15/10/2018
Ok so it’s the Sunday before Monday, I read today 2 more chapters of Benjamin Graham, and for the first time I actually made the effort of applying some knowledge that I obtained from the book to my stock portfolio!
So Mr Graham states three rules when it comes to picking a “common stock”, let me tell you what these rules are:
- The company should be large, prominent and conservatively financed.
- Each company should have a long record of continuous dividend payments – (10 years min)
- The investor should impose some limit on the price he will pay an issue in relation to its average earnings over say the past seven years. We suggest the limit be set at 25 times such average earnings and not more than 20 times those of the last 12 month period.
So some time in the future I’m defo going to go into some detail or try to explain my portfolio, but for times sake i’ll just explain about this one ETF I’m buying at the moment.
This ETF called (LCUK) is bare swag. The way ETFs work are bare swag. Basically an ETF is a collection of loads (or not many) shares in various companies.
The powers who own the ETF set a price of which you pay and other millions of people(just like you) buy this fund so that the powers that own the ETF might have 10 million quid. Then they use that 10 million quid to buy those shares in those various companies you wanted to invest in.
Here’s an example:
Imagine if your boy J.KIDD aka Cheesegrater aka Abhi said I’m going to make a fund and for joke sake let say I called it “MO MONEY MO PROBLEMS”.
I would set the price at £10 and then tell everyone what I’m going to do with the fund. So Abhi holds a press conference and says “the shares I’m going to buy are Tesla , Apple and Microsoft.”
Imagine millions of people paying me £10 pound such that I have 9 million quid.
ALL I would do is spend 3 million on each share Tesla, Apple and Microsoft. Boom done. Obviously I’d take a small fee, coz I got all my AI doing the work for you and if the shares rise you get more money and if they drop you lose money.
Quite simple I think, what I love and think is so magical about ETFs is the fact they allow ACCESS to shares’ that in some cases ordinary people just like you and me would not have the kind of capital for.
Simply because I’m only charging you £10 for one of my funds, and the accumulation of millions of pounds is what allows me to buy them for YOU!!! Almost a win win to some respects.
OK back to me
So now that you know what an ETF is I’ll let y’all know I’m buying an ETF called (LCUK). It’s roughly about £10 per fund and using the power of the internet I decided to see what stocks this fund buys.
Of its’ top 10 listed companies only 2 didn’t meet all three of Mr Graham’s rules, with three of them being borderline on the average earning rule.
WOW I’m so proud of myself! I have a lot of confidence on the fund as it’s about 80% in line with Graham rules which makes me feel like if I were to meet him he would pat me on the back and well done Abhi you picked a good fund, he might even have given me a gold star if I wanted to be a proper show off and tell him the fund only takes a charge of 0.04%!!!
I feel confident because there seems to be some crazy and turbulent times ahead with all this brexit bollocks and my portfolio will take some hits so knowing that at least this fund is in line with the majority of Mr Graham’s rules makes me feel very assured that if a recession occurs i’ll be buying this ETF on the cheap and when they rise, guess what MY MONEY RISES TOO.
HYPE HYPE HYPE HYPE HYPE HYPE!!!
Right off to bed thanks for listening.