Diversifying Your Portfolio

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Diversifying Your Portfolio
Chris Rose Crown Cycling Circle Investment Club
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Agenda

• Introduction
• Consider the true aims of an investment club
• The need to diversify
• The advantages of an investment club
• Alternative investment opportunities
• Exchange Traded Funds and Commodoties
• Fine Wine
• Gold
• Property
• Others
• Getting started making alternative investments
• Summary

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Introduction

• It doesnt just have to be about stocks !
• Always lots of reasons NOT do to something
• fear of the unknown

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Aims of Our Investment Club

• Make money
• Learn
• Have Fun !
• BUT IN WHAT ORDER ?

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The Need to Diversify
Balance your portfolio according to your risk
profile but keep it interesting !
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Why Diversify Within an Investment Club

• Spread risk of club portfolio
• Broaden the spectrum of investments to improve
  retention and interest
• Produces great learning opportunities
• Explore the unknown
• Leverage knowledge and experience of members
• Curb over enthusiastic and irrational decisions
• Make Money !

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Alternative Investment Opportunities

• Exchange Traded Funds / Commodities
• Gold
• Property
• Fine Wine
• others

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Exchange Traded Funds (ETFs)

• What is an ETF / ETC
• Reducing risk
• Accessing opportunities
• Low administration costs
• High Liquidity

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Examples of ETFs

• UK property iShares FTSE UK Property Fund
  (IUKP)
• China iShares Xinhua China 25 (FXC) up 120 in
  Sept 06 Sept 07
• Brazil Up 95 in last 12 months
• www.ishares.co.uk
• www.etfsecurities.com

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Investing in Fine Wine
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Investing in Fine Wine

• Why wine ?
• Depreciating asset
• Established market
• The model is well understood
• Fun doing the research
• You can drink it !

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Investing in Fine Wine

• How it works
• Initial Finite supply
• Growing demand
• Later a dwindling supply
• All leading to an increase in the value

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Investing in Fine Wine

• Picking a good vintage
• Broker recommendation
• Robert Parker Score 95 http//www.erobertparker.c
  om/
• Wine Spectator Magasine
• Online research www.decanter.com

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First Growth 1990 Vintage
    Parker Score 10 year increase
Mouton Rothschild 87 278
Lafite 92 355
Haut Brion 96 725
Latour 96 725
Margaux 100 769






Source Morgan Aston Ford
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First Growth 1990 Vintage
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Investing in Fine Wine

• Practical issues
• Find a good broker
• Storage
• Market reports
• Low Commission
• Proactive
• I use Morgan Aston Ford http//www.mafltd.dircon
  .co.uk/

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Gold

• Gold is a commodity and traditional home for our
  money in times of trouble, easy to track and
  highly liquid.

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Gold Chart
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Accessing the Gold

• Krugerands under the bed of every member !
• Gold Coin Sovereign or Krugerand
• Gold Bullion
• Mining eg HOCHSCHILD MINING PLC (HOC)
• ETF Gold Bullion Securities (GBF)
• Superb online tutorials

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Gold Bullion

• Bullion -
• Good Delivery bars
• Physical possession
• Part or whole bars
• Online eg www.bullionvault.com

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Property

• UK property vs Overseas property
• Location location location !
• Controlling the passion
• The structure of the club and ownership
• Poor liquidity
• Long terms costs of ownership
• Use ETF ?

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..Others

• Commodities http//www.etfsecurities.com
• Venture Capital Trusts
• Film
• Land

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Be Brave !
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Where to Start

• Consider the asset allocation of the club
• What type of alternative investment inspires you
• Detailed research into an investment
• Club structures
• Goals
• Exit strategy
• Invest and Monitor

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Summary

• Stocks and shares are not the only form of
  investment opportunity open to investment clubs.
• You will gain from the learning experience, you
  will have a lot of fun, and it may even make a
  profit !
• Health warning All investments may go DOWN as
  well as up and these ideas are no exception
• i.e. dont blame me !

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Challenge for WMS 2008

• Make at least one alternative investment.