What am I missing in my equity investments...

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rob oyle

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Be interested to hear opinions on my savings in equities, whether I have any obvious gaps or over-concentrations.
Originally I would have considered shares with minimal (IAWS) or no (Ryanair) dividends and reasonably familiar to me but for diversification purposes, I have picked others along the way (and moved away from Irish stocks).

Airlines (Ryanair) 24%
Banking/Insurance (KBC, Barclays, BOI, DLG) 21%
Building (CRH) 18%
Food (Aryzta) 13%
Pharma (Glaxo) 8%
Oil (Shell) 6%
Conglomerate (Berkshire Hathaway) 5%
Telecoms (BT/Vodafone) 4%

Obviously Ryanair is a big outlier at almost a quarter of the portfolio but Michael O'Leary's crew (no pun intended) have been on a bullish run recently. Any glaring sectors I'm missing - technology I suppose? I'm not trying to beat the market or anything and not interested in ETFs or direct commodity investment.
 
You could always have a look at Utilities. Some of the "water" stocks pay a reasonable dividend. I am also the owner of the Pharma stock mentioned above and I have to say that it is nice to receive a quarterly dividend rather than a twice yearly dividend.
Whether you would also consider looking at the armaments sector or those companies involved in related industries. From a moral point of view many people would not invest here but I suppose that is down to each individual.
 
If your entire wealth is in equities, 24% of your portfolio in any one stock is excessive. If they make up half your wealth, then 12% is probably ok - a bit high, but ok.

You will see from your Aryzta holding how quickly a star performer can lose favour in the market. It is worth 50% of what it was 12 months ago. I presume it formed more than 25% of your portfolio a year ago?

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My own portfolio is not that different from yours. Due to the recent rise in Ryanair share price, I am now overweight in Ryanair. I hate selling a good company and it leaves me with a CGT liability, but it's the right thing to do.

Brendan
 
Thanks for the feedback - until I can purchase a property (a medium term goal), I am holding 1/3 of my savings in cash and term deposits and 2/3 in equities. As the blended rate on my deposits drops below 2.5% (my own arbitrary limit!), I tend to look elsewhere for these funds but there isn't much out there.

I keep track of my investments annually and at the start of 2014, Ryanair, CRH and Aryzta were 33%, 25% and 25% of my equity investments respectively - so much for diversification!
Ryanair and CRH's share prices have pushed on from there and Aryzta has fallen back - I've sold stock in the first two and watched Aryzta fall back of it's own accord!I sold shares in Ryanair once it hit €11, €11.50 and €12.25 over the last few months and I will again if/when it hits €13. Most of the other shares I have acquired with the funds from the Ryanair sales. 27% of my shares trade in GBP, which is interesting and while I'm aware of currency risk exposure, I'm not concerned that this is too much.

I don't know about armaments... yeah I'd be a bit hesitant in supporting such an industry or gaining from its advancement. I suppose investing in the likes of BAE is a grey area where commercial and military operations are side by side. And if I can avoid dividends to some extent I do, but most players in most industries seem to have the same philosophy around dividends.
 
Having 83% of your portfolio or 55% of your wealth in 3 shares is very risky. Especially as you are planning to buy a house.

An exception would be if you were saving a lot of money. If you were saving €20k a year, and your portfolio were €30k, having €10k in one share would not be a huge issue.

Ryanair, CRH and Aryzta may be great companies and may continue to do well. But it's the stock market valuation which matters, not the underlying performance. So Ryanair, for example, might be overvalued by the market. It might continue to perform well, but it might be re-rated downwards.

As you get close to buying a house - then you need to switch out of shares. The stock markets are good long term investments but could fall by 20% overnight and you might not have the deposit.

Note: I am not making any comment on these shares. I am using them as examples as they are in your portfolio.
 
Armaments are probably a limited amount of the market. I think you have most of the broad sectors aside from technology. A few less important ones to consider are beverages, real estate with REITS, mining, media. Check geographic exposure too.
 
Thanks again, yeah I do not have a balanced, diversified portfolio and I will continue to sell down the larger components in favour of other stocks (I see Aryzta is down another couple of percentage points today to €42 - ouch!). I'd like to pick up something in mining and media in due course but was just looking to see if I'd missed anything that was obvious to others.
 
I wouldn't be able to sleep at night with so little diversification but that's just me maybe I would rather hold funds or ETF's over shares despite the tax disadvantages ( this is discussed at length though elsewhere )

Only thing I would say I think both yourself and Brendan mentioned selling the shares that have rose and are therefore making up a higher percentage of your portfolio so you's are rebalancing , from my gambling experience this seems a bad strategy , I fear you will end up selling your winners all thr time whereas you may never get a chance to sell your losers , I also read somthing maybe it was here that most market gains are made from a tiny % of companies , when you are picking only a handful of companies out or the thousands on Stockmarket you need luck to pick the winners , if you so pick one like an apple say and you start selling it when it grew in price and rebalancing , your never going to get the gains you should from your portfolio remembering that only a tiny percentage of company's make up the majority of stock market gains , it's just an observation and I may be incorrect I don't have stats to back up what I'm saying but it's a gut instinct .
 
Fella said:
from my gambling experience
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I am an investor and not a gambler. In gambling, you throw away dud hands and bet on good hands.

Investing is very different. I don't try to pick winners. If I have 10 stocks, a few of them will be winners and a few will be losers.

Take Aryzta. It had been a big winner for me. I needed cash, so what should I have done? Sold my CRH shares which were loses? CRH has risen and Aryzta has fallen. But there is no way of telling this. Shares are volatile. Ryanair may double after I sell them and Aryzta may fall further. Or Aryzta may double and Ryanair may fall. If I sell half my Ryanair and they do well, then I am getting a good return anyway.

Brendan
 
It's actually very similar gambling and picking stocks , well to a certain degree if you trade Betfair it's the same efficient market that the stock market is.

Why wouldn't you sell your CRH which were loses if you needed cash ? It's probably a better move you avoid the CGT. I think we are in agreement largely there is no way of knowing what way the price of a share will go , but if you have the option to sell surely it's more economical to see the losers and avoid CGT
 
Fella said:
It's actually very similar gambling and picking stocks
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There really is very little comparison between gambling and being an investor i.e. a long term buyer and holder of a diversified portfolio of stocks.

Investing has an expected net positive return. Your wealth should grow in time.

Gambling has an expected net negative return. Your wealth will eventually be eliminated by charges, commissions and the bookies' margins.

Brendan
 
That's just what you hear in the media brendan , gambling can have a positive return when done properly , don't believe what you hear about bookies always win!
 
Brendan Burgess said:
That's why they have Bookies Anonymous to help bookies kick the habit of losing money. :rolleyes:
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Come on Brendan that's a lazy argument , in fact small independent bookmakers close down all the time and are taken over by the bigger , joke bookmakers like Paddy Power who won't take a bet off customers who actually know how to find positive expected value bets , all the media will tell you or anyone else is bookies always win blah blah blah and you never see a poor bookie , it is just not at all factually correct and many bookmakers go bankrupt and can't pay out. It has happened against me on numerous occasions.
 
Fella said:
Come on Brendan that's a lazy argument , in fact small independent bookmakers close down all the time and are taken over by the bigger , joke bookmakers like Paddy Power who won't take a bet off customers who actually know how to find positive expected value bets , all the media will tell you or anyone else is bookies always win blah blah blah and you never see a poor bookie , it is just not at all factually correct and many bookmakers go bankrupt and can't pay out. It has happened against me on numerous occasions.
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There is a big difference between bookies always winning and it being significantly profitable in the long run after charges, investment of time and inflation. And even if it is, its probably only true for a handful. The ones who are very skilled or lucky.
 
RobFer said:
There is a big difference between bookies always winning and it being significantly profitable in the long run after charges, investment of time and inflation. And even if it is, its probably only true for a handful. The ones who are very skilled or lucky.
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There is a skill and there is a lot doing it but tiny percentage of overall gambling population , its under reported in media and lazy journalism most articles you read on gambling the journalists are clueless.

This is way off topic now anyway sorry. I would say the original poster lacks diversification and should possibly look at funds or even a higher % into berkishire as that is like a fund.
 
So, a year on, here's where I stand:

Banking/Insurance (Barclays, KBC, DLG, Leg & Gen, FBD, BOI) 16%
Airlines (Ryanair, Easyjet, BBA) 16%
Food/Drink (Aryzta, Coca Cola) 12%
Energy/Oil (Shell, SSE, National Grid) 11%
Pharma (Glaxo) 9%
Building (CRH) 9%
Telecoms (BT, Vodafone, Sky) 8%
Conglomerate (Berkshire Hathaway) 7%
REITs (Hibernia & Green) 5%
Retail (Assoc Brit Food, Tesco) 4%
IT (ARM) 3%

Since last year, some of my investments have tanked (Barclays, FBD, Easyjet, Aryzta, Tesco, Sky) and some have performed well (BBA, Ryanair, ARM). More losers than winners. I think I've performed more or less in line with the market overall.

However, in order to diversify, 55% of my equities now trade in GBP. I held Shell A shares on the Amsterdam exchange (in EUR) but swapped to Shell B shares in London (in GBP) to avail of scrip dividends. No individual shareholding is now more than 9.4% of the total. I think I've met my diversification goals but have opened myself to considerable currency risk - the recovery in stocks on the LSE since the Brexit shock, while welcome, have impacted me in the weakening of GBP to EUR.

Anything else I should be considering at this stage?
 
rob oyle said:
I keep track of my investments annually.
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I'd suggest you need to track direct investment in equities more frequently, e.g. monthly. Even with funds, ETFs, etc. I think you need to look at them more frequently and rebalance appropriately. (At least that's what I do.)
 
PMU said:
I'd suggest you need to track direct investment in equities more frequently, e.g. monthly. Even with funds, ETFs, etc. I think you need to look at them more frequently and rebalance appropriately. (At least that's what I do.)
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Sorry what I meant was I record the historical value of everything at the end of each year, I have a link through Yahoo Finance for the current value of everything. I just don't keep prior valuations or (want to!) look at it too much.
 
Rob would you can consider allocating a small percentage to precious metals. I started investing in gold and silver mining stocks at the start of this year. It appears that gold and silver have broken out of five year bear markets recently which has even caught the attention of mainstream media.
 
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