Beginners' Portfolio: Year-End Valuation
This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.
LONDON -- It's been a couple of months since our last valuation of the Beginners' Portfolio, and since then I have simply ignored our share prices and just kept an eye on important company news. Honestly, I really have; until I came to update my spreadsheet for this end-of-2012 report, I really didn't have much clue how things were going price-wise. When you're just starting out, I know it can be hard to switch off from day-to-day share prices. But if you can manage it, I recommend it highly.
Anyway, with the Christmas and New Year holidays upon us, I've had to prepare this in advance, so the prices in the table below are taken from close of play on Dec. 19.
The "Proceeds" column shows the cash we'd actually get if we sold each holding, after charges.
Total Cost (pounds)
Bid Price (pence)
Dividends as well
Since last time, we've had some more of our shares go ex-dividend, entitling us to juicy payments.
BAE Systems' interim ex-dividend date was Oct. 17, with a payment of 7.8 pence per share bringing us 11.39 pounds to add to the pot. The BAE share price has risen above our purchase price, though it's not enough to cover costs yet on its own -- but adding in the 11.39 pounds puts our BAE holding just in profit.
A BP interim dividend on Nov. 7 of 18 pence per share brought us 6.26 pounds, Glaxo's interim on Nov. 14 added 6.12 pounds, and then Vodafone's latest interim dividend brought us 9.45 pounds.
What do we think?
Two things strike me this time. One is that Tesco shares have started something of a recovery after a positive third-quarter update. That puts us in the money, though it's early days yet.
The second is that the mining sector has hopefully started to turn around, and our Rio Tinto holding is in profit to the tune of 10%. I had no idea how the timing would work out when we bought (and I still don't -- it could turn down again). But what counts is to buy shares when you think they're cheap based on long-term expectations, not when you think they've reached the bottom; the latter is a far harder call than the former.
Overall, including share price rises and dividends, our pot has grown by 449.13 pounds, which is a gain of 11.2%. Am I pleased with that?
Well, I'm neither happy nor sad about it yet, because it's way too soon to know whether we have made good choices. Random noise is enough to make the kind of difference we've seen so far. Ask me again this time next year.
But what I am happy about is that we have a set of companies whose fundamentals really haven't changed and which I'm still happy to stick with for the long term.
Having said that, there are a couple of interesting observations.
Firstly, our one-off growth-share investment in Blinkx accounts for a large part of the gain. Had we not bought it, the portfolio would only be up 4%, in profit to the tune of just 141.03 pounds. With higher-risk growth shares, short-term price movements are even more subject to irrational sentiment than ever. It reinforces that what looks like a good performance so far might be just luck -- which is the overriding factor in the short term, anyway.
The other thing is the importance of dividends, which have added 1.7% to our return so far. Without dividends, we'd be 9.5% up. That might not sound like much of a difference, but 1.7% over such a short period is already beating the pants off a savings account -- any long-term share price growth is a bonus!
I recommend the Fool report "10 Steps To Making A Million In The Market." It makes clear that making a million is not reliant on hitting a magic share that zooms from nothing to riches overnight, but it can be done with just the kind of shares we have in our Beginners' Portfolio -- plus the magic ingredients of time and patience.
Many people think the idea of making a million is just a pipe dream. If you think that, click here for a copy and see if it changes your mind -- it will cost you nothing.
And do please feel free to share your thoughts on the Beginners' Portfolio Discussion Board.
The article Beginners' Portfolio: Year-End Valuation originally appeared on Fool.com.Alan does not own any shares mentioned in this article. The Motley Fool owns shares in Tesco and has recommended shares in Vodafone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.