The intention is to identify mainly good dividend paying stocks by using a value investing approach.These posts are a record of the investment products that I have bought, or suggest buying and my view if they remain a buy or a hold or a sell.
The objective, as every fund manager will claim, is growth from a balanced selection.
Each investment is based on the following principles:
They are long term investments.
The company has a sound balance sheet.
The investments are well priced, maybe not cheap but certainly not expensive.
The investment pays a reasonable yield.
The objective is not to trade but to invest. A guiding principal is to buy a share in a company, or a fund, that will exist in 30 years, pays a yield and is in a growing market, if it can be bought cheaply the the main principals of value investing are being followed.
The share will only be sold if the principles change, for instance it becomes extremely overvalued. However, if purchased with a good yield, and continues to pay that yield, it may not be sold even if overvalued.
This approach is not without risks and it is not about trading in and out of shares. It is about using a sensible, steady approach to increasing value. The markets are irrational because they involve humans and humans are not rational. What does matter is fundamentals such as balance sheets, what a company earns, and more subjectively the quality of the management and the market it operates in. As the future is unpredictable, and not predictable, to preserve and increase value it is best to keep it simple, buy something of quality at a good price. If it is a dividend paying stock then this provides a level of protection to any falls in price and of course inflation.
Why buy and hold.
For one it is simple. If you buy a share that is a good safe bet, then why sell it. Some years it will be overvalued, other years undervalued but if it continues to pay a yield and still looks a safe bet then hold it. Inflation and dividends keep a share price, over time within a ratio of it's earnings, if the earnings and inflation increases, so should the share.
We are to start off with £100,000 and will look at investments from this point onwards.
