Investing in Shares 101: My Experience 2

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Dr Tony Stewart is a scientist and analyst by training. He has run a strategic market research business and has an extensive background in statistical analysis. At the beginning of his investment career, he read widely and undertook courses on investing run by the Securities Institute of Australia. He has invested in the Australian stock market for thirty years.

John Rothfield 1987 Feature 3

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Investing in Shares 101: My Experience Part 2 — Overview, Building a Portfolio, Banks

1 Introduction

In my experiences Part 1, I covered the golden age of floats, successes, luck, my education in shares and my one major systemic mistake. Because of the last, I argued passionately against diversifying and recommended you concentrate on a few shares only. My take homes were to stick to the value investing approach and to concentrate rather than diversify and the reasons for this. The nuts-and-bolts advice and investing methodology are covered in 1 Basics and in 2 Value Investing.

In Part 2 I begin with an overview of my thirty years of investing in shares not covered in part 1. I talk about why understanding a woman’s approach to investing is useful.  I extoll the virtues of DRPs (Dividend Reinvestment Plans) or forced investment in small lots and the general advantage of growing one’s portfolio in small parcels. I explain why I thought early on that the banking sector in Australia was a good bet and why I have been constantly disappointed. This is a useful case study that can be generalised and is worth pondering upon.

I conclude with a take home summary that encapsulates everything I have been advising in these four articles.

I hope you’ll remember this advice fondly in thirty years time, but also that you’ll review it annually and compare your investing experiences with the advice. You can always correct when you divert from sensible action!

2 Overview of My Thirty Years

I was very lucky starting out when I did. I was very lucky investing in CSL (see My Experience 1).

I had a good time buying and selling shares. I did seriously try to be contrarian (buying when the market was down, selling when it was up). I learned a great deal buying and selling many shares, hopefully not too regularly. However, I regret that I spent so much time trading in mediocre companies. From the early 2000s, I spent much time trying to get rid of shares that I shouldn’t have bought in the first place.

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