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See how easily you can beat the professionals in 2017

For what it’s worth, there are more platitudes in the mainstream financial media than one can poke a stick at.

It goes without saying then, even if you play your cards right, you can run from the part-and-parcel of overused expressions, but you won’t be able to hide.

As 2016 comes to an end, I’d like to formally take one for the team and concentrate all such banalities into this one article.

Hopefully then we can start 2017 with a clean slate in knowing that such clichés will forever remain out of sight, and out of mind.

Icarus stocks of 2016?

In January this year, shareholders in Sirtex Medical Limited (ASX: SRX) knew the score and jockeyed for position, sensationally trading the stock above $40. The potential for SIR-Spheres microspheres was all blue-sky in Sirtex’s business back in February … until it wasn’t.

Shareholders belted the stock into free-fall after the company’s announcement on 9 December 2016. Apparently, competition is now the new-kid-on-the-block and a real fly-in-the-ointment for the Sirtex board.

And then there’s Bellamy’s Australia Ltd (ASX: BAL) (sigh).

They released a business update to the ASX on 2 December 2016 announcing that, in addition to “temporary volume dislocation in China sales channels”, sales are below-expectations and EBIT margins have fallen.

This, I’m afraid, was the straw that broke the camel’s back.

Investors turned white as a sheet, hitting the panic button when they considered the wool was being pulled over their eyes over the prospects for infant-formula sales in China.

Are shareholders’ funds now dead as a doornail?

What really gets the shareholders’ goat too is the CEO’s sale of 165,000 shares north of $14 back in late August. Talk about feathering one’s own nest.

Going forward

Point 1:

A diversified portfolio of between 10 and 30 stocks should mean sensible investors will eventually have the last laugh.

Strong actual performers in calendar 2016 so far include Nanosonics Ltd. (ASX: NAN), Webjet Limited (ASX: WEB), Credit Corp Group Limited (ASX: CCP), and Iress Ltd (ASX: IRE).

Buying a portfolio of stocks will help you sail through the storm when any one individually hits the rocks.

Point 2:

Investing is a lifelong journey, and if you can give your portfolio time to do its thing, you shouldn’t need to worry about the occasional falling knife.

Those shareholders that bought into 1300 Smiles Limite (ASX: ONT) 10 years ago are on the money because they realise that dividend cash is king, and good things come to those who wait.

Foolish takeaway

Nip poor investing practices in the bud, and have a plan to:

  • [Continue to] save regularly
  • Invest in a portfolio of companies for periods longer than you initially thought you would, and
  • Back those companies where management own a decent chunk-of-change in the company themselves

Think ARB Corporation Limited (ASX: ARB) and Altium Limited (ASX: ALU).

To weather future financial storms, acknowledge that no investment is hazard-free, mitigate risk as much as possible through diversification, and hopefully your portfolio will be as fit as a fiddle this time next year.

My last word on Bellamy’s and Sirtex is I’ll try to forgive and forget their respective CEOs for gilding the lily with shareholders, but I’ll have to hold my tongue in doing so. To help you avoid similar disasters, I have included a link below to “3 ‘Rotten’ shares every investor must avoid” right now.

Finally, a sincere thank-you for reading, and here’s hoping this is the final say on mainstream investment media clichés for good.

Merry Christmas and wishing all of you a prosperous 2017.

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Motley Fool contributor Edward Vesely owns shares of ARB Limited, Bellamy's Australia, Credit Corp Group Ltd and 1300 Smiles. The Motley Fool Australia owns shares of Altium, Bellamy's Australia, and Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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