Forum Topics Holding Positions with < 1% Allocation & 10x in 10 years
Muddled
Added 5 years ago

Totally agree re Sharesight, great tool, use it to help manage our SMSF.  As others have said, generates great performance insights, makes tax planning and reporting much simpler.  Never going back to spreadsheets.

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aashu4uiit
Added 5 years ago

Thanks for sharing your thoughts @reddogaustin

The  only challenge I have is that my Pv is < 20k>

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reddogaustin
Added 5 years ago

No worries @aashu4uitt

May I offer more food for thought.

Ringfencing your share portfolio from your life wealth plan/situation, I would suggest the overall portfolio size is irrelevant in some respects. I trained myself to look at percentages, not dollar values.

This stops you worrying "omg it is a $1k buy" when you starting out and "omg it is a $50k buy" later on. I find it is easier if these values are "I want to buy 2% worth and therefore that is $50k or $1k or $5k or $500", or "I want to trim 3% of my ASX:PME that has out of control growth, and 3% is $500/$1k/$10k/$40k" etc

Reviewing the dollar value absolutely has its worth and is required at various decision points, but it can also be a distraction, and trigger bias.

Remember, a 100% gain on a $1k buy is just as impressive as a 100% gain on a $50k buy. Sure a higher dollar value for the dude that doubled $50k, but the euphoric feeling is exactly the same.

Shamelessly… Sharesight does this with a toggle switch – percentages, dollar values, percentages, dollar values… oh the delight!!

 

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reddogaustin
Added 5 years ago

@aashu4uiit

I know I sound like a broken record, but I really cannot recommend enough that people try the paid version for sharesight, if the free one doesn't cover their holdings. Apologies if I seem pushy, I just want to enable straw-people to do what they want to do - be great investors! and learn from others mistakes (mine) as it was a hard learned lesson for me as I only started using sharesight 2 years ago, the 18yrs before that, was a mess of spreadsheets and guesswork across a whole range of metrics.

Considerations

a. a tax deduction

b. I don't know your personal circumstances, but if you are intending to dedicate a reasonable amount of time to investing, then why not have a proper tool that helps you?

c. think of it as a trial. don't like it? chalk it up to a life lesson

d. your 30x positions can be any percentage you want, or 40x positions or 50x positions! [a lesson here waiting to be learned, but each has their path to walk :-) ]

e. What is $300 over one year? $1 a day? 3x nights at the pub (remember those?), 3x pairs of shoes or jeans?

f. DRP and cost base tracking

g. tax reporting

h. performance reporting and analysis

i. history analysis to learn from your own mistakes...looking back over my sells and previous company choices... wow.

j. feed the inner watcher - log in every day and marvel at your success's and reminisce over your losses.

[edit: spelling]

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aashu4uiit
Added 5 years ago

I have been adding new names to my portfolio far too often in the name of diversification or let's say I didn't have conviction so was picking left right centre. I soon realised that if I have to improve my returns I have to deploy a good amount of cash into existing positions rather than buying more into new positions. I even made the mistake of buying all 30 stocks (experimental portfolio) for the same $ amount of allocation some of the stocks are at 50%-100% gains but some are at 40%-70% loss. I realised as I only allocated the same amount to all stocks my returns are way below benchmark - So the learning was - allocate higher capital to winners/high conviction positions - Yes, I know it's very simple and very basic but I am sure a lot of us have such less than 1%

Your stock went 10x in 10 years: 26% CAGR - Excellent Returns


You only allocated 1% of your capital to this idea, $100 from the capital of $10000. In the end, even if it's 10x, the idea contributed $1000 of gain to the overall portfolio which is 0.96% CAGR and just 10% return in total for 10 years. I am sure it's not an eye-opener for many of you but for beginners like me, it's important learning.

Lessons Learnt:

  1. Allocate more capital to ideas where allocation is less than 1 %
  2. Look at the returns from portfolio level and not each stock level , a caveat - depends on allocation as well.

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reddogaustin
Added 5 years ago

Hi @aashu4uiit,

A lesson well learned, and one I learned myself (a while ago now, but did learn it never the less!)

*Incoming shameless plug*

The lesson struck home for me once I started using Sharesight, in conjunction with a friend making the same observation above. Combined with the avoidance of homemade spreadsheet errors, I could see immediately:

- holdings with good CAGR and holdings with bad CAGR^

- holdings that were <1% of my portfolio on any given day - this forced me to ask that question "<1% isn't going to move the needle on the portfolio CAGR, so if I won't buy more now, why do I own this amount at all?"

- the % breakdown of all holdings across the portfolio (Diversity report + do not group) - this helps me match each holding size within the portfolio to my portfolio plan and once exported to excel, helps me model different outcomes.

For ~$300AUD a year, or what ever the fee is, the value proposition is asymmetric for me. If that analysis helps me see a bias, or avoids a spreadsheet error, spot a dog stock, then I am making money as far as I am concerned. Also shhhhh, don’t tell Sharesight though, they’ll jack the price up on me!!

 

^ good and bad are relative to your risk/goals/xp/etc

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Strawman
Added 4 years ago

Hi @gummy

Sharesight offer here:

https://strawman.com/blog/manage-your-portfolio-in-style-with-sharesight/

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