SDI

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$1.06 sdi limited

the only thing I’d add is that some manages like Lyall don’t...

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Just_a_guy

3,322 Posts.

103

02/02/19

10:53

Post #: 37308109
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Originally posted by mal85: ↑

I think Lyall’s approach is very similar to Peter Lynch’s. Whilst I certainly agree that looking far and wide and rapid analysis of companies leads to the development of effective and efficient screening heuristics, there are problems with this approach for investors. Peter Lynch for one was working 7 days per week for a couple pf
decades to achieve what he did.

I made a conscious decision a couple of years ago to not go down this route. I used the following l
ogic, and everyone I have discussed this with has said it is flawed/crazy, although I still stick by my guns.
i think 20-30% after tax returns are achievable in the long run - there are enough investors with different styles that have achieved this with a strategy (albeit different) to think this is more or less the ceiling without excess risk (apart from renaissance- who are in the too hard to emulate basket for me).

to generate this sort of return you are looking at 50% after tax returns in bullish years and 10% in bearish years. If you are flipping stocks every 9 months then that equates to 100% in bull years, every year. It seems that the very best stock pickers max our at 70% calls right, so
every stock you pick has to make 150% odd in good years with this approach. This is very very hard to achieve. By buying and holding it immediately drops your return goals by half- making it much easier.

If you manage to find an anchor stock or two that can make 30-50% of your portfolio, with a high probability of 20% pa multi-year returns (Think CBA 25 yrs ago or WOW 20 yrs ago or CSL), then it makes it significantly easier to hit these targets. A changing mix of other stocks that have high return characteristics (high upside potential- low sized, low downside potential bigger sized and the occasional low downside high upside where you swing very very very hard) and it is possible to achieve these numbers.

re: SDI- it has essentially been rangebound cyclical since its rerate in 2012. I would say it is decidedly a low quality stock that you can profit from if you time the cycle correctly (more or less with AUD). I think there are much better ideas to be spending time on...

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the only thing I’d add is that some manages like Lyall don’t have the tax issue you and I do.

As someone recently said - you’ve got to be different and you’ve got to be right to beat the market. Difficult but possible and certainly requires a strategy.

Last edited by Just_a_guy: 02/02/19

SDI Price at posting: 72.0¢ Sentiment: Buy Disclosure: Held
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Last $1.06		Change 0.025(2.43%)		Mkt cap ! $111.1M

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the only thing I’d add is that some manages like Lyall don’t...

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