EOFY "Stock" Sale!

Bitto — Mon, 24 Jun 2013 22:00:23 +0000

Is the stock market taking a leaf out of the books of retailers and having an 'End of Financial Year Sale'? If so where are all the big red "SALE" signs floating around the ASX website? It may sound like a joke with market volatility at its highest in recent times, however this is a good time to review current holdings and to possibly add more.

There is no better time to view the strength of your portfolio than in this current market. Have you got the right diversification? Is your portfolio too top heavy? Or have you just been waiting for the right time to buy? Nearly every portfolio will have received some losses in the recent market volatility, but the difference between an actual loss received to the potential loss over two different portfolios will depend on how well it has been built, starting from the bottom up.

A portfolio should look similar to that of the food pyramid we all saw as kids. The base, your core stocks, should house the bulk of your investment. These are your dependable companies. They will generate income and grow however normally not as fast as others — companies such as Woolworths (ASX: WOW), currently 6% off. QBE Insurance Group (ASX: QBE), another possible choice, is on sale at 3% off. How about one of the big four banks like National Australia Bank (ASX: NAB), currently 9% off?

The next block in your investment pyramid should be growth companies. They should comprise approximately a third of your investment. These companies are the ones that have a bright future and will grow and grow. Companies to consider here might be Collection House (ASX: CLH), selling at a reduced price of 5% off, or Telstra (ASX: TLS), selling at 8% off. Both offer a good outlook on future growth and also provide a generous income.

The final stage is the speculative block, these companies are a gamble and should only be a small value of your investment portfolio. They are the maybe of the future and require great research prior to purchasing. This building block should only be added once the previous two blocks are complete and solid.

Foolish takeaway

Creating an investment portfolio can take some time, a large amount of research and patience. These steps are needed to ensure that your investment is as safe as possible in times of a volatile market and don't cause too much pain. Diversification is a must, and the old saying of "don't put all your eggs in the one basket" rings true. Having solid core companies will help keep your investment on the upward track. Good growth companies will turn any modest investment amount into an impressive return. Speculative companies aren't for everyone, they are a gamble. Remember, only 12 months ago the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) was balancing around 4,000 points, currently it's at 4,680 points, even after the falls of the last month.

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Motley Fool contributor Roberto Galeano owns shares in Woolworths and Collection House.

The post EOFY "Stock" Sale! appeared first on The Motley Fool Australia.

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Should you follow Yellow Brick Road?

Bitto — Wed, 19 Jun 2013 00:45:27 +0000

In recent weeks, the market has taken a wild ride. The finance sector has been one of the hardest hit with the major banks share prices being stripped away. The Commonwealth Bank of Australia (ASX: CBA) after hitting a bottom price of just $25 in the height of the GFC, was trading at $73 only weeks ago. To date, it is still up 74% on a five-year past performance view. But it's not the only player in the field.

A new kid on the block is Yellow Brick Road Holdings (ASX: YBR), currently trading at $0.52. Founded by Mark Bouris, Yellow Brick Road is a full service wealth management company that offers products and services for home loans, commercial loans, financial planning, insurance, superannuation, investments, accounting and tax.

After securing a deal with Macquarie Group (ASX: MQG) last year, Yellow Brick Road is offering home loans at very competitive rates that beat most of the banks. As of March 2013, Yellow Brick Road has secured around $1.26 billion worth of home loans, and is poised to obtain more in a home loan market worth approximately $1.1 trillion.

In a recent ASX announcement release, the company said, "[Yellow Brick Road] is taking its market leading Empower Home Loan offer one step further, announcing a first year 1.25 per cent discount for all borrowers with a lifetime discount of between 0.86 per cent and 0.91 per cent p.a." With Macquarie as a financial backer and stakeholder, there is room for growth.

Macquarie Group is currently trading at $42.18, down 9.49% on a five-year past performance view, but up 65.61% on a one-year past performance view. Even though Macquarie Group has expanded its home loan book by more than half in the past six months it has also been hit in the recent month, just like all the other banks, down from a height of $47. In my opinion, that's a good buying price.

Foolish takeaway

Mr Bouris and Yellow Brick Road – with the help of Macquarie — are offering mortgage holders the better deals they are after. In a time where it is now easier to refinance, Yellow Brick Road is well-positioned to succeed, and so is Macquarie. Investors would do well to consider adding either company to their watchlists.

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Motley Fool contributor Roberto Galeano does not own shares in any of the companies mentioned in this article.

The post Should you follow Yellow Brick Road? appeared first on The Motley Fool Australia.

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Bitto, Author at The Motley Fool Australia

EOFY "Stock" Sale!

Should you follow Yellow Brick Road?