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Long Term Investment Trial

Discussion in 'Medium/Long Term Investing' started by kermit345, Aug 2, 2017.

  1. kermit345


    Likes Received:
    Dec 11, 2009
    I've been contemplating an approach to long-term investing for some time but never really given it a consistent trial to see if its viable or not. What i'll be trialing in this thread is a 10 stock portfolio starting with $100,000 whereby I add stocks and review the portfolio on a monthly basis in the first week of each month. Initial purchases will be 4% of portfolio value and I can add to a position up to 2 additional times both for an additional 4% each if the stocks remain undervalued.

    I'll be taking into account $20 brokerage costs and the interest earned on the theoretical bank will be on a monthly basis based on the best available 1 month term deposit rate (i.e. this first month will be 1.75%).

    The aim of the portfolio is to target large companies with earnings stability, low debt and decent dividend yields which appear to be undervalued based on a simple PE measure. Chances are this approach will simply do similar to investing in the broader market but it's something i've wanted to trial for a while so see how we go. Hopefully by having a thread on here it will ensure I stick at trialing it at least for a reasonable amount of time.

    Each month i'll also post the number of stocks that met my initial scan, of which i'll review the top 50 based on some criteria i've put together and i'll name the top x amount of stocks that came through as undervalued in some shape or form. From this list is where I pick my monthly investments. Selling of the stocks will be done on the basis that either something else looks to be providing better value or something has changed the value of that stock which means its no longer a viable investment for the method.

    Anything i've missed or any questions let me know.

    137 stocks met the scan criteria this month of which the following 14 stocks made the final investment consideration list:

    1 wes.ax
    2 amp.ax
    3 rmd.ax
    4 rhc.ax
    5 sgp.ax
    6 vcx.ax
    7 ccl.ax
    8 sol.ax
    9 ipl.ax
    10 hvn.ax
    11 tpm.ax
    12 sgr.ax
    13 car.ax
    14 dlx.ax

    Of these stocks I made the decision to purchase DLX and CCL as per following table.


    Time will tell how this goes, could be a flop but feel the time is right to give it a try for a bit of fun and interest. Will post any further details I think of along the way.

    EDIT: Performance will be compared to the S&P/ASX 200 Total Return Index (XNT)
  2. skc

    skc Goldmember

    Likes Received:
    Aug 12, 2008
    It feels like you are trying to recreate some sort of smart beta ETF using your own criteria to choose the stocks. It should be something you can backtest to see if it works. Also, you might end up paying a lot more capital gains tax which will definitely eat into your net return.
  3. Value Hunter

    Value Hunter

    Likes Received:
    Feb 24, 2013
    Kermit just to clarify this is a hypothetical portfolio as opposed to actual cash?
  4. kermit345


    Likes Received:
    Dec 11, 2009
    skc - nah not re-creating anything (not that i've seen anyway) although i'm sure there are probably some fund managers or ETF's that possibly look at investing from just a P/E standpoint? Just none that i've seen through work although I have seen a few based on dividends and/or P/Book Value as parameters. My approach is about comparing current P/E to both the companies historical P/E and the industry P/E that their company sits within. Also I'm not weighting based on market cap which reading the definition of smart beta seems to be one of the main sticking points as well.

    I also haven't seen anywhere that I can backtest this kind of thing as most backtesting data thats available is technical based. Not many places offer the data for backtesting based on fundamentals and those that do I assume will charge for it.

    VH - yup hypothetical portfolio at this stage, i've been running another hypothetical version on a website called sharesight and its outperformed XNT but I was never fully committed to monitoring it or adding/selling stocks on a monthly basis. Hopefully this thread will keep me to doing this. If it goes well i'll start to gradually add these type of stocks to my portfolio.
  5. kermit345


    Likes Received:
    Dec 11, 2009
    First monthly update, portfolio has marginally underperformed the XNT index however there are some dividends to come etc that will help catch up some of the performance. Not really going to go into the hows and whys of performance as this is a long-term exercise and the performance of one month doesn't really prove anything. All i'll say is that the two first investments haven't been sold or added to however i've added 5 new holdings being AMP, CGF, SOL, TPM and JBH. This leaves 3 spots for additional investments next month before we need to decide whether we need to add to additional investments or remove some for better opportunities.

    This month the initial screen identified 136 stocks which was narrowed down to the following investment opportunities:

    1 dlx.ax
    2 ccl.ax
    3 amp.ax
    4 wfd.ax
    5 bxb.ax
    6 agl.ax
    7 llc.ax
    8 cgf.ax
    9 sol.ax
    10 fbu.ax
    11 evn.ax
    12 tpm.ax
    13 nst.ax
    14 skc.ax
    15 car.ax
    16 jbh.ax

    Any queries fire away and below is the monthly update screenshot:


    Attached Files:

  6. kermit345


    Likes Received:
    Dec 11, 2009
    Quick monthly update, portfolio is underperforming XNT but I still have no concerns at the moment as a long term strategy. Added two new stocks whilst adding additional investment to 3 existing stocks. CCL is probably the only stock i've got a little concern over whilst the others I think will recover in time.

    Monthly filters identified 146 stocks which was narrowed down to:

    1 amp.ax
    2 ccl.ax
    3 sol.ax
    4 jbh.ax
    5 bxb.ax
    6 rmd.ax
    7 rhc.ax
    8 bld.ax
    9 jhg.ax
    10 fbu.ax
    11 skc.ax
    12 hso.ax
    13 ebo.ax

    And the monthly update as follows:
  7. ap1986


    Likes Received:
    Apr 3, 2018
    How about 10 equal weighted options as below

    1) CBA
    2) WBC
    3) SOL
    4) GOW
    5) BHP
    6) RIO
    7) PMV
    8) WOW
    9) SHL
    10) APA

    Guess... the above buy and hold with DRP will give you a better return. SOL is not a DRP so you might have to incur brokerage to buy shares.

    Let me know what you think.

  8. Mr Bear

    Mr Bear Businesses don’t change often, perception does..

    Likes Received:
    Jun 9, 2014
    I assume you’ve already given up since no recent updates?

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