What to do with multiple recommendations?

[amy23l]

Hi, I am very new to buying shares & I recently subscribed to a publishing that issues a report each month with a few recommendations, in particular im referring to an issue that recommended 3 small cap mining companies

considering its referring to 3 companies in the same sector would someone spread the risk over all 3 companies or put all eggs in one basket so to speak and just pick one company?

 

[Iggy_Pop]

Sounds like a company I subscribed to many years ago. If you are new to shares, I would not recommend buying small cap speculative miners. Suggest setting up a watchlist and monitor for a period of time. What you will most likely see is the shares will go up for a while, as many people who also subscribe to the service buy the shares. Unless the companies do something outstanding, you will most likely watch the price drift lower til the company folds or does another capital raising, which will continue to dilute the value.
I learnt the hard way and soon learnt to get out quickly after losing some money.

If you want experience with shares, as a starting point, buy something in either -

Top 100 on the ASX
Some LICs - AFI, ARG
Some ETFs
If you want to stick with Smallcaps, suggest Contango LIC or Cromwell Phoenix where someone does the desicion for you

And as many on this forum say - Do your own research. Use the service as a guide and a way of learning. This forum and Hot Copper having many posts on how to gain this experience and discuss the shares you are looking at.

Iggy

 

[mcgrath111]

Hi mate,

Not sure how new you are to the stock market, however if you're purely going off a broker type recommendation I would strongly advise against it; particularly given the huge volatility in mining stocks.

Also small cap mining lives off hopes and dreams, that x deposit will produce the highest grade yadayada.

Im not saying mining is a sector that you should ignore, yet if your using a subscriber reccomendation + mining small cap you could find yourself up **** creek without a paddle.

Just my 2cents.

 

[amy23l]

Thanks for opinions! I have started with $500 worth of Telstra & g8 education, (I'm putting $130 a week into my CommSec account so I can buy something each month & grow my portfolio from there) I like the idea of having a mix of low risk & high risk, I'm self employed and (naughty me) don't have much super, what I do have isn't making me much so I'm prepared to take a small risk on something speculative aswel

I guess because I only want to risk a small I didn't want to buy all 3 recommendations, one in particular st George mining took my interest but I wasn't sure if I shud only rely on one or if I shud hedge my bets on all 3 suggestions

 

[So_Cynical]

Thanks for opinions! I have started with $500 worth of Telstra & g8 education, (I'm putting $130 a week into my CommSec account so I can buy something each month & grow my portfolio from there)

You are down 4% with the brokerage straight up, if you upped your position size to $1500 and bought every 3 months it reduces down to 1.33% and you save 40 bucks on brokerage.

 

[Klogg]

Thanks for opinions! I have started with $500 worth of Telstra & g8 education, (I'm putting $130 a week into my CommSec account so I can buy something each month & grow my portfolio from there) I like the idea of having a mix of low risk & high risk, I'm self employed and (naughty me) don't have much super, what I do have isn't making me much so I'm prepared to take a small risk on something speculative aswel

I guess because I only want to risk a small I didn't want to buy all 3 recommendations, one in particular st George mining took my interest but I wasn't sure if I shud only rely on one or if I shud hedge my bets on all 3 suggestions

I can't give advice as I'm not licensed, but it's worth mentioning - High risk does not equal high reward.

You mention taking a 'small risk on something speculative'. You don't necessarily need to take risks to be rewarded well. This can be achieved through your own research, or a fund manager, or any other myriad of ways.

If you want experience with shares, as a starting point, buy something in either -

Top 100 on the ASX
Some LICs - AFI, ARG
Some ETFs
If you want to stick with Smallcaps, suggest Contango LIC or Cromwell Phoenix where someone does the desicion for you

I hate to say it, but this is misleading at best. Assuming the ASX100 is a starting point (or a safer option) is misleading. Using size as a proxy for risk mitigation will usually end badly.

Also - if by ETFs you mean an index fund, then I tend to agree. Can't say I agree with the rest.

 

[amy23l]

You are down 4% with the brokerage straight up, if you upped your position size to $1500 and bought every 3 months it reduces down to 1.33% and you save 40 bucks on brokerage.

oh wow, I didn't even think about that... coz I have the commsec deal of $600 worth of trades free to be used within 3 months, I havnt really thought about the expenses incurred with buying shares... I did read somewere that its recommended to keep costs to 2% or less so I will take your advice there to save the coin

thanks heaps!

 

[PharmBBs]

oh wow, I didn't even think about that... coz I have the commsec deal of $600 worth of trades free to be used within 3 months, I havnt really thought about the expenses incurred with buying shares... I did read somewere that its recommended to keep costs to 2% or less so I will take your advice there to save the coin

thanks heaps!

I've made the same mistake lol. But I don't feel too bad about it. It doesn't hurt to have a diverse mix from the get go. Although you are banking on the stocks to exceed that 4% (or x%) to break even with brokerage, and then add inflation (so if brokerage was 4% and inflation is 2% then your stock must give you an annual return of 6% in total for the first year).

 

[BarneyChambers]

My opinion is that its always a good idea to diversify when you're new to the game. There's less risk, it gives you good experience and its also more interesting to keep track of in the coming months.

Be wary of small cap mining stocks though, they're volatile and risky!