Austock portfolio versus my model portfolio

On 6th July, The Eureka Report published a report that included a list of stocks that Austock most preferred. Apparently this type of list is usually reserved for their top-tier clients. By top-tier, they usually mean those fund managers and super funds that pay them the most brokerage. However, anyone could come up with a similar list of stocks, and I’ve come up with my own list of stocks that I’m 99% certain will beat the stocks in the Austock list over the next 12 months.

Neptune Marine – I told you so

In my post of 6th Dec 2010, Neptune Marine – Beware of “Growth through acquisition”, I commented that growth by acquisition doesn’t work most of the time. Here’s the proof. Neptune Marine have released a statement on 1st Feb 2011, stating they are going to write down the value of their assets by $99.5m. The company is also selling divisions and trying to restructure itself (the company uses the word “rationalised”), in an aim to return to profitability. The blames lies fairly and squarely at the feet of the board and CEO. All those overpriced acquisitions have now cost shareholders.

The company is still trying to raise $80m in equity, and have released a prospectus for a non renounceable rights issue. New shares are being issued at 5 cents – compared to last trade at around 20 cents. Good luck if you’re an existing shareholder.

How to make your kids millionaires

Any parent wants the most out of life for their children, and I believe one of the best things you can give a child is financial freedom.  However, more important than just providing them with the money to be financially free, is giving them the knowledge to build and maintain financial freedom by themselves.

I began the process of investing for my children 3 years ago, when my youngest child was 2 and the second had just been born.  In this blog post I will outline some simple steps that anyone can take in order to begin building wealth for your children and educating them along the way.

Calculating Intrinsic Value of a share

It could be argued that there is no way of assessing the true value of a share at any given point in time.

The standard blurb on how to value an asset is ” the sum of all the future cashflows that can be produced, or taken out of the asset during its lifetime”. You’ve probably heard about discounted cash flows, where future cash flows are estimated and then discounted back at a given discount rate to give its present value.

Blue Chips by name, not by nature

The following stocks are classified as being in the Top 100 stocks by the Australian Stock Exchange (ASX). Many financial planners have in the past and will be urging their clients to invest in these companies. I’ll be avoiding these companies, unless their performance improves dramatically. None of these stocks will be ten-baggers (i.e. stock price climbs to 10 times the current price). While the share price of these companies may rise, eventually prices track performance, and these companies have not performed brilliantly in the past.