Austock portfolio versus my model portfolio update (as at 31st Dec 2011)

So, five months are almost up since I started the challenge of a model portfolio I picked in five minutes versus Austock’s list of preferred stocks (at 6th July 2011). My model portfolio is comfortably beating Austock’s preferred stocks by more than 4%. Sadly, the model portfolio is lagging the ASX 200 Accumulation index by 1%.

Austock portfolio versus model 31 Dec 2011

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Movie Review: Inside Job

Wall StreetNot what you really expected is it? A movie review on a site about value investing.

I accidentally started watching the “Inside Job” the other night and was glued to the screen for two hours until the finish. The movie is a 2010 documentary on the Global Financial Crisis (GFC), but focuses on the CEOs of Wall Street investment banks and the US regulators and their actions.

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Austock portfolio versus my model portfolio update (as at 2nd Dec 2011)

Austock portfolio versus model 2 Dec 2011Its been a while since I gave an update on the performance of my model portfolio versus a selection of stocks made by Austock. This is mainly due to me being exceptionally busy rather than not wanting to provide an update. In the last update on 28th Oct 2011, the model portfolio was lagging behind the ASX200 accumulation index by almost 3%, but still 2.4% ahead of the Austock portfolio. In the latest update – see picture above, my model portfolio is now leading the Austock portfolio by over 4%, and trailing the Accumulation Index by less than 1%. Performance is still not that good when you consider that my return since 6th July is  down 6.4%. I would’ve been better-off putting the cash in the bank. Having said that, the Austock portfolio is down more than 10% since July 2011.

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A Greek Tragedy and US deception

Greek TragedyI very rarely focus on Global Economics and prefer to turn that “noise” off, but I think the current global situation has implications for value investors in Australia and globally. So much so that I thought I’d share my thoughts with readers.

Did you know that most of Greece’s sovereign debt is held by European banks? There are concerns that the debt is worthless as Greece is unlikely to repay. Greece can’t get out of it by printing money. Either Greece will have to default, or pretend it isn’t, while the rest of the Euro ignore the pretense, pretty much like they are doing now. Banks in Europe are now being downgraded, with Standard & Poors downgrading seven Italian Banks and three US banks (Bank of America, Wells Fargo and Citigroup) overnight. There have also been reports in the media that some International banks are refusing to trade with European banks. I’ve also read that several European Banks are technically insolvent, as much of their assets aren’t worth the paper they may or not have been printed on.

The US is also kidding itself that it’s sorting itself out. The current economic state is very unstable, and any crisis in Europe will likely affect the US as well. I think the US is over-confident that it can control its economy and avoid a recession. However, the US is lucky in that it can print money to devalue its currency (unlike Greece) making the US dollar cheaper, supporting its exporters and encourage investment into the US.

So what can we expect if this scenario comes to life? A recession in the US akin to the 1930’s Depression, large stock market falls globally and riots and protests in Europe is probably the worst case. The most likely scenario in my view, is for Europe and the US to muddle through for a few years with little or no growth. Expect markets to be much more volatile with large swings both upwards and down.

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Austock portfolio versus my model portfolio

On 6th July, The Eureka Report published a report that included a list of stocks that Austock most preferred. Apparently this type of list is usually reserved for their top-tier clients. By top-tier, they usually mean those fund managers and super funds that pay them the most brokerage. However, anyone could come up with a similar list of stocks, and I’ve come up with my own list of stocks that I’m 99% certain will beat the stocks in the Austock list over the next 12 months. Read more of this post

Neptune Marine – I told you so

In my post of 6th Dec 2010, Neptune Marine – Beware of “Growth through acquisition”, I commented that growth by acquisition doesn’t work most of the time. Here’s the proof. Neptune Marine have released a statement on 1st Feb 2011, stating they are going to write down the value of their assets by $99.5m. The company is also selling divisions and trying to restructure itself (the company uses the word “rationalised”), in an aim to return to profitability. The blames lies fairly and squarely at the feet of the board and CEO. All those overpriced acquisitions have now cost shareholders.

The company is still trying to raise $80m in equity, and have released a prospectus for a non renounceable rights issue. New shares are being issued at 5 cents – compared to last trade at around 20 cents. Good luck if you’re an existing shareholder.

How to make your kids millionaires

Any parent wants the most out of life for their children, and I believe one of the best things you can give a child is financial freedom.  However, more important than just providing them with the money to be financially free, is giving them the knowledge to build and maintain financial freedom by themselves.

I began the process of investing for my children 3 years ago, when my youngest child was 2 and the second had just been born.  In this blog post I will outline some simple steps that anyone can take in order to begin building wealth for your children and educating them along the way. Read more of this post

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