My long term pick...

[SkarlakenKoos]

Ok, so warrants are not for me... burned my fingers badly (as in portfolio gone). I'm young, so time on on my side. Here's my new system (can't get simpler than this): Pick 10 shares (my own index), based on fundamentals (div yield is most important). Pick your time to buy based on TA (i.e. I'm not going to buy with the RSI oversold, etc.) I'm not allowed to sell in the next 20 years. Here's my 10 shares: ADH: Private eduction in South-Africa. I worked for them for a while and although I think they can do better on the quality side - they run a sound business. ASA: I bank with them... and I want some of my money back! BIL: SA is resources... I need to have one at least. Also, this is one of the bigger ones with a rand hedging component. FSR: Another bank. MSM: Massmart... they own a number of stores which seems always busy. Last results looked good. MTN: They're close enough to a monopoly, international revenue as well. SAB: Simple business, which I like... "we make beer!" SFN: Do I have too many financial shares in my basket? SHP: The better choice (IMHO) when compared to PnP, etc. SOL: At these levels? Looking very juicy... and at R233 I'll stock up as part of my WEE deal with them... :-) My question to the forum: What do you think of my basket of shares? Which share would you replace? Note, I only want 10 shares (so if you want to add one of your own, you have to take one out). At the moment I'm in cash atm. (I mostly missed the recent turmoil). I do have some SHP though.

[#2]

Id dump one of the banks for UUU, based on the time frame.

[SkarlakenKoos]

I had such nice formatting.. stupid thing messed it all up. Easy reading format: (1) ADH (2) ASA (3) BIL (4) FSR (5) MSM (6) MTN (7) SAB (8) SFN (9) SHP (10) SOL UUU, thanks for that... I'll do my homework. If I have to dump a bank, I'll think I'll dump ASA.

[samoa]

replace ASA with stx40 or stxdiv? I agree with your thinking. My system very close to yours.

[louisg]

You may want to consider staggering your purchases over an extended period (say 6 months) instead of buying everything at once. OMO

[geordie1]

I think your approach is correct.Shares are in attractive buy territory although they can always go lower.I have been following this approach for over 20 years and I stopped working 12 years ago so with luck and judgement it can lead you to a very nice place.Which shares you pick is really a personal choice but I look for a div of around 5% and a PE around 10 with a good history and decent management.Look for shares that the big investors put money into.It's boring and tedious but it works over the long term.I do a bit of trading for fun but the real profit is in the approach your are advocating,Derivatives can give you big profits and losses and are addititive but can be harmful to your financial health.

[Mr_S]

i dont quite understand the concept of not selling for 20 years..lets say your stock has accumulated significant value over 8 months, now that we are going through this credit crisis, surely u would want to sell your stock in order to preserve your previous gains? right?

[#8]

OMO but here goes 1. ADH - Remove. Private elite education? Gov making noises about reforming / transforming education; segment of population that can afford top notch education shrinking Replace with TRU - Good divs, solid company & serves the growing middle class 2. ASA - Too many banks & this one's tail gets wagged from UK (Barclays) Replace with PPC solid cash generating, good div companies - Infrastructure spend will be flowing through for at least next 10yrs 3. BIL - Better than AGL as BIL has exposure to oil = Keep 4. FSR - Good choice Solid "Family" run bank = Keep 5. MSM - Well positioned; nice blend of cash & credit sales = Keep 6. MTN - Global exposure, solid brand, cheap at the moment = Keep 7. SAB - Mature business. Ok for capital preservation, not much in the way of further growth opportunities, = Replace with GND - well positioned to enjoy revitalisation of ZIM via Maputo & already is bypassing Richards Bay with Coal & cars, good divs, solid management, no loareg institutional investors wagging the share price 8. SFN - Good choice = Keep 9. SHP - Good choice, well positioned to "invade Africa" Little ligt on teh divs but good prospects for capital growth = Keep 10. SOL - Good choice, well hedged at $90 pbar on down side, BBBEE deal will keep divs pumping = Keep This obviously OMO but do your research Maybe APN & RDF for Divs CAshflow is also a good thing.

[SkarlakenKoos]

This is probably the most useful piece of advice I got from the forum! I will investigate the alternatives that you proposed. Thank you very much.

[#10]

or you could just use the darts approach....how arrogant and totally naive to think that you somehow from this distant view can have any insight whatsoever into these counter's performance.....invest in adartboard and some darts....

[_nova]

haha, Chartist is right... and the dart board story? ... well it's actually the truth and it beat the market pundits

[Electrox]

when will the word "Exits" overcome "Entries" in order of precedence.

[SkarlakenKoos]

I don't agree... I know the dartboard story, but that does not apply here. The 'dartboard' approach will work if you cancel out the 'big losses' by having stop losses in place. Thus, you will end up with 'big wins', 'small wins', 'evens' and 'small losses'. So on average you should make money. My (ultra-boring) approach above is based on fundamentals. Good companies with good solid history, which I want to use to create long term wealth. I believe the *market is predictable*, but the shorter the term, the more difficult it becomes. If you look at the main indices' charts for the past 40 years... I think it will be fairly easy (and accurate!) to predict the next 40 years by drawing a simple linear line. Lastly... I'm no professional stock market guru... but I cannot name one TA trader which is really successful... I do know of this one fundamentalist investor though... Call my approach boring, simple and stupid if you like - but I think it is fool proof... If I buy good companies with value at a good price and wait 20 years, I'm sure I'll make 15%+ per annum. My hat off to the guys that are making money by buying and selling everyday... that is not for me.

[louisg]

SkarlakenKoos, you go ahead and do what you believe is the correct way to invest for the long term. I agree fully in your approach. It has worked for me, and I will soon be joining Geordie Lad in that really good place(financial independence). As for Chartist and Nova, ignore their comments. Their views are different to yours(nothing wrong with that), perhaps their financial goals are different too. They have a system that works for them and that they believe in. It does not make it the only correct way to approach investing/trading in the market. Stick to your guns and let the techies stick to theirs. The funny thing is that if we master our respective strategies, we can all WIN in the end. I am still to read on this forum of a single techie who lives off his/her trading profits exclusively. Are their ANY techies out there that do live off their profits?

[louisg]

SkarlakenKoos, I would not advocate blindly holding ANY share for 20 years. Just monitor them, and if you are happy with their performance then stay invested. However, if the a company changes fundamentally, then you will have to review your stance on that particular business.

[Werner_1]

Louisg, i agree 100% with your comments. I have 2 portfolios, to be honest the one that always impresses me is the long term one, selecting good shares for long term has worked for me, i havent been in this game for very long, only since about 2004/05 but can see that it works. recently slightly down, but still well up since starting the portfolio. I like an approach of both fundamentals and technicals, select the shares using fundamentals and entry and exit points with technicals. works for me... Guys, by the way, how has your long term portfolios handled this crisis? i am down about 23% since Jan 2008...

[Werner_1]

I hold some of these recommendations and really agree that they have long term potential. PPC, BIL, SOL, APN, GND - now is quite a good time to get these, most of them came off their high quite a bit.

[SkarlakenKoos]

louisg, thanks! That goes without saying of course... if the fundamentals change, I change the stock. That is the reason why I prefer to build up my own portfolio rather then just buying the index. I control the stocks that I own and can decide what I keep and what I change. The point being, is that I make that choice based on *fundamentals* not based on price movement anymore.

[louisg]

About 20% for me too. It doesn't bother me, I sleep well at night. If anything, I view these levels as great BUYING opportunities.

[john_1]

Now LG if you had listered to me you would be in cash 20% more than you have now, and able to buy all those great companies at a real discount..ie for a price lower than you sold them...dont worry next time!