier · 964 · 246831

Archcavalier

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on: Jan 19, 2012, 07:50 PM
Anybody care to share their portfolio to newbies?

How many companies should idle be in a portfolio?
How should you diversify your portfolio in sectors?
« Last Edit: May 25, 2012, 11:26 AM by FutureGizmo »


bauer

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Reply #1 on: Jan 19, 2012, 11:14 PM
Anybody care to share their portfolio to newbies


My portfolio consists of 1 long term stock (more than 10yrs holding period), 4 medium term stocks ( 2 to 5 years holding period), 2 short term stocks (within 1 year holding period)

Post Merge: Jan 19, 2012, 11:18 PM

How many companies should idle be in a portfolio?


It depends on your total funds and how many you desire to hold. But seriously, our local stocks selection lists is very few so holding more than 10 stocks in a market with only 200 plus stocks is quite large considering that only 1/3 of those stocks is traded on a daily basis which becomes even smaller.  I believe that more than 10 stocks holding is just a "mimic" of the general market trend of the Pse index (assuming you select the right stocks)

Post Merge: Jan 19, 2012, 11:21 PM

How should you diversify your portfolio in sectors?

There are a lot of factors in considering a diversified portfolio, the best way is you should have a good analysis where is the sector that has a good potential for growth in a timeline that you predetermined.
« Last Edit: Jan 19, 2012, 11:23 PM by bauer »


TSO

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Reply #2 on: Jan 20, 2012, 12:52 AM
Anybody care to share their portfolio to newbies?

How many companies should idle be in a portfolio?
How should you diversify your portfolio in sectors?

1. US: 6 companies. Philippines: 7 companies. All of them to be held for the medium-term.

2. Depends on the size of the market. Philippines very limited, as bauer said, so it's not a problem to have less than 10. United States... most investment gurus have 15 to 20.

3. There is no fixed rule about this. Just be vigilant about bubble environments. Once you're invested in a company, you need to be on top of every news bit about it, especially if it has something to do with its industry. Top-down approach works when you're going for a growth analysis, but when you identify stocks from the ground up like me, well... :D


Archcavalier

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Reply #3 on: Jan 20, 2012, 03:48 AM
If you guys are holding for that long does that mean your holding Stock Certificates?

At the end of the day, it really does depend on you capital.
If you going to hold for the long run that would mean you guys have at least hundred thousand shares, right?

For me, it would be just stupid to hold something that long and only have less than 10K worth of shares. That money could have been spend on better things, right?


ferrariEverest

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Reply #4 on: Jan 20, 2012, 03:59 AM
At the end of the day, it really does depend on you capital.
If you going to hold for the long run that would mean you guys have at least hundred thousand shares, right?

For me, it would be just stupid to hold something that long and only have less than 10K worth of shares...
it depends on capital AND knowledge/experience.


hypothetical but realistic example:
value of 100k shares worth P1 each = P100,000
value of 10k shares (or less) x P100 = P1,000,000
would u still say holding 10k shares (or less) is plain stupid? i dont think so.
it's a matter of relativity.


& assuming one was only able to hold 10k shares for a long period of time.. & assuming the market made a good move during such period... i bet his profit would still beat returns of some/most investors/traders who did active investing/trading.


TSO

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Reply #5 on: Jan 20, 2012, 07:23 AM
Cavalier,

Yes, in the end it really does depend on capital.

Because if you're not large enough, you won't be able to afford a lot of shares in the market. Put another way, you can't diversify because the round-lot system obstructs you from doing so (odd-lots are illiquid and supposedly more expensive).

In this regard, it borders on insanity for someone to throw in P5K in the market, OR in a mutual fund like PhilEquity or First Metro and look at his funds in the medium term because he can easily gamble it away in a casino or in short-oriented, frequent trades.

But on another regard, because of the inability to spread it across industries, the guy has a stronger incentive to be more thorough. Sure, in the long run, 5K is nothing even if he earns 15% per year for the next 10 years. But this completely ignores the fact people are dynamic, shunning the strong possibility the player will deposit more money in his nest egg. Throwing in 5K every month under the same annual rate of return for three years results in 225K. a 25% cumulative profit above the total 180K deposited over the same time period. (For comparison's sake: the PSE index since June 2009 to date has earned 27.5% p.a.)

What if this person suddenly decides to pool part of his money with a few friends? That 225K could easily double and that's a good start to become a money manager. Warren Buffett himself started with $105K in 1955, spread across friends and family -- that's almost $882K in today's money, given a 3.17% 56-year inflation.

That sounds like a big sum to us Filipinos, but taken into local context, that $882K is roughly equivalent to P100K, i.e. a tiny insignificant drop in the bucket.


Archcavalier

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Reply #6 on: Jan 20, 2012, 03:58 PM
I do agree with long term investment the profit is double million as compared to short term goal especially if you have big capital.

Lets Say,

Guy A has 100 share held for 10 years.
Guy B has 10 shares held for 10 years.

with the same company with a growth of 400% in 10 years.

Guy A would have 400 as profit.
Guy B would have 40 as profit.

As oppose that Guy B did short term trade with an annual return of 20% with compound interest for the next 10 years.

For argument sake, lets say he enjoyed a winning streak. taking out of account the dividend they would received for the next 10 years.

Guy B would have profit 62.  For short term.

Bare in mind, im only arguing Guy B who has small capital.

Therefore, for Guy B who has small capital it is a better option to trade short term as oppose to long term since, Guy B's short term trade can replicate and surpass his long term profit.

Their is no question Guy A would profit more. The bigger the Capital the bigger the profit.
Guy A on the other hand would it difficult to replicate what Guy B has done since his playing with a bigger capital. Guy A would have to take a bigger risk to profit, bigger risk means bigger lose which would not be wise.


Value investment would be better of if you have a bigger capital as compared to some one who has a smaller capital to start with.


ferrariEverest

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Reply #7 on: Jan 20, 2012, 04:10 PM
As oppose that Guy B did short term trade with an annual return of 20% with compound interest for the next 10 years.
i believe most hedge funds cannot/don't attain 20% annual returns... much less do it for 10 straight years.
so basically, Guy B attaining such a spectacular performance is unrealistic.

another point:
a trader/investor with a small capital rarely succeeds. if he/she is also is relatively inexperienced, then he/she has much less chance to succeed.
experience & 'substantial' capital , ideally, must go hand in hand.
kung konti ang capital, kailangan i-compensate by increasing experience.


Archcavalier

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Reply #8 on: Jan 20, 2012, 04:13 PM
i believe most hedge funds cannot/don't attain 20% annual returns... much less do it for 10 straight years.
so basically, Guy B attaining such a spectacular performance is unrealistic.

Its only for acquirement sake. Its a theoretical situation.


ferrariEverest

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Reply #9 on: Jan 20, 2012, 04:18 PM
yes, i understand. but u have to start with realistic inputs to come up with realistic outputs.
otherwise, u are denying yourself of investment reality... which can lead u to feel disappointment/self-regret (among other detrimental emotions) in the future.


bauer

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Reply #10 on: Jan 20, 2012, 04:22 PM
Value investment would be better of if you have a bigger capital as compared to some one who has a smaller capital to start with.


Big or small capital is not an issue if you refer to "value investment".  Kapag sinabi mo na "value" it doesn't matter how much is your capital.  It simply means - you added value to your capital.


Archcavalier

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Reply #11 on: Jan 20, 2012, 04:48 PM
So for 10 year investment.

Better to have it in stock certificate, correct?


TSO

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Reply #12 on: Jan 20, 2012, 05:18 PM
Cavalier,

Uhhh what was the point of that long post of yours when we already established it depends on the amount of capital you have?

Also, note that the larger you are, the harder it is to get big growth. :)


bauer

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Reply #13 on: Jan 20, 2012, 05:37 PM
So for 10 year investment.

Better to have it in stock certificate, correct?

90% of my MWC shares, i hold in stock certificate.


ferrariEverest

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Reply #14 on: Jan 20, 2012, 05:55 PM
Also, note that the larger you are, the harder it is to get big growth. :)
that's why we shouldn't grow too big, else... mahirap kumilos at d na kasya yung lumang damit :D


 


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