FNArena’s Weekly Insights – November 25 2024
By Rudi Filapek-Vandyck, Editor
Many years ago, I read a story by Marcus Padley praising the virtues of a one-stock investment portfolio.
The philosophy behind the idea is that when all your money sits in one stock, you will make sure you know every in and out about this company and you’ll know when to take some money off the table and when to buy additional exposure.
The concept also makes sure you concentrate all your efforts in the right place. There’s only one company to follow, query, research and analyse. Anyone can do this.
It’s an appealing concept, assuming you choose the right company, which is always straightforward when we allow Harry Hindsight to have his say.
In my personal case, I might have chosen TechnologyOne ((TNE)) whose growth trajectory since 2004 is nothing short of ‘stunning’.
Consider the share price back then was less than $1 and this week the price has exceeded $30. I am not even going to put a mathematical appreciation on this.
Year-to-date the shares have rallied more than 100%.
You wonder why I would ever buy an index ETF or try my hardest trading in and out of stocks whose momentum comes and goes.
But, of course, I could also have chosen CSL ((CSL)) which until the early covid-panic of 2020 had been an equally stunning investment for many years, but a whole lot less so since.
I would have built-up a lot of frustration had I put all my money into CSL, there’s no denying it.
The underlying philosophy behind the one-stock portfolio does appeal though and the longer I analyse and comment on financial markets, and run my own Portfolio, the more I gravitate towards the core philosophy as expressed by investment legend Peter Lynch: Know what you own, and why you own it.
