Austock portfolio versus the model portfolio update as at 14 May 2012

Austock portfolio versus model 14 May 2012

So, its been sometime since I updated the status of the two portfolios, and with almost two months to go (6th July 2012 is the finish date), it’s not looking good for both the Austock and model portfolios.

Both portfolios are significantly under-performing the S&P /ASX 200 Accumulation Index (ASX: XJO). The Austock portfolio has returned -10%, while the model portfolio has returned -7%, while the index has returned -3% since July 2011. Over the last month, the index is basically where it started, while both portfolios have suffered losses. The falling gold price, and ordinary reports from the four gold stocks in the model portfolio have seen them take heavy losses (once again illustrating that when it comes to pick gold stocks, I shouldn’t try). Dragon (ASX: DRA), Kingsgate (ASX: KCN), Ramelius (ASX: RMS) and Saracen (ASX: SAR) are all down by more than 15%.

Many of the resource stocks in both portfolios have fallen, due to concerns over the future of the mining boom, with Chinese growth looking like it’s slowing down. BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO), Woodside (ASX: WPL), Newcrest (ASX: NCM), Oz Minerals (ASX: OZL) and Carnavon (ASX: CVN) are also down by more than 15%.

On a positive note, my model portfolio has 16 stocks out of 30 still beating the accumulation index, while the Austock portfolio has just 12, so more than half the model portfolio’s stocks are still outperforming the index.

With the continued volatility and uncertain outlook for global economies, particularly Europe and the US, I’d be pleasantly surprised if either portfolio made significant gains between now and the 6th July 2012 (but I’m hoping the model portfolio will!). One of the main lessons of this exercise that I have had reiterated to me, is that a diversified portfolio needs to hold more than just equities. Cash, Term deposits, Bonds, Fixed Income, International Equities and perhaps some exposure to property are all asset classes that should be considered to offset a protracted downturn in Australian equities. The other lesson is that, for equities, a time frame of less than a year is not an ideal holding period.

A copy of the spreadsheet is attached here (79kb), if you’d like to see full details and performance of each stock in the portfolio.

Advertisements

2 Responses to Austock portfolio versus the model portfolio update as at 14 May 2012

  1. Ricardo Thomas says:

    Hi Mike – new to this forum – enjoyed looking at your post. Simular selection to my SMS. My two stocks of concern are shared with you – ORG and FGE – esp FGE.

    Some buyers remorse over this stock. I will follow with interest – Thanks for sharing – Ricardo

    • surfingmike says:

      Hi Ricardo and welcome,

      Personally I own Forge as well as having it in my model portfolio. I’m not all that worried about Forge to be honest. In fact, should the share price go much lower, I’ll be very tempted to pick some up personally. Forge has good prospects in my opinion. It’s just that the market has taken a dislike to the mining services sector in general, which presents contrarian investors with an opportunity.

      As for Origin, I wouldn’t worry too much about it either. In 5-10 years time, its likely to have made you a nice little earn, with its investments in LNG (Liquified Natural Gas).

      Cheers
      Mike

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: