Ann: Trading Update, page-74

@madamswer

1. I'll put it another way, if the SDI forum had been absolutely quiet in the past 12-24 months, with no posts whatsoever, I seriously doubt it that some of the current newer SDI holders would have known about SDI, let alone decided to buy it.

2. As for the never ending discussion about ARB, BRG, REH, ONT, NCK, the more I read your posts, the more I'm having trouble understanding what exactly you are trying say.

All I'm saying is I have preference to invest in good companies at reasonable prices than in mediocre businesses at bargain prices.

I don't expect anyone to agree or to be comfortable with my preference.

These names were first provided as examples of paying for quality, where I find that these companies' PE are always elevated for a long period of time and that they are able to consistently grow their earnings such that the "high" PE that was paid many years ago, are now no longer that high compared to current earnings level.

I could have used your other favourites such as CSL & DLX and my conclusion is still the same.

You then replied to my post by saying that these companies' earnings performance since 2011 were not that flash.

I then replied by saying that they all had their own challenges or capex commitments during the period, and considering this, it's actually not that bad.

You then answered back by saying that these companies were helped by some favourable external factors.

I find these constant need to make a point a little bit unusual of you and perplexing. This is especially so, considering that, in many other threads, you have used the same companies as examples of investment grade companies that you love to invest in because they are consistent surplus capital generators, instead of serial capital consumer.

3. As for my point about having a concentrated portfolio, it is clear to me that you also completely missed my point.

If you read carefully my post about successful business owners, I said that "Most successful business owners usually have more than 90% of their wealth tied to their business. "

This is the case with the founders of Facebook, Google, etc. and locally, we also have Anthony Pratt and his Pratt Industries, etc.

This is simply my personal observation that most rich people usually have their wealth tied to a single asset, their business.


I will find it very surprising if you don't have the same observation.

As for my reference to the Browns of ARB, I am simply making a point that had they kept all of their original shares, they would have become richer than they are now.

I am not that naive to not realise that for every Facebook, there are thousands of dead websites, or for every Apple, there are thousands of defunct XYZ computers.

Now, it is my belief that if I want to get an above average return from my investment portfolio, I need to run a concentrated portfolio, such that a big proportion of my wealth is tied in just a few names, i.e. good companies purchased at reasonable prices.

I do this because I believe that as a private investor, running a portfolio of 20+ names, with some of them being mediocre businesses, is much harder and more prone to making mistakes.

And my own result over many years also confirmed this, most of my gains are from a handful of names purchased at reasonable valuation. As a logical person, I have the duty to analyse my own performance and to continue doing what works for me and to stop doing what clearly didn't work for me.


As mentioned by many others, my method might not suit other people, due to differences in circumstances, knowledge level, experience and temperament.

I believe there is no need to over-analyse my statement/post, it's not that sophisticated, it's just one person's investing preference.

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Have a nice day and happy investing!

P.S. I won't be replying any further as I see no point in it. Cheers!