MENU

Investing 2014: You won’t want to miss it

I’ve had such a great 2013 as an investor.

My portfolio is flying, up 45% this year. In pure dollar gains, my biggest winner is Google (Nasdaq: GOOG), closely followed by a small ASX technology company whose share price is up over 80% in 2013.

(Out of respect to the paying members of Motley Fool Share Advisor, our subscription-only premium stock picking service, I can’t reveal the name of the small ASX company, except to say just yesterday Scott Phillips reiterated the stock as a buy at current prices. I’m excited!)

A 45% gain over the past 12 months truly doesn’t get much better.

I’m not resting on my laurels. I want to keep winning, keep picking winning socks, keep seeing my portfolio powering higher and higher.

But I am realistic…

— Bank stocks the size of Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank (ASX: NAB) simply cannot rise in value by 23% and 38% respectively every calendar year.

— The ASX can go down as well as up.

— I will make more investing mistakes in 2014. One or more of those mistakes is likely sitting in my portfolio right now, staring me in the face.

— That 3D printing “wonder stock” I’ve been telling you about for most of this year… after jumping another 5% overnight, it’s up 658% since I bought it, and is now one of the biggest individual holdings in my SMSF. 3D printing is all the rage. The stock, although growing very quickly, is very highly valued.

What could possibly go wrong?

As Warren Buffett says…

“Only when the tide goes out do you discover who’s been swimming naked.”

Time will tell whether I’ve been swimming naked. Tune back in this time next year.

Christmas — a time for selling

I’ll be using the summer break to review my current holdings. I’ll cut some losers, but probably not as many as I should.

Many investors think selling is the hardest thing to do. It’s not.

I have three pieces of selling advice. They are pieces of advice I guarantee you’ll find liberating.

    • Forget what you paid for a stock. It’s totally irrelevant to any investing decision.
    • Stop waiting for a losing stock to get back to what you paid for it. See point 1) above.
    • Cut your losers. Run your winners.

Be ruthless, don’t look back, and move forward decisively, and with confidence.

I’m down over 70% on Lynas, but haven’t given up hope, yet

I fully realise the above is easier said than done. For one, I’m holding onto my shares in Lynas Corp (ASX: LYC) into 2014.

For those unfamiliar with the story, let me give you the quick version… I’m down over 70% on this former high flying rare earths producer, and it hurts.

I’m holding to remind myself of the perils of investing in high risk mining companies where I have no predictive powers over the future price of the underlying commodities.

I’m holding also because I think the downside, from here, should be limited. Lynas trades around book value, its start-up problems seem mostly behind it, and with a bit of luck on rare earths prices, and good management, could have some decent upside from its current share price of 30 cents.

That said, I’m definitely under no illusions that Lynas could ever get back to my $1 buy price. From here, that would require the stock to rise 233%. Such big winners are rarer than the rare earths Lynas is mining.

I’ll also be adding new stocks to my portfolio, particularly focusing on companies to add to the growth portion of my portfolio pyramid.

Motley Fool Share Advisor portfolio pyramid

My core comprises big holdings in stocks like Woolworths (ASX: WOW)Telstra (ASX: TLS), Warren Buffett’sBerkshire Hathaway (NYSE: BRK.B), and a smattering of big banks thrown in for their fully franked dividends.

The Motley Fool’s top stock for 2014

But it’s growth stocks can really power your investing portfolio. With the global economy fully into recovery mode, led by America, the stage is set for growth in 2014.

The holy grail of investing is buying growth stocks at value prices. Sometimes you have to pay up for growth, as with my 3D printing “wonder stock”, but other times that growth comes to you at very reasonable prices.

2014: Another very good year

If everything goes as myself and Scott hope and expect, 2014 could be a very good year for my portfolio, and hopefully yours too.

I’ve also got my eye on a couple more stocks to add to the more speculative portion of my portfolio, building on my purchase last Friday of a $50m market cap ASX-listed healthcare company. Wish me luck.

Speaking of luck, perhaps yesterday was the turning point for my shares in Buru Energy (ASX: BRU), the company in late June I called “My stock for ‘the next great resources boom‘. At the time, the stock was trading at around $1.20.

The last six months have been a roller coaster ride for this West Australian emerging oil producer, the stock going from $1.20 to as high as $1.97 and back down again to as low as $1.32, before settling yesterday at $1.59, up 9% on the day.

Could Buru be my portfolio’s big winner in 2014, and beyond? Watch this space.

Bring on 2014

Let me close by wishing all Motley Fool readers a Merry Christmas and Happy New Year. I hope I’ve provided you with some investing insights, education and the odd piece of profitable advice, even if that advice has been to avoid some of the dogs that have plagued my portfolio in 2013.

Most investors focus on their losers. I’m guilty too, although rather than despairing and beating myself up, I do it to help you avoid the mistakes I’ve made. The column inches I’ve written here on dogs like Lynas far outweigh what I’ve written about my big winners of 2013. Such is an investor’s life.

Losers are painful, but inevitable. A much more productive use of your time and emotional capital is to concentrate on your winners, including adding to them as their share price rises.

A brand new Fool<

We’ll also be starting the year in style by adding a new research analyst to the Motley Fool Share Advisor team!

We have more and more companies on our scorecard each month, and we’re committed to bringing you the best possible company coverage and analysis. Our new Fool will be a familiar name (and face) for many of you, and has a long history as an investor and analyst.

We’re really excited to be welcoming him to the team, and you’ll be hearing plenty from him in early 2014 and beyond.

So who is it? Stay tuned, Fools.

It’s going to be a great year — you won’t want to miss it!”

Merry Christmas, and as ever, I wish you happy and profitable investing in 2014 and beyond.

If you are looking for some stock ideas to add to your portfolio today, look no further than our #1 dividend-paying stock. Discover The Motley Fool's favourite income idea for 2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2014."

Of the companies mentioned above, Bruce Jackson has an interest in Apple, Facebook, Commonwealth Bank, Woolworths, Telstra, Berkshire Hathaway, Lynas Corp and Buru Energy.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.