Position Your Portfolio – My latest newsletter

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Position Your Portfolio.

My year-end investing newsletter

My latest (December 2014) newsletter is now available

Investing doesn’t need reinventing – just remember some rules

Successful investing is a product of joining many variables together. Many of which we can actually control such as the decisions we make, the risk we take and the investment rules and disciplines we follow.

Here are some of my favourite investing quotes that I keep handy and refer to. They are easy to understand but many investors find them a lot harder to stick to or follow.

1. Over the long run, prices revert to their mean and their fundamentals.

2. Don’t follow the herd. The herd applies optimism at the top and pessimism at the bottom.

3. The safest and most profitable investment is to buy when no-one likes it. Patient opportunism (waiting for bargains) is often the best strategy.

4. Time is your friend, impulse is your enemy. Don’t be captivated by the siren song of the market.

5. Buy assets that appear to offer an attractive return for the risk incurred and sell the asset when the return no longer justifies the risk.

6. Successful investors tend to be unemotional, allowing the greed and fear of others to play into their hands.

7. Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.

8. I have never heard of a forced buyer.

9. When searching and analysing investment ideas, individual curiosity and intellectual honesty is required.

10. The trick of being a successful investor is to sell when you want to, not when you have to.

11. Do not be fearful or negative too often because bear markets aren’t forever.

And finally

12. Do your homework or hire experts to help you.

Price Is A Problem In The Absence Of Value

The CEO of AMP is resigning, so I had a look at how the stock price has performed under his tenure.

Since being CEO, AMP’s stock has fallen 7% compared to the ASX 200 Index, which has risen 168% over that same time.


BHP’s recently retired CEO oversaw a total stock return of negative 17% while the benchmark index broke even.

Qantas’ current CEO can brag that his company’s stock price has declined 46% during his watch vs. the index return of + 55%.

Myer’s stock price has left shareholders 14% poorer (and I am counting dividends)  under the current steward but the index has climbed 28% over the same time period.

English: Why Pay More?, No. 112 The High Stree...

But I can hear the cries already. They’re in a tough industry, it’s cyclical, they inherited a bad egg from the previous boss, it’s competitive and margins are tight.

Perhaps the board is equally to blame for poor stock price performance as much the management team that is charged to execute the strategy?

To contrast, the current ANZ’s boss has presided over a 42% total stock return whilst the index fell 3%, Westpac’s stock performance has been an impressive 90%, which handsomely beats the 15% return that the index managed and last of all, had you owned that boring old power utility, AGL when their present CEO took over, your total return is 55% versus the ASX 200’s negative 3%.

Some commentators talk about what legacy a departing CEO has left or the systems they put into place.

Whilst they are being rewarded handsomely (which I don’t object to), shareholders rewards should be somewhat aligned.

Don’t even get me started on their “golden handshake” severance pay.

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