A terrible expression but a sort of euphemism for stocks with appalling performance – in Australian parlance. Not to be confused with an investment strategy of buying high dividend stocks on the DOW – the so called ‘Dogs of the DOW”’.
Here I talk of stocks that have constantly turned in bad performance – yet investors hang on.
My three dogs for the week just finished, are Telstra, Myer and McGrath Real Estate - TLS, MYE and MEA.
Let’s look at their performance:
Click to Enlarge
Click to Enlarge
Click to Enlarge
All three have much in common. All are household names owned by average
investors who have lost a lot of money.
The demise of all three have been
frequently on the front pages. Yet there
are still buyers – where there is a seller there is a buyer. Maybe punters.
I can understand mums and dads investors
may not quite understand all the machinations of the markets, but I ask what
have the board of directors been doing other than creaming with fat director
fees?
How can they sleep at night or hold their heads high?
I would be ashamed
to have my name associated with any of these companies.
What have management been doing?
A further characteristic of all falling
stars is that there are many many warning signals to get out, yet many investors
hold on with a glimmer of hope that they can get their money back.
Be not ashamed to have a dog in your
portfolio.
But be tough on yourself if
you do nothing.
Rule of thumb is 10% - I am unhappy if a
stock goes the wrong way by even 5-6%. I
constantly review my positions and am quick to cut loose anything that could
become a loser. Always spring cleaning.
I have experienced the pain of making paper profits and allowing them
later to become realised losses.
To stay out of trouble regularly take a
hard look at not just your portfolio but also your strategy.
Enjoy the ride
Tom Scollon
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