(14-06-2012, 02:04 PM)yeokiwi Wrote: [ -> ] (14-06-2012, 12:30 PM)mobo Wrote: [ -> ]Seems like the best way to get good returns is not really stock picking buy & hold but selling and keeping cash when the market is very high and then loading back when the market drops?
Most of my gains came from buy and hold for at least a period of more than 2 years.
The gains typically came from doubling of revenue or profits, increase dividends, realisation of undervalued assets or buyouts. To enjoy these gains, it is necessary to adopt a buy and hold technique since no one will know when the above events will transpire.
Buying at low will improve the odds of outperforming the market return but it is basically a hit or miss action.
However, as I had written, the stock selection strategy will in a way cap your returns over a long period of time. If 15% is desired as a long term outcome, a predominantly blue chips and REITs portfolio is unlikely to see that kind of return over a long period of time.(Can you imagine SPH, SMRT, Singtel growing at 15% annually for the next 5-10 years???)
Of course, there are always exceptions that will prove me wrong.
For Blue Chips, some common characteristics are, Low or No Growth which means they usually pay out most of their EPS as Dividend for a good Yield.
That means, yes, you are not going to get 15% (Dividend + Capital Gains) kind of returns annually. Even 10% will be tough. It's likely going to be in the 4% to 8% range.
BUT, if you are a die-hard fan (that means you die-die must have some in your portfolio and you are very familiar with their biz and have your own sets of valuations) of Blue Chip Yield Stocks, there're always ways of squeezing out some extra % returns from them, such as,
1) If you simply look at the Price Charts for any of the above stocks, it'd not be very surprising to see that many has at least ~10% gap between their Year High and Low. That usually happen during their cd/xd time frame. I'd posted extensively on how I take advantage of this in the SPH thread and if you can successfully do it twice a year (SPH pays div twice a year), a 10% return is not impossible. To get 15%, you'd need to do it more often (taking advantage of market fears and greeds) but if I were to post the number of times I do that in this forum, I'd most likely get a warning / banned for turning this Value forum into a Trading one!
2) Buy during exceptional times of duress (I learn this from my idols like Warren Buffett / Peter Lynch). Every once in a while, the company does something which the market doesn't like - can be either within their control or outside their control and the market punishes the share price. It can feel like an end-of-the-world kind of feeling if you so happen to be holding the stock (as a die-hard fan). Some notable examples over the years are,
a) StarHub - They lost the EPL rights ~3 years back and share price dropped from $2.3x to $1.8x.
b) SPH - They over-bidded substantially (compared to next highest bidder) for Clementi Mall. I can't remember how much the share price dropped but it was easily at least 10% (?).
The key is, during such times, as a die-hard fan who ought to know better that such events have only a very very low % of probability that it'd really lead to an actual end-of-the-world outcome, we ought to be gleefully collecting more of these stocks (after analysing and re-anlysing the financials again). That's where the 15% kind of annual returns are going to come from such boring no growth Blue Chips. Look at Starhub price now, $3.3x, almost a 2-bagger from less than 3 years back! If you include the dividends, then even higher.