My
own stock ownership history is tiny, limited to purchasing a single share of
Lockheed Martin (LMT) for my brother as a fun Birthday present, as well as owning
shares through a fund in my Pension that I had no control over. Naturally this
was quite a thrill, given the curiosity and research I had been conducting
following entry into the E.S.P.P. program.
My
picks were a mix of ETFs and individual shares. An ETF is basically a fund
that holds a collection of assets but can be traded, i.e. bought and sold like
shares. I'll leave the exact mix and quantity of those selections out for the
time being but I wasn't putting vast sums of money away, just tiny amounts that
I can afford.
My
picks were:
- Caterpillar (CAT)
- Wells Fargo (WFC)
- Bank of Ireland (IRE)
- Berkshire Hathaway (BRK-B)
- United Technology (UTX)
Berkshire
Hathaway (BRK-B) is steered by Warren Buffett. The reasoning behind this pick is fairly
simple. Warren Buffett is simply the best investor in the planet. I’m new to
the stock picking business, but I’m hitching with the wise heads on this one.
Caterpillar
(CAT) is a Dow Jones component, i.e. a blue chip, which has been beaten down by
the global recession and in particular decreased mining activity. I think this
grand old company will easily weather the storm and I’m using this dip as an
opportunity to purchase a quality company at a good price.
Wells
Fargo (WFC) is a similar blue chip that has been beaten down by the financial
crisis, but the great thing is that this monster bank never engaged in the
risky mortgage lending of the other American banks. Fear of anything financial
is what has lowered the price of this quality company and again I’m using the
fear of others as an opportunity to buy quality businesses. The fact that
Warren Buffett owns a good chunk of this company is another positive sign.
United
Technologies (UTX) is another substantial conglomerate with interests in high
technology aerospace and building. It is another quality company that I reckon
is trading at a discount or close enough to fair value in the current time to
be worth picking up.
Bank
of Ireland (IRE) is my riskiest pick, a real danger money option and as such only
got a small amount of my hard earned Euro. This is the speculative element of
my portfolio but I think there is good reason to be optimistic about the stock,
with only 15% government ownership and hard work being done to right the books.
Anecdotally this hasn’t done much for customer service of the bank, with less
staff having to deal with more angry customers. I heard a story that one poor
lady was barked at by a teller to hurry up when she exchanged pleasantries with
a neighbour when at the head of a queue!
As
I read over those decisions and the reasoning behind them, my strategy becomes
pretty clear; I’m picking good companies when the price is down. I’m not timing
the market, or trying to pick the exact moment when all stocks are down. I can’t
and won’t even try but I’m purchasing quality when there is a discount there.
Another
common thread is that the P.E.G. statistic for all of the stocks is pretty good,
close to one or below it if you utilise the Dividend Adjusted P.E.G.
My
websites of choice for share research are the Yahoo Finance for financial
information, Google Finance for tracking movements and Motley Fool for
research.
