YOU'LL NOTICE THAT I'VE TALKED
ABOUT COMPANIES, PLURAL, BECAUSE IT IS
IMPORTANT TO
SPREAD YOUR MONEY ACROSS SEVERAL
INVESTMENTS –
THE MORE THE MERRIER.
earnings growth for a decade, chances are that it will be able to weather
whatever happens within its industry in coming years. If companies like
Auckland International Airport and NZX can consistently grow their
earnings when others in their sector are suffering, there's a reasonable chance
that they have a sustainable competitive advantage. That is, their natural
monopoly allows them to grow and maintain profits while smaller players
suffer with the vagaries of the market. If a company is able to significantly
grow earnings in only one year out of three, chances are that their industry
is cyclical (and potentially difficult to forecast) or perhaps their management
got lucky. For my money, I think that there are enough risks and
uncertainties in share market investing without having to rely on company
management "getting lucky".
So what are the hot stocks for 2013? I would put my money on the
hot companies – those that have a hot track record (a history of growing
earnings), a hot management team (who have proved themselves capable of
setting then meeting, or exceeding, expectations) and are in a hot position
(either by having a dominant market position, or being in a growing market
with lots of potential). You'll notice that I've talked about companies, plural,
because it is important to spread your money across several investments – the
more the merrier. Anything can happen and you don't want all your hopes
riding on just one or two investments that might not work out for some
reason … and sometimes there's not even a reason!
I've carefully avoided naming this year's hot stocks, but I'm confident that
if I was asked to write a column about the winners of 2013, each of the
recipients would exhibit the characteristics discussed here.
Fortunately for those investors who don't fancy their chances at picking
one quality business out of a hundred, there are some hot fund managers
and KiwiSaver providers who put together portfolios of their "best bets" for
investors, large and small!
Carmel Fisher
www.fisherfunds.co.nz
Carmel Fisher is the Managing Director of Fisher Funds Management
Limited, a fund manager and KiwiSaver provider. The information and
opinions expressed in this publication should not be used as a basis for making
an investment decision about any particular company. Professional investment
advice should be taken before making an investment. Past performance is not a
reliable guide to future performance.
www.h e rmagaz in e .co.n z | 55
