Quote:
Originally Posted by whizzard
Lastly, I have to agree to disagree with you on the point about actively managing an investment portfolio. We just have to do the best with the cards that we are dealt with - illnesses and accidents may or may not happen. They can't be planned for so in the meantime, we manage based on our circumstances. E.g. I have invested in Datapulse for some years which has been paying fairly good dividends (about 10% pa). The stock doesn't appreciate much but it provides good dividends. But, the world is moving away from what the company does i.e. CD and DVD replication services. As high speed broadband becomes increasingly pervasive, consumers find it more appealing and convenient to download their songs, movies, games and software online instead of physically buying the discs. Some of this has even gone to a cloud based model. I recently divested my entire holdings in this company as I am no longer confident that its business is sustainable in the long haul. It may remodel itself into something more promising in the future but at the moment, if it continues the way it is, I am not that upbeat about its business prospects. It has provided me with a good dividend yield all these years but the time has come for me to say farewell to it, take the money and move on to another better investment hopefully. It's still paying a good dividend and the share price has stayed up and it would be easy for me to leave it as it is but I think that investment is getting riskier for me.
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This is not a good example, because it's a small cap stock. There are quite a few of these old tech small caps with good yield but dying business models. Elek and Eltek comes to mind and to some extent, Venture Manufacturing is in a similar boat although they are trying to change. Singapore tech is a sunset industry because of the cost of doing business and if you don't have much future prospects and are unwilling or unable (due to management age) to reinvent yourself then you simply pay out all you earn until the company goes to nothing. There are high dividends but no growth.
The type of companies for a long term portfolio that you manage passively would be yield stocks that are stocks with decent yields and growth that at least matches GDP growth or inflation. These could be blue chips like bank stocks,
SPH, high quality REITs, ST Engineering, Singtel etc. If you are in these types of stocks rather than small caps, you should not have to do anything with your portfolio, should you become demented
