Just like that old 80s “oils ain’t oils” Castrol ad, it’s important to remember that shares ain’t shares.
Shares are the riskiest asset class. And the recent proof of that was the market rout of 55 per cent from November 2007 to the “bottom” in March 2009.
The oldies to the right would more likely focus on “income” stocks. But Generation Xers should have a higher weighting towards growth. So, with just five stocks to recommend for Gen X, I’m placing diversification first and growth a close second.
BHP Billiton: Australia’s future is strongly linked to the strength of Asia, with the numero uno customer being China. BHP is well diversified and has fingers in dozens of pies. It attracts awesome talent and has shown itself to be a reasonably savvy investor.
A listed investment company (LIC): either AFIC or Argo. LICs invest in other companies and therefore provide instant diversification. Short-term performance hasn’t been great, but could be trading at a discount now.
Wesfarmers: A bit of everything, including insurance, coal, retail (Bunnings and Coles), fertilisers and safety products. But most importantly, they’ve got a great history of strong management and training future leaders.
Westfield: Australian-based global property group. While e-tailing poses some threat, if you’re going to own one property stock, then it should be Westfield.
ANZ: Banks are always in the poo with customers, the media and politicians. It’s just the depth that varies. But they are PHENOMENALLY profitable. Like the others, my pick is ANZ, which also has a growing focus on Asian expansion.
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Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.