A newbie asks about Typical Portfolio Returns
#11
(04-03-2012, 06:59 AM)Kristina Mae Sy Wrote: Thanks scion cho for the input.
I also have most of my portfolio in uitf/mutual funds ,with a ratio of 50-50 for equities and debts respectively. I adjust the ratio depending on the situation of the market and the interest rates .

I have never traded stocks before but have read a lot and done my homework.
This will be the first time that I will be buying pure equities by myself.
And have allocated a small portion of my portfolio for stock trading.

By the way how many stock do you own ?
What is the optimum number of stocks to own to make it manageable?
And for a newbie like me what stocks can you suggest for my portfolio allocation? Should I stick to the main index and sectoral index stocks to be safe initially ?

regards,
kristiemceeSmile

I've noticed that Bond Funds and Equity Funds aren't really negatively correlated. So, if Equity market goes down, tendency is that Bond market also goes down (or be flat or whatever. Basta hindi paakyat). Since we're into the "Fund shifting strategy", may I ask, when for you would be a good time to shift into Bond Funds? I'm still looking for signals (i.e. macroeconomic, technical, etc) that may indicate that Bond Funds would most likely benefit (thus, increase in its Fund value).

Going back to your question, I really don't set a limit on what number of stocks I must hold. But I think, on the average I hold around 8-10 stocks. The weights aren't the same.

I'm trying the "trend-follower approach" wherein I get to increase shares in one stock as long as it maintains its positive trend/momentum, then sell if support lines are being broken. I could say that the ideal number of stocks for proper diversification would also depend on your portfolio value. Stocks in my portfolio also vary in terms of investment horizon. Some stocks I just bought due to some technical momentum, but I don't plan to keep for long. For stocks that have good fundamentals, I don't have problems keeping them for so long. Usually, these are the heavy weights on my portfolio.
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#12
@scion_cho: "I've noticed that Bond Funds and Equity Funds aren't really negatively correlated. So, if Equity market goes down, tendency is that Bond market also goes down (or be flat or whatever. Basta hindi paakyat)..."
My comment: both bonds and stocks are sensitive to interest rates but at different degrees; both bond prices and stock prices would react positively to any interest rate decline, but with bonds more sensitive to it than stocks would be. This is the reason why bonds did so well in 2011 and outperformed stocks, which just barely eked out a positive return during the period.
Furthermore, bonds and stocks have different roles to play in an investment portfolio. Bonds (those without any embedded options) have a known cash flow over its lifetime (coupons plus return of principal upon maturity), are easy to value as a result, and are thus considered to be less risky (all things being equal, meaning ignoring default risk). Stocks have no maturity and its cash flows are very uncertain and stocks are thus very risky. Higher risk means higher return; lower risk means lower returns. You never hear of anyone becoming a millionaire because he invested in bonds -- he has to be a millionaire to start with if he wants to earn substantial returns from bonds.
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