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Building a share portfolio
So... what if we replace:

BVT with BID
KIO with BIL

IQ Test

(12-10-2017, 10:12 AM)MrBean Wrote: Maybe - but then why not just 1?

Well yes. If you only chose the one best stock, you would get rich very very fast. Slightly less fast with two, because, by definition, number two has a lower return than number 1. And so on for each added stock.

The reason why we diversify is because we are human and we make mistakes in picking stocks which aren't the best. But if you choose five stocks and four are above market average, you'll be way above market average. Statistically, the more stocks you have, the closer exponentially you are to the market average. Historical statistics show that at 10 stocks, the average professional investor is within 10 percent of the market average. At twenty stocks, the average professional investor is within 1 percent of the market average. So if that's the historical stats for professional investors, what about us mere mortals? That's why if you're planning to stay rich, ETFs are better than stocks. Stocks increase your volatility and help you get rich faster, but increase your risk. If you are not prepared to accept an increased risk, then ETFs are better than market average and the better choice.

It's one of the two golden rules of investing:

Rule 1: Buy low, sell high.

Rule 2: To get rich, concentrate your portfolio. To stay rich, diversify your portfolio.

It all depends what your goals are...

(12-10-2017, 02:07 PM)Bandit Wrote: So... what if we replace:

BVT with BID
KIO with BIL


That's a matter of personal choice.

KIO is quite volatile and has the potential to make big profits, especially in the shorter to medium term (3-5 years). KIO would be the Bitcoin in your portfoilio. Might make you rich, but might crash hard if the iron price drops. AT the moment, iron and paladium are the two metals in huge demand and should grow very fast, but that could change at any time. (See SBAPD1 as a paladium example - SBAPD1 is Standard bank's direct paladium ETN). My prediction is that these metals will continue to grow massively for three years at least. But that's just an educated "guess" of course, as is always the case in the stock market.

Speaking of which, if you want to diversify your asset types, you might consider dropping KIO and doing an ETN (exchange-traded note) instead which is different in kind. If you buy SBAPD1, for example, it's actual physical paladium which Standard bank stores in a vault. Its performance is almost completely unaffected by JSE performance, but it is strongly linked to the Rand price and paladium demand. The increased demand for paladium comes because 90% of catalytic converters in petrol engines now use paladium. Diesel catalytic converters, which use platinum have failed international standards testing and the move is away from platinum and towards paladium. Hence, the drop in recent years in platinum and sudden growth in paladium.

So if you're looking for an alternative to KIO, maybe consider an ETN instead:

JSE Finance Forum Attachment - Filename: Pic.JPG   

No ETNs, no ETFs, just shares. I have an ETF portfolio. ETFRHO is doing fantastic btw.
IQ Test

Yes, that's partly because rhodium is a side product of paladium mining. The two are always found in the same ore. Rhodium will invariably follow the paladium price to a large extent.

In the mining sector, my bet is on KIO... ;-)

With regards to your other choice, BVT vs BID, I haven't really studied either, and I don't really know enough on either of them to comment.

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