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.
The Beginners Portfolio is a virtual portfolio, run as if based on real money with all costs, spreads and dividends accounted for. Transactions made for the portfolio are for educational purposes only and do not constitute advice to buy or sell.
The performance of the Beginners Portfolio has been reasonable so far, with some disappointments offsetting some very nice gains. Sadly, three of the weakest performers have started 2015 with more of the same heading downwards.
I chose BP (LSE: BP) (NYSE: BP.US) as the portfolios oil hope, but the dragging-out of the Gulf of Mexico disaster was more painful than Id hoped and the share price didnt do too well. And then came the oil price slump, which has killed off any hopes of a early recovery in oil stocks in 2015.
Brent crude is heading perilously towards sub-$50 prices, and thats crushing oil stocks. BP shares, at 391p as I write, are down 5% so far since the start of January, and were down 14% (including trading costs) since adding BP to the portfolio in August 2012. But at least dividends have brought us out about break-even.
Falling oil prices have damaged confidence in general industrial demand, and thats added to weak commodities prices to help send mining stocks down further too including Rio Tinto (LSE: RIO) (NYSE: RIO.US), again added to the portfolio in 2012.
Since then, were sitting on a share price loss of 10% (again after costs), with the Rio Tinto price down 2.5% in January to 2,930p. Weve enjoyed dividends from Rio, too, but with yields a bit lower than BPs were still about 5% down overall.
And then how can we forget Tesco (LSE: TSCO)? Weve had a disastrous time since adding Tesco to the portfolio in May 2012, with thatinvestment our biggest loss to date. And with dividend yields slashed to around 2%, there really isnt much cash coming in to compensate.
The question is, what do we do now?
Im not worried about BP or Rio Tinto, because we really are in it for the long term, and I reckon over 10 years or more theyll both make for healthy investments. In the meantime, Im happy to take 6% a year in dividends from BP and 4.5% from Rio.
Cant sell now
Tesco is the only company Im really not sure about, but now could well turn out to be the very worst time to sell though I know Ive said that before at higher prices. Once the full year to February is out of the way, analysts are expecting a return to growth to kick in. So Im still holding.
The Beginners’ Portfolio is based on a very simply approach to investing — so simple, in fact, that anyone can do it!
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