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Alec Hogg: Biznews’ Global Share Portfolio for April


In this month’s instalment of the Biznews.com Global Share Portfolio Webinar, Alec Hogg once again takes us through the performance and current position of the long-term portfolio, which is proving to be highly successful indeed. If you’ve just joined in on this journey, not to worry. Hogg provides a comprehensive breakdown of how the shares are doing and how the companies, split between the likes of Google, Amazon, Berkshire Hathaway, IBM and Novo Nordisk, are performing.  Novo Nordisk has once again been the star performer of the portfolio, with Berkshire Hathaway proving to be rather disappointing. Find out the bigger picture in this user-friendly perspective for investors, traders, market-watchers and laymen alike. – Tracey Ruff

Well, it’s exactly 12:30 and we’re on Thursday, the 23rd of April.  I’m Alec Hogg and here is our monthly update of the Biznews.com Global Share Portfolio. Just by way of introduction for those who haven’t been following us over the last little while, what we did was we started with $200,000.00 that was invested in the Biznews Share Portfolio, onto the Webtrader platform.  We have the Standard Bank Webtrader, which is a fantastic facility that can enable us to invest in many stock markets around the world and this is really a way to start helping people to invest. A bit of a handholding, to put together a model portfolio so that we can then see how that portfolio performs after all costs, etcetera.  It really is a fantastic system and clearly, we’ve been very fortunate. This is a long-term portfolio.  It’s meant to be held forever – never for any of the shares to be sold.  Of course, sometimes shares do go a little bit out of kilter and you can then take a decision but even though share prices are very high at the moment, that isn’t something we’re doing.  Anyway, the model portfolio then has made certain investments.

Let’s just have a look at the structure on the next graph. That shows you the account overview. The account value is now at $208,000.00. Of that, $176,000.00 has been invested in equity positions and we still have $32,000.00 being held in cash. On the cash component, it depends very much on what we are able to find as a stock selection.  This is probably the best way to look at it.

There’s the account overview.  Those are the shares that are held in the portfolio. Amazon.com, Berkshire Hathaway, Google, IBM, Novo Nordisk, and Vanguard.  The intention is to invest roughly one-third in Vanguard, roughly one-third in these two stocks (15 percent each for Berkshire Hathaway and Google) and then to have five stock picks.  Amazon.com, IBM, and Novo Nordisk are the first three of those stock picks.  They would each absorb an investment of eight percent of the portfolio.

We’ll get into more details in a moment, but that’s the way the portfolio has been structured.  You might have heard about Core and Satellite portfolios.  Well, the Core here is the S&P 500 (in other words, the Index/Exchange Traded Fund), which is very cheap – the way in and out.  We’ve looked at costs in a big way and as you’ll see a little later, the Vanguard Fund closely tracks what happens on the S&P 500 – that overall index in America.  Then we’ve taken another third into our two core holdings – our two foundation stocks – and those are Google and Berkshire Hathaway, and then we’ll have five share selections.  You can do this yourself.  You can actually make these investments anytime you want to, through the Webtrader platform.  That’s what this is all about.  Okay, so much for the background.  Let’s have a look at how our portfolio has performed in the past month – in fact; in the four-and-a-half months to date, (we started on the 5th of December, as you can see over there).


It is now the 3rd of April, so give or take a few days we’ve been going for about four-and-a-half months.  This is in U.S. Dollar terms. The Vanguard Portfolio: we have 318 of those units and they cost us $188.00 each.  They’re now at $193.00, so not a huge increase there. In terms of this table, what we wanted to reflect here was the portfolio, the percentage of the portfolio, and how it is performed at the moment.  If you have a close look at this table, you’ll see the target for the S&P 500 (in other words, the Exchange Traded Fund) is 30 percent. By the way, it’s very important to have a look at the codes after these stocks (VOO: ARCX for the Vanguard S&P 500) because there are various types.  Google has a few different shares.  Berkshire Hathaway, of course, has As and Bs, etc. so you want to get those codes absolutely right so that when you are buying or following our portfolio, you buy the correct shares.

That is particularly important when it comes to the Exchange Traded Fund.  Thirty percent is therefore held in Vanguard.  There’s the target – 15 percent each.  Berkshire and Google are both at 14 in the current portfolio.  That’s primarily because we’ve had fantastic performance from Novo Nordisk and Amazon.com, two of our share picks.  IBM has been pretty stable there at eight percent.  As you can see, of the cash components, we still have $32,000.00 sitting there in cash.

Let’s move on to the next one.

This will give you the Rand figures.  This is the critical issue for South African investors.  At the 5th of December when the portfolio began, we had R11.27 for each US Dollar.  As you can see, the Rand today is at R12.28 for each U.S. Dollar.  It’s very easy to have a look.  The cash has remained unchanged at $32,356.00 and that is a nine percent appreciation in Rands.  Even if we didn’t do a thing in the portfolio, even if we just put all the money into cash, we would have been nine percent up and in many ways, offshore investing is trying to do that.  It is based on an opinion/a view that we have, that the Rand is a weak currency and likely to remain weaker into the future.  As you can see, in ± five months, the Rand has depreciated by nine percent against the U.S. Dollar.  That’s running at 20% per year.

Very scary, if you happen to be an importer or somebody who uses imported products in South Africa, but very attractive if you’re an exporter from this country.  It will paper over many problems that you might have in your business because the Rand continues to depreciate.  We can get into a political issue or an economic management issue on that one.  If you read Biznews, you’ll know that we think the economy is not being well managed.  We think that the development status is going to ensure that the Rand remains a weak currency until the political/economic management changes, to take account of the world/global realities.  However, that’s politics and we’re not really interested in politics.  We’re just interested in an overall view and as you can see here, our view is that the Rand will remain weak and that’s primarily the reason why we should be looking to invest in offshore equities.  Justin is sitting here with me.

To read the full story click here: Alec Hogg: Biznews’ Global Share Portfolio for April

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