Want to get wealthier?
by Peter Switzer
I hate people who promise to make you rich. And I particularly hate get rich quick seminars and products, and recommend you view them with suspicion. They can teach you stuff that can be valuable but be careful of what you sign up for — they can lead you astray.
I like to get wealthier and to do it gradually reducing the risk.
On the weekend, my reading of the experts I like to follow indicated that the following shares are worthwhile getting into — BHP-Billiton, Origin, CSL, QBE, Sonic Healthcare, Incitec Pivot, Toll Holdings and wait for it, Telstra.
Telstra, of course, is in the middle of a major blue with the Rudd Government over the National Broadband Network and the breaking up of the telco. It makes it a risky investment but at the current low share price and the size of the Telstra brand, the analysts see it as a good bet. But it’s a bet, remember that. It’s a more speculative play.
But on the other hand, it’s seen as a more defensive stock as is QBE as well as Sonic.
This means these kinds of stocks get left behind when the market goes into a wild rally. These are usually good for cyclical stocks that ride up when the economic cycle is looking better with plenty of upside.
Airlines, consumer discretionary, such as retail companies, and construction-related industries are all examples.
Andrew Page at Hubb Financial has pointed out that between the top and bottom of the market (that is, between November 2007 and March 2009) the ASX 200 dropped by about 50 per cent. If you look at shares related to the building and construction industry, the average fall was 71 per cent.
Page pointed out that some 32 cyclical stocks he was watching had rebounded, on average, 132 per cent since the rally kicked off.
To get wealthier you need to expose yourself to those sorts of returns, as well as slower and steadier returns from defensive stocks. This is what building a portfolio is about.
The perfect portfolio
Over the past six months on my program SWITZER on Sky News Business Channel, I have been on a quest for the perfect portfolio. I have talked to a number of stockbrokers, but most often Simon Bond from RBS Morgans.
Before I go into the Christmas break for the show over December and January, I will unveil the perfect portfolio on the show. It will have 20 stocks and I will get other experts to assess it and we will watch how it performs over time. The perfect portfolio will have a few changes as we monitor developments that could alter the value of holding a stock, but its general make up shouldn’t change all that much.
It will have exposure to the key sectors and it will be both cyclically-inclined but have some mainstay defensives.
And it will be aimed at the medium to long-term investor who knows there will be ups and downs in the short to medium-term but in the long run the great quality companies that will help him or her get wealthier slowly.
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
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Published on: Monday, November 09, 2009blog comments powered by Disqus