Stock Selection and Portfolio Management to Minimize Risk & Maximize Returns in the Share Market (Diversification across various asset classes, industries, sectors, countries using listed securities on the ASX) Presented by: Robert Markham Managing Director Vector Vest Inc. Asia-Pacific 7 June 2016 AIA Melbourne
AGENDA 1. About VectorVest 2. Minimizing Risk & Maximizing Returns 3. Stock Analysis & Selection 4. Portfolio Management
About VectorVest Stock Analysis & Portfolio Management Software provider In Business 30 Years Fourteen Countries (AU 1800 shares, USA 9000, Total 23 000) Software Mathematical,Rules based Uses combination of fundamental and technical stock analysis Integrates this with a unique market timing system.. To give a share portfolio management tool to help subscribers decide when to buy shares, which shares to buy and how to manage their share portfolios using a variety of risk management techniques
Minimize Risk Maximize Returns By creating and maintaining a Portfolio that hedges Risk by Diversification - Preserve Capital, generate consistent Capital Growth and provide a steady and reliable Income Stream in different Market Conditions
Successful Investing What securities should I buy for: Diversification Capital Growth & Preservation Dividend Income When is the best time to buy them? Once I have bought them, how do I manage them? Risk Management/Stop Losses When should I become bearish and what should I do? When should I become bullish and what should I do?
Diversification Choices Asset Class Sector/Industry Country
Diversification -Asset Class Asset Allocation Cash Bonds & Fixed Interest Shares Property Currencies
Diversification-Sectors & Industries Financials (Insurance, Real Estate, Banks, Diversified) Telecommunications Utilities Consumer Staples Consumer Discretionary Health Care Materials Energy Industrials
Diversification -Country Americas United States Canada Europe Germany UK Asia Pacific Japan Hong Kong China Singapore Australia Emerging Markets
Country Performance Table 1 year 2 year Americas United States S&P500-1% 10% Canada TSX Composite -11% -7% Europe Germany DAX -18% 3% UK FTSE 100-11% -8% Asia Pacific Japan Nikkei 225-10% 15% Hong Kong Hang Seng -17% -8% China SSE Composite -22% 44% Singapore Straits Times -17% -10% Australia ASX 200-14% -7%
Performance Comment Countries stimulating their economies have best performing stock markets China. Germany Japan USA Countries with no economic stimulus are underperforming Hong Kong UK Canada, Australia Singapore
Diversification Options Buy actual Asset Chosen Asset Class (eg Property, Bond) Country Buy ASX Listed Securities Chosen Asset Class Sector/Industry Country Liquidity/Transaction Costs/Currency Risk
Listed Securities Direct Shares Index Trackers (ETF s) X Managed Funds
Using Direct Shares to Diversify Direct Shares Sector Exposure Industry Exposure Local & International Exposure
Direct Share Analysis & Selection Sector and Industry Analysis Fundamental & Technical Analysis of Individual Stocks Valuation Historical Financial Performance Earnings Price Performance & Stability Stock Charting Selecting the best shares
Using ETF s to Diversify. While stock diversification remains the primary reason investors use ETFs, the growth trajectory of the ETF market in Australia tells us that ETFs are being used to cover a full suite of asset classes and strategy exposures," (BetaShares)
Using ETF s to Diversify ETF s are index trackers and trade like shares Sector and Industry Country Asset Class Bonds/Fixed Interest Commodities Foreign Currency Options Inverse/contra (hedge)
More about Australian ETF s About 150 ETFs on the ASX. AUSTRALIAN ETF s Many give exposure to markets otherwise unobtainable Around 30 give exposure to foreign markets such as USA, Europe, Hong Kong, China, Emerging Markets Others track sectors such as High Dividend, Small Cap, Property, Telco and Healthcare ETFs available track other classes such as Inflation or Government Bonds No leveraged ETF s Only 2 Inverse/Contra ETF Liquidity issues--improving
ETF Analysis & Selection ETF Fundamental & Technical Analysis of individual ETF s Short term price trend Long term price stability Liquidity ETF CHARTING SELECTING THE BEST ETF s
ETF s AU vs USA USA ETF s More than 1500 High Liquidity Very diverse covering all kinds of sectors and asset classes Regular & Inverse-make money in up & down markets Leveraged & Unleveraged-Risks Associated with leveraged ETF s
USA ETF numbers by Asset Class US Equity 404 International Equity 417 US Fixed Income 157 International Fixed Income 56 Commodities 104 Currency 23 Leveraged 123 Inverse 135 Asset Allocation 35 Alternatives 44
USA ETF s Currency Risk Management International Broker
Portfolio Management Process When to Buy Rising Market What to Buy--Analysis & Selection When to Protect Falling Market How to Protect-Risk Management (Stop Losses/Profit Taking) When to Replace-Rising Market What to Replace with--analysis & Selection (Investment Plan-Objective, Strategy, Process)
Demo Minimizing Risk & Maximizing Returns -Diversification, Capital Growth & Preservation, Dividend Income Sector & Industry Analysis Stock Analysis & Selection ETF Analysis and Selection Portfolio Management
VectorVest 5 Week Trial Australian & USA $9.95USD www.vectorvest.com.au Australia only $15AUD www.vectorvest.com.au/aia Stock Health Check Exercise Rob Markham email: robertmarkham@vectorvest.com.au