To clearly demonstrate the advantage of buy and hold equities, I will posit the following situation. Ten years ago on November 23, in the year 2000 you had $10,000, which you wanted to invest in a quality Australian company. I was originally going to say you chose BHP (whose performance I might add was much better than the stock I chose), however, they have done several things like stock splits & de-mergers in the last 10 years, that make a retrospective calculation tricky.
Daily Archives: April 7, 2011
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Taxation Value of Equity Investments, Part 1
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Managed Funds
You will often hear me talk about the poor performance as a whole of the managed fund industry, after taking into account fees.Mathematically of course, over any given period, 50% of funds are going to out-perform and 50% will under-perform.Unfortunately, studies have shown that when fees and charges are added into that, over 80% of all managed funds fail to beat a basic benchmark.
I decided, rather than trust someone else’s ‘studies’; I would look into the matter myself.Here was what I discovered:
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Beating the Indices
Our most satisfying result was calendar year 2008, a horrible year for investors globally, the S&P/ASX200 (TR) index declined by about 40%.I do not think it appropriate to quote an un-audited result here, but suffice to say that while our portfolio declined in value; it was nowhere near the quantum of the broader market. Any loss of capital is undesirable; however, if the cause of it enables you to accumulate significant positions in some seriously mis-priced issues then, in the longer term, it is not such a bad thing.
Over the next few months, while we get all the regulatory loose ends tied off prior to our July 1st 2011 ‘informal’ launch of EGP Fund No. 1, I will periodically post some information to direct our investors to the philosophical foundation of my investment choices and beliefs.
I am an unashamed fan of Warren Buffett as an investor, as I am of a great many other ‘super-investors’.I have reviewed extensively Buffett’s career and writings and would encourage anyone with a genuine interest in wealth creation to do the same.
Welcome to the Eternal Growth Partners Blog.
The Blog is created as a tool to communicate information with unit-holders of EGP Fund No. 1. This will be the default communication tool, the only materials that will be mailed out to unit-holders are those we are legally required to. The purpose of this is to minimise costs in order to maximise returns.
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