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Online Share Trading

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Why so great?

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BC02
Super Contributor
I'm really trying to figure out why everybody keeps saying you have to buy BIL? On a quick analysis, its div payout ranges between 2-4%, more importantly its price has only grown 250% in 10 years!.
Considering this price also went through a major resource boom.
If I wanted a share thats correlated to the market to get market returns at this stage its seems better to buy some investment firms (like Coronation (8% div) or Satrix Top 40 (3% divi)) and get exposure that why.

Why waste the money directly on BIL?
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21 REPLIES 21
Not applicable
I think it partly because of the kind of braai fire talk we have heard repeated here..."you never sell Bil etc". As you know those that advocated a sell were called stupid and ***** traders so maybe its just follow the OST herd mentality. Bil was at 26600 at the time.
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Douw
Frequent Contributor
Riding the waves makes the money.
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Not applicable
Resource stocks rarely make for good investments. Buffet is pretty famous for staying away from them as well. They are cyclical in nature, limited control of the selling price of their product (their aint no brand premium on coking coal!), hugely capital intensive - and have finite lifespan. They are good for trading though.
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Not applicable
Oh get off your *$!* high horse on this will you - it wasn't your call we were critising, it is the manner in which you were singing your own praises (and the timing of your praise singing as well)
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striker
Super Contributor
- Must agree with you - all the hype about their diversification and potential, never really shows in the price or D/Y. One is surely better off buying the less diversified miners like KIO and EXX - they continually deliver and pay great div's.
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warhippo
Super Contributor
Interesting discussion and as far as the Satrix 40 is concerned is it not that Resources account for 40 percent? of the weighting of this FTSE/JSE Top 40 Index mmm!
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MarkD
Contributor
I concur. I mentioned in another post that I invested in BIL some time ago...today i think my growth on the purchase is at 2% and my income from the dividends is around 2-4% as you say. Of all the profitable stocks that I've picked up (which is the majority), this one is the most boring. I will be selling it fairly soon i think and like you I'm also looking at using the proceeds to get into something like Coronation, which seems much more attractive to me. I also tried to invest in IMP and got hammered for a little while, before i decided to cut my losses there and get out because it just doesnt suit my appetite. So ja, resources - not my thing it seems.
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BC02
Super Contributor
Just to stir the pot a little:
250% over 10 years = 9.5% growth per annum
(this was excluding divs, but so are these further below)

I believe one should be earning at least 15% per annum over 10 years, this equates to 400% growth over 10 years.
Satrix 40 averages around 15-16% per annum

Other companies over 10 years:
Famous Brands - 4060%
Shoprite - 2062%
PSG - 1800%
Woolworths - 1030%
Coronation - 800% - only from 2004

I agree that one can argue that for every Famous Brands, theres 10 companies that didnt make it, but Shoprite, Woolworths? These are all no brainers, low risk.
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Not applicable
I'm not quite following the maths on this. Coronation has only increased 350% ish. the price would be +-49 now if there was an 800% increase buts its only 27...
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Not applicable
I'm not quite following the maths on this. Coronation has only increased 350% ish. the price would be +-49 now if there was an 800% increase buts its only 27...
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THRESHOLD
Super Contributor
Billiton is probably "best-of-breed." You either buy into the resource story or you go wih historic evidence of underperformance. Pick your poison. That said, it is worth pointing that this thing went from R11 in 1999 to R320 odd in 2008. 30x your money in 9 years. PLUS stunning dividends when based on an R11 share price. Not too bad! If the resource super-cycle plays out as predicted by many,there is a good chance that these resource counters will be the only shares to hide behind as the rest of the economy will get smashed. What hope for the resource counters once that happens? SO, if you REALLY, REALLY believe that - then rather take a position in GOLDFIELDS.
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G_V_V
Super Contributor
The PE's are at historic lows.
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Not applicable
woolies from 2005 170%
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WES
Super Contributor
Every shares has the right price. You can buy a excellent share at the wrong price, like Shoprite at the moment, all that we are saying is that at the moment BIL at R 240 odd with a PE of 7.75 is a good buy. No share is always a BUY or always a SELL. So stop looking at the past, it doent mean that because SHP has performed so well in the past it will repeat it in the future.
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SimonPB
Valued Contributor
respect dude that you managed to bring GFI to the top .. albeit I disagree .. part of BIL attraction is geographic and commidity diversity and managmenet ability to move into/out of commodities that are worse/better .. witness the failed potash deal .. of course management than also a risk if they get it wrong, and I not convinced by all the gas they moving into, gas prices are smacked and likely to remain so as supply just booms ..
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THRESHOLD
Super Contributor
BUT now we are getting into the arena of relative value and growth investments. I cannot believe that BHP is a contender in those divisions. Growth, for them comes at a massive cost and doesn't really feature when you are dealing with a 2 trillion Rand quasi- country. Value without growth? - not in my lexicon. Then there is the volatility of earnings... So - again - unless you buy into the Commodity Supercycle - why bother. Its a GREAT company but as Buffet would maintain, "Not necessarily a great investment."
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THRESHOLD
Super Contributor
And for the record - I am not a gold nut - it is just looking like a one-way bet at this point. So I choose to build a position in some leveraged counters. I have extensive micro/small-cap holdings and these are very illiquid - gold will hopefully hedge me against a market selloof. So it serves a dual purpose as speculative long and hedge. That sounds like a bargain.
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SimonPB
Valued Contributor
sure, agree on most .. an I do buy into the super commodity cycle whicha s you say is an important first point ..
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BC02
Super Contributor
I agree my point was more that considering BIL went through a resource boom in SA (at least) you would have expected better growth against the other companies, when comparing price over 10 years.
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