It's what you pick to put in your investment basket that counts - Mary Holm

Monday 27 December 2004

Q. A recent item in your column discussed the benefits of picking a few stocks versus a basket of shares. Your reader advocated picking, while you advocated the basket. I think you're both wrong or both right, depending on how you look at it.

I tried the pure basket approach (pun intended, as you'll see) by going to the financial adviser industry to invest my redundancy at the

By The Landlord

end of 1999.

They invested in property, equities and cash, with growth and value focus, with many managers - all to reduce risk. In the four years since, they turned my $53,000 into $42,000. So in my view, the pure basket approach is clearly not useful.

I also tried the pure picking approach. I bought some Brierley Investments. Solid, paid dividends and all that jazz. Unfortunately, it was about six months before the 1987 crash and those $5 shares ended up at 33 cents. Clearly, the picking approach didn't work.


At the start of this year, I bought a subscription to a private securities analyst. I then cashed in the "basket" - making a loss - and bought the suggested stocks.

To show it's not all been roses, of the 16 companies I have bought into, four have made losses of between 1 per cent and 14 per cent while the other 12 have made profits of between 1 per cent and 56 per cent. Overall, I have made around a 19 per cent gain of about $8500 in capital and dividend payments. In my view, this has been achieved through stock picking AND diversification.

Read More - Opens in a new window
Commenting is closed

Property News

Downward pressures might push investors out

There’s a major housing market downturn coming and it’s likely to reduce the number of investors in the market, according to ANZ economists.

Commercial

Industrial holdings leave Provincia in strong position

Tales of strife and problems abound in the commercial property world these days, but the impact of the Covid-19 pandemic has not been as devastating for all commercial players.

Mortgages

OCR reaction: Reserve Bank open to lower, negative rates

Economists say that the Reserve Bank has left the door open to lower or even negative rates, as it kept the official cash rate on hold in its Monetary Policy Statement (MPS) today.

Site by PHP Developer