Portfolio Advice - sell or hold

gb153

I found out recently that my parents inherited shares from my grandparents a number of years ago. They were using a 'buy and hold' strategy and were simply cashing in the dividends each year. I decided to take a look at the portfolio and maybe offer them some advice or maybe take over the portfolio for them. I'm guessing the shares were originally purchased by my grandparents by choosing companies evenly throughout the alphabet!

I should mention that I have only recently started to look at the stock market myself in the past 5 months and have had a bit of success investing and trading some of my own money. Although I'm relatively new to the game I have put a lot of time into it reading books, websites, backtesting techniques etc and I feel I can at least do better than the simple 'buy and hold' technique. I am thinking of selling some of the shares in the companies below and transferring them to a spreadbetting account for my parents. Anyway if anyone has any opinions on any of the companies below I would be glad to hear it. Even a one line opinion with sell or hold!

AIB
Alliance Boots
Arnotts
Bank of Ireland
Barclays
Burberry
Cadburys
Carnival
CRH
Diageo
Dixons
Dr. Pepper Snapple
Experian
GlaxoSmithKline
Home Retail Group
Imperial Chemical Industries
Kingfisher
Kraft Foods
Lloyds TSB
Marks and Spencers
Mountview Estates
Reckitt Benckiser
Royal Dutch Shell
Tescos
Woolworths

I mostly use technical analysis myself but I also try to do some fundamental as well. I have been investing and trading in indices and commodities so I haven't had any experience with individual stocks yet. Some of the companies are doing quite well at the moment so I will leave them be. I cringed when I saw they had Irish bank shares right through the boom years and continuing on to circa 1% of their peak value!

ravima

some of those shares are gone, in that they were taken over or went bust and if the former, the original shareholders would have got a payment and if the latter, then they whistle. If you hold the original certs, for companies still trading, then write to the registrars to see if the shares are still valid or if your grandparents were paid off.

Alliance Boots were taken over
Cadburys were taken over
Woolworths went bust

SBWife

The UK Woolworth's went bust but if they owned the US shares they became FootLocker which continues to trade on the NYSE.

hmmm

gb153 wrote: »

I should mention that I have only recently started to look at the stock market myself in the past 5 months and have had a bit of success investing and trading some of my own money. Although I'm relatively new to the game I have put a lot of time into it reading books, websites, backtesting techniques etc and I feel I can at least do better than the simple 'buy and hold' technique. I am thinking of selling some of the shares in the companies below and transferring them to a spreadbetting account for my parents.

Stop stop stop stop right now. Red flags everywhere.

Play with your own money for a couple of years before you start playing with your parent's money or you will probably lose everything they have. Don't do, just don't do it, I guarantee in 5 years time when you have more experience you'll look back and cringe - at that point you will understand the pitfalls better and can control your risks better.

You are being extremely condescending towards your grandparent's portfolio, and looking at it it isn't half bad. It's a bluechip portfolio and has probably done very well for them over the years. Until you have more experience investing you could do a lot worse than simply leaving the shares untouched.

bah1011

your parents don't need to get involved in risky trading especially at their age assuming their over 55. its a pretty safe and stable portfolio.

gb153

Thanks for the replies guys. Actually what I should have said was that I am planning just to sell one or two companies for the time being and to reinvest it. It will be a long term investment as opposed to short term trading. If after a year that is doing well then I can then look at possibly selling another company. They actually asked me to do this for them a few months back but I decided not to as I didn't feel I had anyway near enough experience. I am still far from being an expert but I am not a layman either.

The reasons I am now willing to take an active part in this are
a) some of the companies have now gone bust and are worthless. They also had Waterford Wedgwood which are now bust. I didn't realise Woolworths had gone bust. I came across Woolworths share price in Austrailia on a website and I thought it might have been them but its more likely the UK one.
b) some of the share prices are worth 1% of their value just a number of years ago.
I can at least advise them to close an investment which is clearly losing value. As far as I can see the worst thing to do is to simply buy and hold regardless of changes to market value.

It took me ages to go through a box full of share certificates, annual reports, transfers of shares due to mergers/demergers etc. I would say about 80% of the share certificates are there. I left in Cadburys by mistake. The shares were actually transferred to Kraft as far as I remember but I must recheck. The box was completely unorganised and even had all the old balloting cards for AGMs.

From what I can see the companies that are doing well at the moment and which I wouldn't sell are: Burberry, Diageo, Dr. Pepper Snapple, Experian, Kingfisher, Kraft Foods, Mountview Estates, Reckitt Benckiser, Tescos.

With regards to the Irish banks I'm not sure what to do. Is it worth cashing out what little they have left? Could they become completely worthless following some restructuring after the election?

Barclays are probably worth less than half their peak a few years ago and Llyods are worse again but I would some faith in these making a recovery compared to the Irish banks. I could be wrong though.

I appreciate the comments on my post but would also like to hear any thoughts on the companies above. I'm not simply looking to gamble my parents investments away. You may call it risky but its a lot less risky than blindly leaving investments dwindle away to nothing.

hmmm

gb153 wrote: »

It will be a long term investment as opposed to short term trading.

Spreadbetting is not a long term investment.

As far as I can see the worst thing to do is to simply buy and hold regardless of changes to market value.

Warren Buffet would disagree.

From what I can see the companies that are doing well at the moment and which I wouldn't sell are: Burberry, Diageo, Dr. Pepper Snapple, Experian, Kingfisher, Kraft Foods, Mountview Estates, Reckitt Benckiser, Tescos.

You're not looking for "companies that are doing well", you're looking for companies that are undervalued. If the companies that are doing well are fully valued the share price has nowhere to go. Check out the "dogs of the Dow" strategy and the returns.

whysomoody

gb153 wrote: »

I can at least advise them to close an investment which is clearly losing value. As far as I can see the worst thing to do is to simply buy and hold regardless of changes to market value.

You are now buying and selling at the trough, a far more negative hypothesis. You would now be trying to market time instead

gb153

hmmm wrote: »

Spreadbetting is not a long term investment.

It can be. For example I opened a financial spread bet on the S&P (June) at 1288.9 and it is currently at 1322.1. Once the contract rollover date comes in June I can rollover to the next contract and continue as long as I wish. Unlike using CFDs or other investment vehicles there is no interest charged to leverage (unless its a daily rollover) and there is no capital gains tax on profits.

hmmm wrote: »

Warren Buffet would disagree.

Yes Warren Buffet uses buy and hold but he also knows when to sell. Thats a lot different from buy and hold with no clear exit strategy. From what I've read he analyses company reports with a fine tooth comb and then decides whether the share price is undervalued or overvalued.

I was hoping some members may have some insight into the fundamentals of these companies.

hmmm wrote: »

You're not looking for "companies that are doing well", you're looking for companies that are undervalued. If the companies that are doing well are fully valued the share price has nowhere to go. Check out the "dogs of the Dow" strategy and the returns.

I am familiar with the "Dogs of the Dow" strategy. I'm not looking for companies that are undervalued because I'm not looking to buy. I'm only looking to sell or hold.