• Christopher Hall

In 6 months' time, what would your portfolio wished you'd done for it right now


If you're like most investors, selling your CBA shares to buy Blackmores or Bellamy's isn't an easy call. In fact, it probably seems outrageous.

Don't worry, I'm not suggesting you sell all your blue chips and buy small caps or illiquid shares, but in hindsight, if you'd done that at the start of 2015, well, you'd be set.

Hindsight won't give your portfolio the growth that everyone is seeking right now, but it can give you a pretty good idea of the driving forces behind the top performing shares of today.

Before I rant on about how portfolios need to be slanted for 2016, it'll be helpful if you can gauge how adaptive you have been over the last decade or so.

So quiz yourself:

2005-06: We all wish we'd had more gearing

2007-08: We all wish we'd never heard of gearing!

2009: Flight to quality - the blue chips took the market higher

2010-2012: AUD Tailwinds + Avoiding the Resource Super Profits Tax and Industries sector exposed to a shuffling federal government

2012-2015: AUD Headwinds + ‘Just buy the banks’, Telstra and, well, anywhere you put your Term Deposit Balance, now that interest rates barely out-run inflation.

How'd you go?

If your portfolio kept up with the above movements, well done - you're pretty astute and could be considered a pro-active investor. If your portfolio was out of sync with these movements, you too might find the below interesting.

If you're really dialled into what’s happening on the ASX, around April 2015 you would have noticed a coincidence: did you think it was a little odd that BHP, Comm Bank and Woolies all paid similar dividends? This was when every Australian broker was discussing the 'yield trade' as being the backbone of the ASX. You observed that the 'yield trade' levelled the market and nearly every blue-chip paid 4% + franking.

With the benefit of hindsight, we can now see that the yield trade was so obvious, even taxi-drivers were suggesting it. And when the taxi driver has told everyone, there is no one else left to buy. If no one is buying, then everyone is selling, or waiting to sell... the market falls as it did…. from 6000 to 5000.

Yes, welcome to November 2015, with the ASX a little above 5000.

November 2015 is prompting two main questions:

  1. If bank dividends are in doubt, where are my 2016+ dividends coming from?

  2. My portfolio needs growth. Where is it going to come from?

The answers to these two November 2015 questions is in the theme of Early 2016: The rise of the growth shares with growing dividends.

The astute investor, the one who has adapted their portfolio over the last decade, will start looking for clues in the shares they wish they’d bought 12 months ago.

You probably already know of these shares, they are the 10 or so shares that we all wish we already owned [note: if you don't know these shares, then make sure you're sitting down before you look them up. Prepare yourself to see some staging returns over 100% in the last year].

The leading shares of 2015 have been: Dominos Pizza, Qantas, Collins Food, Capilano Honey, Hub 24, Ooh Media, SmartGroup, SG Fleet, TPG Telecom and Freelancer.

Buying these shares today could be good, but it could also be a little too late. Taking a deeper look at these leading shares and their themes reveals that they’re in two different groups.

These two groups have exceptional tailwinds that have been pushing the share prices up, and up even faster since the banks started falling.

But do we buy these leading shares for 2016 - 18?

While it might be too late to snap up Dominos shares at a bargain (although I will happily be wrong) - all is not lost! There are dozens of companies following in the footsteps of today’s market leaders but which are currently where today’s leaders were 12 months ago. These shares are offering growth and plenty of scope for dividend growth too.

Click here to see these two groups, what defines them, and the list of the their respective leading shares.

Note: This is not advice. Seek professional assistance where appropriate.

Image source: https://psibrone.files.wordpress.com/2014/10/hindsight.jpg


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