One of my colleagues in our editorial meeting suggested that I look at what our subscribers should do with their Toll winnings. I returned fire with: “Just because Paul Rickard had Toll in his recommended portfolio, didn’t mean we all were long Toll!”
But it got me thinking about how all of us should invest.
The five-year chart below shows why a lot of investors were sick of Toll — it was a disappointing performer.
The company put a profit warning in December but again the story of this company brings me back to the lesson from Toll. You see some companies you just have to stick to when the history has been OK, the management has done well over time and when they’re run by a leader like Graham “Screw” Turner, who can never be underestimated.
I don’t hold the stock but I am toying with it. The bounce on the chart would be a positive sign for chartists and I think a company such as Flight Centre will do better as the economy here and overseas improves.
What the CEOs say
The CEOs of Seek, Dick Smith, Webjet, Coca Cola and Wesfarmers all gave me the same message on my Thursday night TV program — if the economy improves so will their bottom lines.
As an economist, I’m backing a better Oz economy and an improving global economy.
All of this will help cyclical companies, which have missed out on the stock market comeback so far.
I am long an ETF for the S&P/ASX 200, which gives me diversity and exposure to smaller companies. I think the dividend chasers will keep bank stocks rising, albeit more slowly. BHP and Rio I think will keep creeping up, Telstra will bust $7 and the catch up companies will, with the above stock moves, push our index up.
We have probably two years where the catch up companies will get some market attention and by then, rising interest rates and other issues could see me turn bearish.
But for 2015, I am chasing catch up companies, though it will be with a small proportion of my overall super money. The core remains in diversified index payers, which I have been buying since March 2009.
That’s my strategy and I’m sticking to it.
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