Meet Rob: From losing half his super, to double-digit returns.

Rob’s first three years of investing cost him roughly half of his super. He followed a friend's advice, overexposed himself to speculative mining stocks, and caught a market downturn at the worst possible time.

Those losses shaped everything that came after.

The ugly start became the foundation of strict discipline - a preference for understanding less companies more deeply, rather than holding many, setting an exit strategy even before entering a position, and treating tips, paid financial advice services, and even his own wishful thinking with healthy suspicion.

Now 15 years into managing his own self-managed super fund, Rob runs a concentrated portfolio of ASX-listed stocks with a target of double-digit annual returns and a research routine that he treats as rigorously as a full-time desk job.

In fact, the lesson that took the longest to learn over his investing journey thus far had nothing to do with stock picking - it was watching years of solid returns vanish by retirement withdrawals he hadn't properly accounted for.

As we came full circle in our conversation from the beginning of his journey to now, much like learning to tune out tips and advice chatter early on, Rob has arrived at the same conclusion about geopolitical headlines and events - while they feel urgent and they're hard to ignore, acting on them and attempting to time the market almost never pays off.

The only thing that has, is sticking to the same stock-specific rules he set for himself, regardless of what's happening in the world.  

It's a reminder to stay safe out there, and I hope you enjoy this instalment of Meet the Investor. 

Profile

Name: Robert
Job: Retired Registered Nurse
Age: 71
Years spent investing: 15 years
Biggest investment: DRO single investment $1.00 at 100,000 shares
Investment goals: annual double-digit return
Products used: E-superfund (service provider for SMSF), CommSec (online broker). Have started analysing with Market Index.
Secret (or not so secret) talent: Open to new investment ideas, retired and can access market information throughout the day.
Guilty reading or viewing pleasure: Historical fiction and crime movies.

Can you share how you got started in investing and what your first investment was?

I started investing in 2010 after reviewing the net returns of my industry super fund and assessing the cost of establishing a SMSF. After finding a low cost service provider, I transferred my funds to a SMSF. I thought I could do better both on the investment side and also managing and reducing the costs associated with that process. My first investment portfolio was essentially 50% dividend-paying large caps  (for example, BHP, CBA) and 50% speculative small or mid-cap (for example, LYC). My first three years, I lost half my super due to inexperience and following the advice of a friend. My portfolio was increasingly weighted to speculative small cap miners .

The takeaway - spend first year with a virtual portfolio and LEARN. Since then, I have achieved reasonable returns (see below). I was also made aware of the need to view my portfolio in the bigger picture, both globally and in Australia.

How would you describe your strategy and your investment goals?

This has changed over time, both with the market and my expertise (or relative lack of). I try to keep it simple, I only trade ASX-listed entities and I constantly focus on increasing my level of knowledge and education about stock market trading.

My goal has always been double-digit returns and for those returns to exceed benchmarks S&P 500, the ASX All Ordinaries,  and the average for SMSF industry high growth. However, my strategy has matured over time. The key elements now are:

1. Identify undervalued stock using a variety of information, for example, Market Watch, listed financials, intrinsic value calculations. Whereas previously I looked for cheap stock generally on a falling price. This process suggests I know better than the market and is a fallacy ( this may be expanded but is a 2-dimensional view of price action). Initially, I paid for service provision in this area, however, my general experience was the cost benefit was not weighted in my favour and lead me to not developing my own critical skills which is obviously NOT desirable. I do not use any paid services. However, in recent months I have discovered and been exploring Market Index which is providing a useful guide to evaluating companies and their price movements.
2. Limit the number of companies I hold and understand them through research. Less than 10 companies, preferably six.
3. I have a clearly stated summary of what a company or product means to me, for example speculative, hold, dividend. This position is updated weekly or daily if necessary. I do not hold and forget. I do not use dividend reinvestment
4. Make decisions clearly and thoughtfully based on evidence not wishful thinking and hopes. I believe the concept of behavioural finance is important in re-evaluating my behaviour
5. Finally, have a global view which may or may not influence the above.

What products do you use to execute your strategy?

MarketWatch, value investing philosophy, share market news and information from media and listed financials through Commsec and the like. I restrict myself to Commsec ( e-superfund reporting is easier) and ASX-listed products/companies only, preferably without overseas reporting obligations.

Can you share your top 5 holdings in % terms and why you hold these positions?

• Global X Physical Gold (ASX: GOLD) - 10% - due to current market conditions, I switched to cash from Gold on a trailing stop loss, taking 7% profit - awaiting gold correction and a clearer picture, which may now be emerging.
• CSL (ASX: CSL) - 10% - satisfies value investor criteria and I believe current valuation is bottom.
• Sun Silver (ASX: SS1 ) - 10% - speculative
• Transurban Group (ASX: TCL) - 10% - recent acquisition, sits well in current market, has good fundamentals.
• AGL Energy (ASX: AGL) - 10% - as per TCL
• 40% Cash
• 10% Other

None of my stocks has been held longer than 4 months. Prior to that, I held all my super in Droneshield (ASX: DRO) at $1.00, sold average price $3.00.

What investment is on your watchlist?

Other than the speculative stock listed above - PNV, NXG, MP1 and CBA. 

I sometimes buy small amounts (<$5000) of stock on my watchlist. I have created a number of watchlists, however am only starting to develop the graphical analysis illustrated in Market Watch.

What was your worst investment and what has been your best?

DRO was both worst and best. Best, as initially bought it at 60 cents. Worst, as I bought off highs whilst the price fell. Net profit was 50% over total trades but the journey was the worst, and therefore, best learning experience.

Clearly, when considering investing you have to understand your risk profile and the psychological costs of said investing. 

Others include BD1 now IIQ for the same reasons as DRO however in this instance I did not take profit of the table early enough or have a stop loss in place.

Can you share a personal passion or ambition you have for the future?

My ambition is to better recognise that what you may earn on the market for your superannuation nest egg must be balanced with what you spend from the same nest egg. 

In the first years of retirement, I spent way more than I earned without fully grasping the consequences of this. The compounding of your returns will always be limited by spending from the same nest egg. I was only looking at the 15-30% returns and not the thousands of dollars I was pulling out. 

My personal passion is to develop my skills as an investor to a point that I feel fulfilled as an investor.

If you are interested in sharing your investing journey, please send me a confidential enquiry via email to [email protected].

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