Stock Market Analysis 2: The Monster Portfolio
OTHER PEOPLES PORTFOLIOS
The Member who sent us this portfolio is happy for you to see what he has been doing on the basis that “if one person can take note and ‘not be like this Guy’ then something will have been gained from the expense I put into creating this monster”.
I am also hoping that his brave transparency, albeit anonymous, gets noted by other members – however good or bad your own portfolio, there is value in allowing other members to see it – and at the same time you get an honest (if brutal) assessment, it just happens to be in public. The idea is not to get entertainment at your expense, the idea is to lift the experience and learning of members to a universally higher level.
So here goes.
Note: A common request after the first portfolio was to include columns showing how long the stock has been held, I haven’t had time to do that yet but will include it in future when it’s available.
PORTFOLIO SNAPSHOT 2 – “The Monster Portfolio”
- This portfolio has turned $300,414 into $188,705, a loss of 37.2%.
- This portfolio does not show any other assets, this portfolio could be a small part of total assets which might explain the “punting” nature of most of the holdings. It does not show any stocks sold at a loss or profit in the past.
- Out of 48 stocks, which is an unwieldy number of holdings for an individually managed portfolio, 38 stocks have a market capitalisation of less than $1 billion.
- Out of 48 stocks 35 have lost money, five have gone bust, 20 are down more than 70%.
- Portfolio risk is 7.29% which suggests that the portfolio has moved in a 7.29% range each week on average over the last 14 weeks. By comparison an ETF matching the ASX 200 has a 1.81% range per week. This is a risky/speculative portfolio.
- The yield on the portfolio is 2.85% with a yield of 4.04% including the average franking of 64.1%.
- The portfolio is 20% invested in the energy sector which is a 15% overweight compared to the market average.
A lot of lessons to learn from this portfolio:
- Small speculative stocks are a road to ruin.
- Small resources stocks are worse.
- You have to learn to sell/manage loss-making stocks.
- Buying and holding is a head in the sand approach that only works in hindsight on stocks that went up.
- There is very little value in holding big “obvious” stocks like BHP and the banks when you have a huge loss-making tail of stock market “bets” going wrong.
Bottom Line: This is clear example that the stock market is a dangerous place if you come at it trying to get rich, playing in small stocks, looking for rockets under rocks, rather than coming at it to ‘invest’. The stock market’s major purpose is to preserve and grow wealth not create it. This is also a great example of the value in setting a strategy at the beginning, rather than letting a portfolio evolve. When starting a portfolio you need a goal. Clearly the goal was not to lose 37%, but if the goal was to take $300,000 and have a punt, then this portfolio has succeeded. Can’t get any more complimentary than that.
Thank you to our Member for letting you see this and I, and he, hopes it serves as an educational example of what not to do.
PERFORMANCE of markets and sectors by comparison:
STOCK PERFORMANCE over variuous time periods (not necessarily the investment period):
YIELD CHART (not including franking)
RISK CHART – Risk is measured by Average True Range (ATR) over a week. The value shown is the range the stock has moved in from top to bottom each week averaged over the last 14 weeks.
Note to financial planners and Members
If you can think of some way to improve this SNAPSHOT – something else you would like included, something that would add value to the assessment, please contact me – especially if you are a financial planner – imagine going into a meeting with a client to talk about their investments…what would you need or like to see in this report. Please EMAIL ME HERE
- This Snapshot contains facts not opinions
- If you find errors please tell us and we will re-issue the tables
- Tables mostly in market capitalisation order
This portfolio snapshot is a factual analysis of the holdings submitted. The stock market is dynamic and it should be noted that this snapshot is simply a moment in time. Whilst we hope it provides useful insight, it is not advice and it is not intended as so. Marcus Today has not and cannot take into account your personal financial circumstances, and we cannot provide specific recommendations about any holdings or any portfolio strategy. If you wish to receive personal advice, you should speak to your financial planner or advisor.
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