In the interests of demonstrating more about investments, I have created a theoretical portfolio of what I consider to be 10 investment-grade Australian stocks.
In each stock I have invested a theoretical AU$10,000 at the closing price of each stock on 31 Jul 2007, for a total investment of AU$100,000.
The stocks I selected are listed on the Aus stock exchange and the codes are ANZ, BBI, BHP, BNB, LEI, NHC, QGC, SUN, WDC and WOR. This choice represents my personal dumb pilot's opinion.
The total value at 31 Jul 2007 is of course AU$100,000. I will give updates from time to time on how this investment goes in terms of value and dividends returned.
You can build a copy of this theoretical portfolio on one of the many free internet trading sites, and follow its' progress, or you can try and beat this mix with your own personal selections!
Even better, you might even select some stocks yourself and invest some of your real money and really ride the train! Go on, you can do it!
Wow! A year has gone by today. And what an interesting year it was on the stock market. So, how did we do with our stocks? Well some produced exceptional results and some were downright appalling! This goes to reinforce one of the basic rules of investing, that is to diversify (don't put all your eggs in the one basket).
Overall, on our initial capital investment of $100,000 we lost $2505 (2.5%) for a total share value of $97,495 as at market close 31 Jul 2008. The good news is that we made $3741.11 in dividends for an overall gain of about 1.2%.
Code Purchase Price Units Market Value Profit / Loss % Change
ANZ 28.300 353 5,736.250 -4,253.650 -42.580
BBI 1.685 5,935 5,341.500 -4,658.980 -46.590
BHP 37.000 270 10,721.700 731.700 7.320
BNB 28.190 355 2,328.800 -7,678.650 -76.730
LEI 39.200 255 10,837.500 841.500 8.420
NHC 2.130 4,696 22,024.240 12,021.760 120.190
QGC 3.000 3,334 15,669.800 5,667.800 56.670
SUN 19.400 516 6,904.080 -3,106.320 -31.030
WDC 19.050 525 8,494.500 -1,506.750 -15.070
WOR 33.900 295 9,437.050 -563.450 -5.630
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Total 97,495.420 -2,505.040 -2.505
So in essence after a full year in the stock market we made an overall profit of capital loss plus dividends equal to a whole 1.2%. Whacky doo! Actually as we are not going to sell, we made a profit of 3.7% and an unrealized loss of 2.5%.
I suppose on the other hand, considering some of the severe investor losses out there who were involved with the "professional" advisors and also minus their advisors' fee plus a cut of the total invested, we really have done very well to hold our heads above water (just!).
What do we do now? Cash out, realign our portfolio or just maintain what we have and plough on? To assess the resilience of our philosophy of long-term investing, we will select the latter. That is, we will sit and watch for another year!
This is precisely the time when most inexperienced or timid investors will cut and run. However, this market weakness has created the opportunity for the wise and long-term investor to seek opportunities!
I will keep us all posted!