Markets, Real Estate and SME

Not much happened today in the markets except a positive close. I would like to take this opportunity to thank you for reading this blog and would ask you to support us even further by subscribing to our mailing list. Enjoy...

Markets

Some great buy tips from +Kris Sayce in yesterdays +Money Morning Australia newsletter
View the full, original article here...

Still Five to Buy

In recent weeks we've received a number of emails asking if those five stocks are still worth buying. After all, with the market up 14.6% in just six months, and two of the recommended stocks up more than 35% during the same time, it's a fair question.

The only stock to do worse than the S&P/ASX 200 is Harvey Norman Holdings Ltd [ASX: HVN]. Even so, it's a better-than-the-bank 8.3% gain.

The others have done much better: Qantas [ASX: QAN] up 36.1%; JB Hi-Fi [ASX: JBH]up 20.5%; Toll Holdings [ASX: TOL] up 25.3%; and Myer Holdings [ASX: MYR] up 37.1%.

To our mind, this is why it's dumb to invest in an index or fully diversify a stock portfolio.

If you talk to most financial advisors, they'll tell you to have at least 10 stocks in your blue-chip portfolio. And many others will say you should have 20 stocks in order to diversify.

We've long believed that's bad advice. You're better off doing some decent research or getting good advice on 5, 6 or 7 stocks. You can then spread your blue-chip portfolio across those stocks.

It's a method we personally use. We've just double-checked our portfolio, and we own five blue-chip dividend-paying stocks (by the way, we don't own any of the five stocks mentioned in this letter. We prefer not to mix business with pleasure. We also own a few mid-cap and small-cap stocks, but we're only talking about safe blue-chips in this letter).

But as we said earlier, that's history, what about the future? Well, when we updated the 5 Beaten Down Blue-Chip Stocks report, it hit us that all five stocks are still a long way down from the 2007 peak (2009 peak for Myer which didn't list until that year).

It Pays to Stay Small in Investing

To show you what we mean, Harvey Norman is still down 66.8%, Myer is down 32.9%, JB Hi-Fi is down 23.7%, Qantas is down 68.9%, and Toll Holdings is down 54.1%.

Now, just because a stock has fallen that far doesn't mean to say it will recover anytime soon...if ever.

But it does help to put the recent stock rally in perspective. Yes the market has gone bonkers in recent months, and there's no guarantee you'll see a repeat over the next six months. But the Aussie market is still a long way from where it was in November 2007.

In short, we see no reason to treat the market today any differently to six months ago. It was risky then and it's risky now. But by the same token there are still some good bargains today as there were six months ago - the five stocks we've mentioned in this report are among them.

And if we are wrong...if stocks do fall, let's ask you, would you rather have to sell five stocks to clear out your portfolio, or 10 or 20 stocks as most mainstream financial advisors recommend?

It's a no-brainer in our opinion. In investing, small is beautiful - whether it's small-cap stocks or just holding a small number of companies' shares.

Cheers,
Kris

Real Estate

I love all the various takes on location and what makes a good buy. Take what you can from others perspective and leave the rest I say...Read more...

Though I do not know anything about the Tasmanian Real Estate market I can't really imagine investing there...Read more...

SME

Due to the fact that some entrepreneurship posts have already been made today I decided to post something relevant to all our pockets, and just to show what a failure the mining tax is after all...Mining tax fails to deliver!

Until next time dear readers. Have a safe weekend...