Rask - Our $10,000 investment challenge for 2025 [Owen v Drew v You]
The podcast episode centers around creating investment portfolios with a maximum of 10 positions, allocating $110,000, and taking a one-year view. The hosts emphasize that these are not real portfolios but rather a fun exercise to explore investment strategies. They discuss the importance of diversification, using a core and satellite approach, and balancing growth and defensive assets. The portfolios include a mix of stocks and ETFs, with a focus on sectors like technology, resources, and healthcare. The hosts also highlight the use of a tracking tool, nxa, to monitor portfolio performance and tax implications. They stress that the information shared is not financial advice and encourage listeners to consult with financial planners.
Key Points:
- Diversify portfolios using a core and satellite approach.
- Allocate a maximum of 10 positions with $110,000 for a one-year view.
- Focus on sectors like technology, resources, and healthcare.
- Use tracking tools like nxa for performance and tax monitoring.
- Consult financial planners for personalized advice.
Details:
1. 📢 Welcome and Financial Disclaimer
- The presentation is limited to General Financial information, meaning it does not offer personalized financial advice. Attendees should consider this as a foundation for understanding financial concepts but not as specific guidance for individual financial decisions.
2. 🎙️ Special Episode Introduction
2.1. Introduction to Special Episode
2.2. Financial Planning Advisory
3. 👔 Portfolio Building Process
- The discussion details the creation of three distinct investment portfolios over several months, highlighting the importance of community support in the process.
- Although support from the community was integral, it varied in effectiveness, suggesting a need for more structured engagement strategies.
- The segment includes informal banter and potential sponsorships or merchandise collaborations, which, while engaging, could be more seamlessly integrated with the main discussion to maintain focus.
- More specifics about the strategies and metrics used in portfolio construction would enhance understanding and provide actionable insights.
4. 🔍 Portfolio Rules and Objectives
- The portfolio is limited to a maximum of 10 positions to maintain focus and manageability, ensuring each investment is significant and thoroughly vetted.
- A budget of $110,000 is allocated for investments, offering substantial capital for strategic allocation.
- The investment approach is primarily short-term with a one-year horizon, although flexibility for long-term adjustments is available.
- There is a possibility to allocate the entire budget to a single investment if it aligns with strategic goals, allowing for concentrated bets when high conviction is present.
- Important: All information and strategies outlined are for educational purposes and do not constitute financial advice.
5. 📝 Portfolio Tracking with NXA
- Portfolios discussed are fictional, meant for illustrative purposes, not mirroring the speaker's real investments.
- The speaker's real portfolio is diversified with 90% in core investments, while the discussed portfolio is a smaller 'fun' satellite portfolio.
- NXA is a portfolio tracking tool that supports performance tracking and tax reporting, providing comprehensive tax statements at year-end.
- The tool is beneficial for managing a diversified portfolio and ensuring accurate financial reporting.
6. 🎯 Portfolio Strategy and Community Feedback
- Nxa software enables comprehensive management of ASX shares, global shares, and cryptocurrencies, offering a strategic edge in portfolio diversification.
- The end-of-year report feature facilitates efficient portfolio tracking, providing users with insights into performance and areas for improvement.
- Nxa is priced around $20 per month, offering affordability alongside functionality, although this price needs verification.
- The unbiased use of Nxa, without affiliate or referral incentives, underscores its objective application in portfolio management.
- Real-time portfolio tracking on the Rasque websites ensures users have up-to-date insights, enhancing decision-making processes.
- Community feedback is actively encouraged to refine portfolio strategies, integrating diverse perspectives into decision-making.
- Feedback mechanisms are designed to transform insights from community comments into actionable strategy improvements, fostering a collaborative environment.
7. 🗣️ Community Portfolio and Expert Insights
- Concentration risk in portfolios can offset losses, but it is not advisable for responsible portfolios.
- Three portfolios were discussed: one from the community, one from the speaker, and one from Drew.
- The community portfolio was developed with input from experts, including Kev from Aters Consultant, who is highly experienced in stock analysis.
8. 📊 Small Cap Focus and Risk Management
8.1. Small Cap Investment Strategies
8.2. Risk Management Techniques for Small Caps
9. 🌟 Community Portfolio Picks
9.1. Portfolio Diversification Strategies
9.2. Community Engagement and Impact on Portfolio Choices
10. 💡 Diverse Investment Choices
- The Qualitas Real Estate Income Fund (ASX: QRI) offers investors a consistent monthly income through real estate debt with a yield of 8.4%, making it advantageous in flat or declining markets.
- Investment in QRI is strategically beneficial for risk-averse investors seeking stable returns in uncertain economic conditions.
- CBA (Commonwealth Bank) presents a contrarian investment opportunity, as some investors like Milo see potential despite expert recommendations to sell.
- EBTC, an ETF investing in Bitcoin, is seen as a speculative option, with a small $500 allocation in Milo's Dizzy Rascals portfolio, reflecting its high-risk, high-reward nature.
11. 🔍 Detailed Analysis of Community Picks
- KKR, a globally listed private equity company, boasts a US market cap of $126 billion, highlighting its significant industry presence. This company is viewed as a growth stock, offering a modest dividend yield of 0.5%. An investment of $1,500 is allocated to KKR within the discussed portfolio, indicating a strong belief in its growth potential.
- MAA Group, a provider of labor and services to the mining industry, is diversifying into the American and Canadian markets. This strategic move is reflected in the portfolio with a $500 investment, showcasing confidence in its expansion strategy.
- Vulcan, noted for its geothermal energy innovations, has secured a substantial commitment with $1.2 billion in loans. The portfolio allocates $500 to Vulcan, emphasizing belief in its potential to capitalize on renewable energy trends.
12. 📈 Personal Portfolio Strategies
12.1. Vulcan Energy's Strategic Investments
12.2. AI Investment Trends
13. 🔧 Building a Balanced Portfolio
- ASML is the only company globally that manufactures lithography machines used in semiconductor production.
- These machines are essential for creating chips used by major companies like Nvidia and various cloud computing firms.
- ASML's uniqueness in the semiconductor industry makes it highly valuable, contributing to its selection by investors.
- The company's name stands for Advanced Semiconductor Materials Lithography, directly reflecting its function.
- Investors like Peter and Salty Hair selected ASML for its strategic importance in tech trends such as AI and Quantum Computing.
14. 💼 Exploring Stock Options
- Washington H. Patson is a diversified company, notable for acquisitions like Milton (MLT) by Soul Pats, indicating active portfolio management.
- The segment discusses 'licks' (Listed Investment Companies), prominent in Australia, emphasizing the need for diversification by considering US-based alternatives.
- The Quality Small Cap ETF (QSML) is highlighted as a significant investment, employing quality filters such as return on equity and free cash flow.
- QSML achieved a 36% rebound over 12 months, showcasing its growth potential and strategic importance.
- The segment points to a trend in ETFs starting with 'Q,' such as QQQ, reflecting a strategic focus on these investment options for 2025.
- An understanding of 'licks' and their role in diversifying portfolios is crucial, as they provide exposure to a range of assets, similar to mutual funds.
15. 🧩 Strategic Portfolio Allocation
- Falling interest rates globally are impacting portfolio strategies, leading to innovative adjustments by asset managers.
- Fairlight Asset Management is recognized for its impressive performance in global small companies investments, showcasing strategic expertise.
- Nick and his team have a track record of successful asset management, having previously worked with Steven Arnold at Aurus, demonstrating deep industry knowledge.
- Dgsm was pitched as an enhanced index exposure to global small companies, similar to Inesco, offering diversified investment opportunities.
- Dimensional is noted as a significant asset manager and financial advice group in the US, highlighting its influence in strategic portfolio allocation.
- The full portfolio details are available in the community and show notes for further review, providing transparency and comprehensive insights.
16. 🚀 Growth and Tech Investments
16.1. Introduction
16.2. Portfolio Setup and Naming
16.3. Investment Strategy
16.4. Weighting Strategy
16.5. Investment Example
17. 🔨 Resources and Contrarian Plays
17.1. Tech Investment Strategies
17.2. Contrarian Plays in Resources
18. 🔍 Focus on Global Small Caps
- The ETF Gus utilizes leverage on US shares, aiming for a return of 500 MSCI US, with a bold return of 69% year-to-date.
- The US market's potential growth under favorable conditions like stimulus and a pro-stimulus president is highlighted as a contributing factor to the ETF's performance.
- There is a risk of significant loss due to market volatility, with historical data indicating that the US stock market falls one in every three years.
- The strategy involves a high risk-reward ratio, which is why it's not typically used by Rask due to potential portfolio blow-up.
- The ETF's strategy is based on leveraging favorable US market conditions, but it carries inherent volatility risks, making it unsuitable for conservative investment portfolios.
- Detailed historical analysis shows that despite occasional downturns, the US market's long-term growth potential remains strong, warranting strategic leverage for high returns.
19. 📊 Embracing Tech and AI
19.1. Investment Strategy
19.2. Midcap Sector Focus
19.3. Investment in RPM Global
20. 🛠️ Consumer and Healthcare Focus
- RPM Global is currently considered expensive based on traditional price-earnings ratios, but it is at an inflection point that promises better margins, indicating potential for future profitability.
- Within a traditional investment portfolio, RPM Global should not be equally weighted but rather allocated as a smaller portion, reflecting its potential for future growth and profitability.
- Monroe's global growth strategy for small and mid-cap companies has achieved a 62% increase in one year, illustrating significant growth potential and strategic success.
- Monroe manages over $5 billion but strategically focuses on smaller global caps, typically around $50-$70 million, allowing for focused investments that can have a high impact.
- The smaller fund size in Monroe’s strategy is crucial, suggesting opportunities for growth in less saturated markets, enhancing potential returns.
21. 🔍 Evaluating Portfolio Picks
21.1. Overall Portfolio Performance
21.2. ResMed's Strategic Role in Portfolio
22. 📉 Risk and Return Considerations
22.1. Investment in ResMed
22.2. Momentum Stocks: Nvidia
22.3. Momentum Stocks: Tesla
23. 🔍 Consumer Trends and Investment Choices
23.1. Introduction to the Segment
23.2. ETF Oz XX
23.3. Consumer Trends and Investment Strategy
24. 🧠 Tech Giants and Future Outlook
24.1. West Farmers' Dominance in the Australian Market
24.2. Home Depot's Alignment with US Consumer Trends
24.3. Healthcare Investments Driven by Aging Population
24.4. Tech Sector Growth and Investment Strategies
25. 📊 Investment Rationales and Feedback
25.1. Microsoft and AI Investment Opportunities
25.2. Pro Medicus Limited (PME) Investment Insights
26. 🔄 Portfolio Adjustments and Critiques
- XRF Scientific, a small niche company, creates machines for lab testing of samples, critical for mining companies to determine sample purity.
- The company operates on a razor-and-blade model, selling both hardware and consumables, ensuring ongoing revenue streams.
- XRF Scientific's dividends increased by 50% this year, indicating strong financial performance.
- The business is owner-operated, which can offer more stable management and decision-making.
- The speaker critiques a heavy investment in resources, suggesting diversification with companies like XRF Scientific and RPM Global, which provide services to the resources sector but maintain income stability regardless of commodity price fluctuations.