[AMA] I Invest for a Living

jhmtaylor on 29/11/2018 - 19:34
Last edited 29/11/2018 - 19:55 by 1 other user

I primarily invest in shares for a living. I have been investing for over 30 years. I am self taught and have minimal formal training in investment management. I used to rely on a full service broker until I realised most of the recommendations were conflicted with the brokers other commitments. Whilst the results were just OK I realised that I was taking too much risk for the reward.

I prefer shares to other investments because the transaction action costs are minimal and the liquidity is very good.
- I have invested in real estate previously and did OK but only because of the leverage with debt. There was a lot of work (tenants, R&M, agents, irregular cashflow) etc) which I was not keen on and the leverage was a concern because it works both ways Over the last 5 years
- I have also looked at bonds and hybrids but nah, the returns are lower and the risk is only slightly better.
- I have used LICs/LITs/ETFs previously the but returns are equal to or just below AVERAGE (Caps intended). Having said this I have recommended this type of investment to relatives and friends who are not interested or are time poor.

I spend about 20 hours per week on reading and research. I never buy a stock unless I have spent at least 1 hour researching the business (and I use a wide range of paid for services that save me lots of time). I usually invest in stocks with forceable growth, predictable income and low debt. However I will occasionally allocate up to 10% of my portfolio into 2 or 3 riskier stocks with good medium and long term momentum.

I am sure these comments will come up so I will pre-empt the reply.
- There is no investment that is not without risk to capital except for deposits in Australian banks that enjoy a Government guarantee up to $250K.
- You can lose lots of money (leaving it on the table) by not investing)
- When investing the risk of capital loss is best ameliorated by diversifying investments. I use 25 stocks with 50% exposed to Australia and 50% international.
- Never ever invest in businesses that you do not understand how they make their income.
- The only IPOs a broker will offer you are the ones not to invest in. The good deals are reserved for their best clients who pay them thousands in fees.

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  zooter on 03/12/2018 - 14:39

  Opinions on investing in

  1) Vanguard ETF
  2) Raiz

  Are you able to beat these investments? If so by how much?

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    jhmtaylor on 03/12/2018 - 18:24

    +1

    Vanguard - most investors who are not prepared to make the commitment will do better in Vanguard ETFs or LICs. An intersting fact. The Oracle of Omaha (Warren Buffett) has instructed the executor of his estate when he dies to sell all investments and put the proceeds into several Vanguard Index funds (ETFs) because his wife is not interested in investing.

    I think Raiz is useful for accumulating small amounts to invest but when the balance got to over $20K I think there are better alternative mentioned previously.

    I actually have a RAIZ account (not associated) that I set up so that my niece and I could benchmark each other. It has been going for 18 months and I do not know how much is there. It could be $5K but after a few months it is a great way of saving without noticing it affecting your lifestyle.

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  boostpak on 03/12/2018 - 15:46

  What's your take on the following:
  AJM, PLS, ORE, SYR, TCL.

  Which would you invest in and why, if not why not.

  Thanks

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    jhmtaylor on 03/12/2018 - 18:37

    I invest in PLS for the reasons stated
    In regard to AJM I have not looked at it
    ORE is a lower cost operator to PLS but they can only make money when the sun shines and there are environmental and social issues with brine lithium and water supply. I cannot imagine a battery manufacturer closing down production waiting for the sun to shine in South America. Continuity of supply is vital to all manufacturers.
    SYR have been a big disappointer over the last year because of a series of events. IMHO the political environment carries excessive risk or the managemnet are struggling to manage the project.
    TCL is a great business but earnings are a proxy for long term bond rates. The US Fed is trying to push up bond rates so that they have more levers on the economy. Trump is pushing back but I doubt he will have much influence. If bond rates rise TCL will become less attractive. PS No franking here.

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  schwinn on 03/12/2018 - 17:08

  Do you think you would be in a better position working part time and continuing your investment? Or are you in a position where you do not need the income anymore for yourself or your family, and the 12% growth and withdrawals is all you need until retirement?

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    jhmtaylor on 03/12/2018 - 18:57

    +1

    This is going to sound a bit weird, but I truly enjoy every moment of what I do. If I needed more money I would up my work rate to 25 or 30 hours per week and take on shorter term trading to boost returns.

    After owning my owning and operating my own businesses for 20 years, I would be useless to any employer because most would not tolerate DILIGAF.

    I need to increase my portfolio by 30% and then I could go into passive investment mode. But I enjoy finding the back story, understanding the financial picture, the market reactions so I will die with a headache for my accountant to sort out after I have gone.

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  cloudy on 03/12/2018 - 17:31

  What’s your favourite (investing) books, I know you have mentioned some above, but I’m sure you have plenty more :)

  What’s the most satisfying investment you have made (deliberately left vague for you to answer how you like)

  What are some examples of your investigative skills that lead you to an investment decision?

  The investment returns you said you earnt in the last three years, are they inclusive of dividends and franking credits?

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  jhmtaylor on 03/12/2018 - 19:09

  I don't have favourite books. I have noted two previously that I thought provided the most succinct advice.

  I enjoy finding no brainer's that the market has not found. For me these include PLS at $0.38, NWH at $0.47, AQZ at $0.72.

  Investigative explanation stuff could run to many thousands of words.

  Investments returns do not include tax benefits. I consciously ignore tax because it encourages bad decision making.

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  dylarr on 03/12/2018 - 20:08

  What are your thoughts on platforms/startups like Stake?

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    jhmtaylor on 03/12/2018 - 22:11

    I don't know a lot about it other than to say it is light on services.

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  Clementt on 03/12/2018 - 20:15

  Have anyone try spot gold trading contract? Not sure if there have it here but seems profitable but need to tread carefully.

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  Moderatorscrimshaw on 03/12/2018 - 22:23

  Thread close per OP request

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