How to spend $100K

Good afternoon ladies and gentlemen,

I have had a very enjoyable and informative time these last few days, looking over past threads and absorbing the congenial and helpful atmosphere contained therein.

I wonder if I might tempt anyone to make suggestions, or offer opinions as to what they would do in the following situation.

You wish to create a neat and gutsy resources portfolio and are prepared to sell the following assorted assets; WDC, WBC, CIY, SFE and AMP.

This will raise approx $105K.

The goal is a resource portfolio of quality assets that addresses movements in global demand, and hopefully outperforms the assets sold.

On your current short list are: RIO, BHP, SGX, ZFX and possibly OSH.
(WPL already covered elsewhere).

The question is how would you spend the $$, and in what proportions, assuming that in the end only 3 assets will be bought? Time frame, subject to annual review, 8-10 years.

Thanks for looking and thinking,

Rustaman.

Very good question...

I think ur kinda limiting yourself by picking only 3 stocks...

Anyway, here's my suggestion:

You definately need an oil company as one of the three. Oil prices may have a correction once us/european winter is over, but over ur time frame of 8-10, they'll generally go up due to favourable supply/demand dynamics. My pick would be WPL, since they have the most reserves, more than 1.3 billion barrels. Analysts are generally quite bullish about its prospects as well...

Secondly i think if you are going to buy 3 stocks they shouldnt all be resources (unless you really believe the commodity super-cycle)..
Due to ageing population, i think heath-care sector will perform well in the medium to long term... My pick is heathscope, their growth through acquisitions in recent years has been incredible (and so has the share price gains) and their management have proven to be more than capable of turning around underperforming assets and divesting investments that are non-core in order to create shareholder value. Healthscope (HSP) along with Ramsay (RHC) are both highly rated by fund managers...

As to the third, you can go BHP, or if it was me, id split it, and put like 10Gs into OXR, KZL, and EXL and WOR and the rest in a managed fund which owns japanese equities... ull c 200Gs in no time!!!

See Alan Kohler's article on asx: http://www.asx.com.au/resources/newsletters/investor_update/20060110_alan_kohler.htm

The above is just my opinion, but thats honestly wat i would do...

Do your own research...

All the best

you want to sell the likes of AMP and buy resources at the top of the boom?

I would be selling resources and buying AMP, QAN, NAB.

see how right I am in 12 months....

Re: How to spend $100K (Part II)

rustaman said:

Good afternoon ladies and gentlemen,

I have had a very enjoyable and informative time these last few days, looking over past threads and absorbing the congenial and helpful atmosphere contained therein.

I wonder if I might tempt anyone to make suggestions, or offer opinions as to what they would do in the following situation.

You wish to create a neat and gutsy resources portfolio and are prepared to sell the following assorted assets; WDC, WBC, CIY, SFE and AMP.

This will raise approx $105K.

The goal is a resource portfolio of quality assets that addresses movements in global demand, and hopefully outperforms the assets sold.

On your current short list are: RIO, BHP, SGX, ZFX and possibly OSH.
(WPL already covered elsewhere).

The question is how would you spend the $$, and in what proportions, assuming that in the end only 3 assets will be bought? Time frame, subject to annual review, 8-10 years.

Thanks for looking and thinking,

Rustaman

Click to expand...

PS: The short list should read "suggested" short list, and include other considered options if one sees fit.

yes i agree with u moneytree... amp should do well in the coming years...

dunno abt qan, i was keen at 3.30, but they only hedged fuel costs until feb-06, so they might be affected by this...

of the banks, my pick is anz...

money tree said:

you want to sell the likes of AMP and buy resources at the top of the boom?

I would be selling resources and buying AMP, QAN, NAB.

see how right I am in 12 months....

Click to expand...

Interesting comments there and you could well be right. But commodity prices increase for a couple of years and everyone starts screaming "top". Meanwhile house prices increased for many years at an extraordinary pace but few are willing to even acknowledge that they might fall despite mounting evidence that prices are indeed falling (see http://www.abc.net.au/news/newsitems/200601/s1546677.htm and http://www.smh.com.au/news/Business...to-remain-weak/2006/01/12/1136956277419.html). And even fewer seem willing to look at the over 2 decade bull run in the stock market and consider that stocks in general may well be at or near a top.

Not making any comment on those markets as such, just on the perceptions which surround them. It's deeply imbedded in our culture it seems. House prices rise and commentators say they "improved". But few seem willing to say that petrol prices "improved" when they rise. Whether something "improved" or not is, of course, a matter of opinion depending on which side of the market you are on. OPEC countries certainly would consider higher petrol prices and "improvement" whilst non-investment property first home buyers or those "moving up the ladder" are unlikely to see rising house prices as being anything but bad news since they mean more debt and larger mortgage payments.

As for the stocks you mentioned, I'm not convinced about QAN in particular beyond the short term. The way I see it (looking at the supply side of the oil industry) either oil prices rise (bad for QAN) and the economy remains strong to support those prices (good for QAN) or, if oil prices are to fall (good for QAN) then that implies that the economy declined (bad for QAN). So they aren't on a clear winner either way. That's thinking longer term of course since markets can do anything in the short term regardless of fundamentals.

I still like St George for the Banks and see them gaining more market share over time..

10 stocks - technically good.
Pyramid them!

money tree said:

you want to sell the likes of AMP and buy resources at the top of the boom?

I would be selling resources and buying AMP, QAN, NAB.

see how right I am in 12 months....

Click to expand...

Actually Resources havent topped yet? At least another yr or 2? depends which resource right? ZIinc is forecasted to fall in 2008? Oil will reach "Peak Oil" one day? Coal alternatives to oil? Uranium alternatives to oil?

Airlines forget about them, oil prices will wipe them out one day

NAB doesnt look like it will recover as expected...

Investment Banks, end of the road IMO, slow gains from now on in, as opposed to the last few yrs

michael_selway said:

Airlines forget about them, oil prices will wipe them out one day

Click to expand...

I recall reading somewhere that worldwide the aviation industry has thus far failed to make a collective profit. Some have made fortunes, others have gone bust or are propped up by governments but overall the industry hasn't been profitable.

I don't know if this is true or not but would be worth checking out IMO.

Smurf1976 said:

I recall reading somewhere that worldwide the aviation industry has thus far failed to make a collective profit. Some have made fortunes, others have gone bust or are propped up by governments but overall the industry hasn't been profitable.

I don't know if this is true or not but would be worth checking out IMO.

Click to expand...

I think this is pretty much spot on.
Half a dozen airlines in the USA have gone belly up in the last few years. Most are still operating (I think) but are in receivership.

Seems like the only guy who know how to make a buck out of airlines is Richard Branson and even he has got out of it....

No sure about QAN though.

Personally, wouldnt touch it what with potential downsides from Fuel prices, bird flu, SARS (remember that?) and or course Terrorism.

BraceFace said:

I think this is pretty much spot on.
Half a dozen airlines in the USA have gone belly up in the last few years. Most are still operating (I think) but are in receivership.

Seems like the only guy who know how to make a buck out of airlines is Richard Branson and even he has got out of it....

No sure about QAN though.

Personally, wouldnt touch it what with potential downsides from Fuel prices, bird flu, SARS (remember that?) and or course Terrorism.

Click to expand...

QAN ive heard they hedge all their oil prices, is this true?

hedging does not make them immune to the price of oil. hedging costs money. hedging is used to smooth out the cashflow.

when oil rises, it hurts qan.

money tree...

qantas, nab, amp all kicked goals inn 2006....

good call...