Insane?

[XFool]

Some while ago, somewhere on here, somebody made a rather puzzling post ("I can't be [expletive deleted]" or similar) that seemed to be about investing in a single share only, I think a US company. I didn't really follow it at the time - I got the impression I wasn't the only one!

However, since the recent crash it made me think. How about say just a two share portfolio? Hopefully with one share offsetting the other, my choice might be ICP + RICA. ICP the normal company investment, RICA the 'hedge'. Then, when ICP plunged, as it did, you could quickly steam in and buy more at a reduced price - as more than one ICP director did - without spending time being confused about which of your several shares to buy. In normal times, just add to RICA to keep the value up to match ICP.

Is this an 'insane' investment tactic?


ICP = Intermediate Capital Group
RICA = Ruffer Investment Company

[SalvorHardin]

Two shares is a much better idea than one share. Your going for companies which should perform differently in stressful times means that it should be less volatile than the market. It's not insane, it's just a bit risky because even using funds there's always the risk that something specific happens to that particular fund (e.g. the managers do a Neil Woodford).

There was a thread about picking a single American operating company (I've looked but can't find it). IIRC it was intended to focus people's attention onto their best idea, rather than for investors to seriously run a one share portfolio. There is someone who does this and who posts on TLF (their name escapes me); their one shareholding is F&C which many of us still think of as Foreign & Colonial Investment Trust.

If I was forced to pick two companies it would have to be investment trusts. Long established ones with an international portfolio. For a two share portfolio I'd go with F&C and Finsbury Growth & Income (a 50% decline in both capital and income has no effect on my lifestyle, so I'm not too concerned about looking for offsetting companies).

For a two share operating company portfolio, I'd go with Brookfield Asset Management and Unilever (Brookfield is a bit like a Canadian version of Berkshire Hathaway, without the share portfolio, focusing on real assets and managing clients' real asset investments). I'd probably then go and see a therapist as I'd be on the edge of a nervous breakdown!

[dspp]

I seem to remember JimSusan back on TMF advocating Lloyds as the one share. I believe he followed his own advice.

regards, dspp

[Lootman]

I seem to remember JimSusan back on TMF advocating Lloyds as the one share. I believe he followed his own advice.

Pyad came close with his TMF value portfolio in the late 2000s. As I recall it was about 80% in Lloyds and RBS. Aviva was in there too. He always was a little too keen on the financials. It didn't end well.

For me I'd cheat and hold Berkshire and Scottish Mortgage. Something dull and something racey.

[Itsallaguess]

A user called 'Pastcaring' used to pop in from time to time and tell us all about his two-stock portfolio.

He had very strong views about those who might seek to mitigate against such a concentration of single-source risk..

I think he was based in Australia, and he owned Commonwealth Bank of Australia (CBA) and Macquarie Group (MQG) -

If the salesman said you must have a well diversified portfolio, gee who would question it.

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=17074&p=234764#p234764

He's been very quiet lately..

Cheers,

Itsallaguess

[XFool]

This seems likely to be the OP I remember. Interestingly and contrary to my recollection, it too was a two stock portfolio:

viewtopic.php?p=212372#p212372

I wonder how it did stand up to the eventual crash?

I think my motivation - post crash - for the two stock idea is fundamentally psychological and therefore really applicable to me and may be entirely unsatisfactory for others.

For instance, I do hold both shares I mentioned (ICP & RICA) and I am afraid I have not adhered to all the sensible ideas about sector diversification, rebalancing etc. ICP is by far my largest shareholding, dominating everything else (risky!). I have been a shareholder for a long time - long enough since an AGM consisted of the ICP chairman, original directors, collection of city people plus their assistants, and me, sitting around the boardroom table. Actually rather err... embarrassing.

I did consider selling off some ICP at the start of the pandemic, but failed to do so. Curses! Could have bought back in and lowered the average cost. Noting that RICA, after a period of me wondering: "Why am I holding this? It's supposed to protect capital, it only seems able to lose it." seemed, when the proverbial hit the fan, to indeed have done what it said on the tin.

I really have no proper 'investment strategy', beyond that I seem to prefer 'less means more (hopefully)'. Plus that makes it easier for me to 'know' whatever I imagine I do know about a small number of companies and therefore could help with making a decision at a time of crisis - whether a right or wrong decision!

Taking this idea to the limit leads me to wonder about a two stock portfolio.

[LooseCannon101]

I invest in only one company - F&C Investment Trust (FCIT) which has a distinguished history dated back to 1868.

The company's portfolio is designed to be a one-stop shop - over 450 individual share holdings from around the world, limited borrowing, a discount control mechanism, 50 years of rising dividends and good capital appreciation.

Insanity in my opinion is not understanding a financial product and seeing only its price.

[XFool]

viewtopic.php?p=235287#p235287

Am I the only one who has tried to read this thread and has just about lost the will to live?
(total recs 3)

[XFool]

A user called 'Pastcaring' used to pop in from time to time and tell us all about his two-stock portfolio.

He had very strong views about those who might seek to mitigate against such a concentration of single-source risk..

I think he was based in Australia, and he owned Commonwealth Bank of Australia (CBA) and Macquarie Group (MQG) -

If the salesman said you must have a well diversified portfolio, gee who would question it.

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=17074&p=234764#p234764

He's been very quiet lately..

Let's see how it's going:

AXS:MQG from ~A$150 to now ~A$105
ASC:CBA From ~A$90 to now ~A$60

[GoSeigen]

A user called 'Pastcaring' used to pop in from time to time and tell us all about his two-stock portfolio.

He had very strong views about those who might seek to mitigate against such a concentration of single-source risk..

I think he was based in Australia, and he owned Commonwealth Bank of Australia (CBA) and Macquarie Group (MQG) -

If the salesman said you must have a well diversified portfolio, gee who would question it.

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=17074&p=234764#p234764

He's been very quiet lately..

Let's see how it's going:

AXS:MQG from ~A$150 to now ~A$105
ASC:CBA From ~A$90 to now ~A$60

Yep, he borrowed AU$177,500 on his house to speculate on those two companies. Now down 25% with the debt still to repay. Ooops.


Most of his posts: tl;dr. Gotta love the Aussie spirit though....

GS

[GrahamPlatt]

I invest in only one company - F&C Investment Trust (FCIT) which has a distinguished history dated back to 1868.

The company's portfolio is designed to be a one-stop shop - over 450 individual share holdings from around the world, limited borrowing, a discount control mechanism, 50 years of rising dividends and good capital appreciation.

Insanity in my opinion is not understanding a financial product and seeing only its price.

And over 9 YEARS of revenue reserves according to the AIC. Low yield, (currently 1.77%) but wow.

[Itsallaguess]

A user called 'Pastcaring' used to pop in from time to time and tell us all about his two-stock portfolio.

He had very strong views about those who might seek to mitigate against such a concentration of single-source risk..

I think he was based in Australia, and he owned Commonwealth Bank of Australia (CBA) and Macquarie Group (MQG) -

If the salesman said you must have a well diversified portfolio, gee who would question it.

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=17074&p=234764#p234764

He's been very quiet lately..

Let's see how it's going:

AXS:MQG from ~A$150 to now ~A$105

ASC:CBA From ~A$90 to now ~A$60

Well, that doesn't look too good from a capital point of view, but, to be fair, Pastcaring was keen to often talk about the dividends from his concentrated holdings, so perhaps capital might not matter that much at this particular moment in time...

Cheers,

Itsallaguess

[mc2fool]

I invest in only one company - F&C Investment Trust (FCIT) which has a distinguished history dated back to 1868.

The company's portfolio is designed to be a one-stop shop - over 450 individual share holdings from around the world, limited borrowing, a discount control mechanism, 50 years of rising dividends and good capital appreciation.

Insanity in my opinion is not understanding a financial product and seeing only its price.

And over 9 YEARS of revenue reserves according to the AIC. Low yield, (currently 1.77%) but wow.

Don't know where you get the 9 from, but the AIC shows £111.22m of revenue reserves, giving 1.77 years of dividend cover. The yield is 1.8%. https://www.theaic.co.uk/companydata/0P00000WHD

[fca2019]

A two stock portfolio tickles me I think only makes sense if you work for the company so have inside knowledge and have incentive plan so you get them at a discount.

[GrahamPlatt]

Yeah right. You work for the company AND you hold their shares.
Like Marconi & Carillion &c.

& yes, sorry mc2fool. You’re correct; my bad.

[terminal7]

think only makes sense if you work for the company so have inside knowledge and have incentive plan so you get them at a discount

.

If a quoted company - knock on the door - a Mr Plod wants to speak to you dear.

If unquoted company - you effectively upping the stakes even further for not only your asset base is partially a function of the success of your company but also your income.

Insane - no idiocy.

T7

[Dod101]

To pick up on the earlier point about only one US share, I was the one who asked for some comments and I think Disney came out as probably the one to go for (BH was I think excluded.) IT was not to be a one share portfolio though just the one US share as part of a wider portfolio.

And whilst I good not be comfortable with Pastcaring's enthusiasm for his two share ( and not just two share, but both are banks!) portfolio I take IAAG's point because many of our shares are well down on the capital front but how about the dividends? They sounded to me to be as important for Pastcaring as the capital.

Dod

[Alaric]

how about the dividends?

Australia has regulators as well.

https://www.smh.com.au/business/banking ... 54i9v.html

[flyer61]

For me I could just about cope with Microsoft and Unilever if I had to pick two.....Microsoft my large company choice and Unilever the small company choice

[flyer61]

For the fun of it......and don't we need some fun..

How about a 4 share portfolio, these happen to be my 4 biggest holdings.

Microsoft
Philip Morris
Unilever
Pepsico

whats not to like....16 (rising) Dividends a year....running yield if you hold these at equal weight of 3.61%. Currency risk - so make the 5th holding VMID and you have a yield somewhere around 3.8%

Of course you could hold those 4 as a half and then VMID for the other half and you have a yield of 4.14%. Just the 20 dividends a year

The percentages are my best estimates from HL.