Our Second Investment
Housekeping
I wanted to thank everyone again for getting to this point. We had our initial funds added which was quite a manual process but we have now had a few weeks operating on auto-pilot from a savings point of view. Well done to all.
More about this post
I was thinking we would buy around $1,200 of a stock per month and we will stick to that plan roughly - but given stocks have to purchased in multiples, I will try to aim for around $1,000 with some stocks going over (for example - I am unsure how we ever buy Amazon - given each share is a bit under $4,000).
I also think that for better diversification (eggs in multiple baskets), we will buy 1 International share then an Aussie share - so at the end of the year, we will have a dozen or so stocks, split 50:50 local and international. I probably (think I) know more about the O/S stocks but they do have complications like AUD to USD exchange rates etc - plus lets try to stay a bit balanced.
Check out the photo above - this is the stock we are buying currently - we will end up with 50 or so shares of FMG. This is just a snap off my phone - I track stocks I am keen on via the shares thingy on my iPhone. A couple of things to point out.
First is that you can choose the period of time for the chart - this stock looks a bit poorly at the moment, as it has had a high of $26.40 - and is currently back down to $20. But if you click the 1 year or 2 year time frame, the chart looks pretty incredible because FMG has come up from under $10.
So - i think FMG is a good stock for us to have - and even though the price has dropped a fair bit, I believe it will turn around and start climbing back up again. We may consider this through our share saving program - it is like a principle called dollar cost averaging - which in my head translates to maybe buying more FMG later in the year if the price dropped a lot. For example - we buy 50 shares at $20 and in 6 months time, we still think FMG is great - but for some reason the market drops temporarily and FMG is $15 a share - if we bought another 50 at $15 - then on a dollar cost average basis, we would have actually bought 1the equivalent of 100 shares at $17.50. So - a price drop happens from time to time for many reasons - and it might signal a good time to grab some more (or you are just putting more good money after bad - so we have to make sure it isn’t an emotional decision.)
Another thing to see in the photo is P/E - 9.71 - this is a ratio of Price of the Stock over the Earnings of the Stock - So for FMG, the share price is currently 10 times its earning - on a per share basis.
P/E used to be crucial but it is less so now that to all the young ones in the market who don’t think earnings matter - but given I am very very old (to quote Rebecca), I still think it is a good thing - when you compare stocks in the same industry. FMG is an Aussie Miner - Rio Tinto is too - FMG is 9.71 and Rio is 18, BHP is 32 and Newcrest Gold is 20. So - for no other reason, that makes me have a better look at FMG as it looks like the other ones are over values, or FMG is undervalued (or somewhere in the middle).
*** You know I said I was very old - well that is one reason why I have completely missed out making a million on Tesla shares - I love love love the product - but I couldn’t get my brain around the Price versus Tesla Earnings - Tesla current P/E is 1,023 ……………………………………………….
What and Why
Have spent time above sort of explaining - I wanted a local stock versus O/S and of stock baskets locally, people tend to suggest that having some money in one of our big miners makes sense.
Of our mining type companies, I reckon Gold might be a bit high in price and I aint a fan of coal. I don’t like BHP as I don’t like their international activities/behaviour and Rio Tinto tend to blow up indigenous artefacts, amongst other things.
Fortescue - I like them - not perfect to be sure but I do like them. I like Iron Ore - prices will be up and down but I like the product. I like Andrew Forrest, their Founder - who appears to be a cracker of a bloke who has (with his wife) committed to giving away the majority of wealth during his lifetime, has a net zero climate target in place, is looking at green steel, and has a very capable CEO - Elizabeth Gaines.
So, let’s see how they over the few years - lots of negotiations with China - will be interesting.
How we have gone
We are still hovering around break even with our Apple shares - the market has been moving around a bit - BUT we do collectively have over 2 grand in our account - so that is something to celebrate.
Your SVP.