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20% annual return - realistic?

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Logical to have a stop only on the specs and not the blue chips?

Why?
 
Arae

I think you might find that the annualised returns quoted for the ASX have a survivorship bias.

Throw in a couple of "blue chips" like HIH - or even TLS, to some extent (depending on your timing) - and you may struggle with your 20% target.

You may jump on to a couple of Speccie rockets but these can be elusive.

Best of luck!
 
Isn't it all about the risk you take?

20% annual return after averaging can be realistic in theory even if markets were efficient and the guy was no expert if the guy was willing to take enough of [non-diversifiable] risks ala CAPM (http://en.wikipedia.org/wiki/Capital_Asset_Pricing_Model)


You'd just have to buy some diversified portfolio with double beta.

(Although I'd probably not do that - too risky, and CAPM is really just in theory)
 

Yes its realistic if you focus on buying when your stocks drop below their years opening price.

Cheers
Happytrader
 
professor_frink said:
why should they have one if they are investing and not trading?
Click to expand...


Minimise loss---maximise opportunity.
Particularly important when taking your initial position.
Imagine having your newly formed SMSF ready to go and you buy your brand new portfolio and immediately see 10% whiped off your initial capital.Then 20% in 3 of your held stocks and then 40% in one.

Having atleast an initial stop even in a longterm portfolio will give an investor peace of mind,PLUS the ability to minimise his chances of holding stock which could take years to claw back to even money.---Opportunity cost.

It makes sense to have as many stocks in your portfolio in profit and performing.Without an initial stop you run the risk of getting stuck in no mans land between your buy price and a price below that!
 

There are other options for a long term investor that don't involve a stop loss. Hedging is fairly easy to do, especially with cfd's being pretty popular these days.

When you buy will obviously have an impact on how important having a stop is. The next time I can buy one of the big 4 banks yielding 8%+ I will most definitely be doing it without even thinking of a stop loss.
 
Prof in my opinion.
Not using stops = disaster.
Not using stops and using CFDs. Well i have to think of a stronger word.
 
nizar said:
Prof in my opinion.
Not using stops = disaster.
Not using stops and using CFDs. Well i have to think of a stronger word.
Click to expand...

I'm not talking about trading with cfd's, hedging with them is a whole different kettle of fish IMO.
 
Hi
I am a newbie myself but I think 20% return given your choice of shares will be pushing hard to achieve.
However, If you choose other shares (such as small cap, of course with greater risk), I believe that you have achieve 20% return easily given you choose right!
 
professor_frink said:
I'm not talking about trading with cfd's, hedging with them is a whole different kettle of fish IMO.
Click to expand...

You know you often hear of hedging with options or CFD's.
Often from longterm holders of stock.

Who frankly wouldnt know how to time a golf swing let alone a short play on a stock.Particularly to minimise loss.

Bob.
When you next think its time to short a longterm hold would you post it up here.
Why
Because I think its harder in practice than thinking about it in theory.
 
I would say forget about setting performance goals for yourself – no matter which school of thought you subscribe to it is ultimately the market which will dictate your returns.

I’ve gone 15% - 20% for the last 5 years using a buy & hold strategy and much the same stocks you listed earlier, so yes it is possible, but I have no doubt this will soon come to an end and it will be time to employ a new approach.
 
If you gear into a buy and hold strategy(perhaps via a margin loan) and the market returns it's long term average then you should be able to achieve close to 20% pa.
 
I think it would be hard to archive 20% pa return on a buy and hold strategy. It's defiantly achievable if your an active trader though. good luck.
 
mime said:
I think it would be hard to archive 20% pa return on a buy and hold strategy. It's defiantly achievable if your an active trader though. good luck.
Click to expand...

I don't agree with you there. There are plenty of developing companies that will do better than that. If you look at some of the companies that are about to commence production they have big increases as they prove their level of future income. I hold AGM which I initially bought at 35c and hold now at an average price of around 64c which does not show a profit but they will commence production next year and I am looking to a price of around $2 before I will sell. I base that on other nickelers such as SMY. I did well with SMY buying in the 30c range and selling in the $3+ range.I hold LYC which I bought at 35c, sold enough at better than $1.30 to recoup my outlay and expect to do well when they start production next year. I have done well with ADI and AUT as specs and hope to do better yet. AOE is returning me 207% at todays price. There have been some failures too but they have not dragged the average down much. YML was not a success for me as I held mainly options and chickened out as the conversion date approached but plenty of YML holders are grinning ( not the ones who were a bit late getting set)
It can easily be done. Research is the answer and keep looking at the fundamentals.
 
These are the results of techtrader after 5 yrs of live trading on Radges Site "The Chartist".

Its a Longterm/Long System based around trading on Margin and pyramiding profit when available. For those intersted (once you register on Radges site) there are 100s of pages on the method.

Anyway it started with $30,000 on Margin (approx $70000 from the lender) and as can be evidenced here with both open and closed profit is now near enough to $400,000.

Ther return then on the original $30,000 is 1080% over the 5 yrs.
A little better than 20% compounding/Year.

You can also see that some of the buy and hold times have been YEARS. Many hit their exits over the last corrective move.

So yes it can be done I and many have and are doing it,this is simply one example that can be RATIFIED.

All here if you have further interest (you need to register on The Chartsist) http://www.thechartist.com.au/forum/ubbthreads.php
 

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I'm talking about stocks in the asx 200. Sure spec stocks can rockets above 20% pa but I feel that for every successful spec stock there is maybe 5 that have gone backwards or sank. I now leave spec stocks alone after I got burned on NEO and have never looked back. I feel that consistent large volume trades of larger companies is the way to go.
 

Why on earth would you want to restrict yourself to the ASX200. There are plenty of companies that are as sound, or better than a lot of those in the ASX200. There are plenty knocking on the door and when in production will get in the door. That is where the real returns can be made. The only problem comes with margin borrowing but I have a goal to live up to the motto "neither a borrower or a lender be". Sometimes slower but not as slow as the ASX 200. Check the fundamentals and keep a check on the fundamentals. There is no need to borrow, just save and invest wisely.
 
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