Fundamentals are good, page-13

Hi Crazypunter

You raise a good point - I have too much invested in TGA. This has happened for three reasons:

* I know TGA well, and it is a predictable business, so I have been comfortable buying on the dips.
* My investment in TGA has doubled in value due to SP appreciation, and I have never understood the logic of selling a good stock to achieve "balance".
* I have struggled to find alternatives that match TGA on the basis of yield, steadiness and risklessness relative to the price one pays for the yield. For its quality, TGA has always had a low P/E ratio, so investing in it has made sense.

My buying criteria makes it unlikely that I would now buy blue chips - in fact, I have been selling them to fund investments in smaller companies with better Value/Price ratios. I have only recently sold stocks that I have held for years - Westpac, Woolworths, Argo to mention the last three that i sold. I am not so interested in thinking where the SP of a stock that I hold may go, or worrying about it wobbling, my main interest is in a sustainable and growing dividend - that is, the underlying health of the business. For instance, my TGA shares yield at least 10% dividend on what I paid for them, which with franking credits is 10%/.7 = 14.5%, and this has increased every year since the company floated, so its SP wobbles have never bothered me, and I have used the dips to buy more.

There are two ways to handle risk - one is to diversify, and the other is to hold only few stocks, but know them well. I am drifting towards the latter approach. When I jumped into investing in 2007 and 2008, I held 31 stocks, and I have in recent years whittled these down to about 12, but their values vary greatly, and TGA would be about 50% of the total value. I would be happy to hold half as many, and know them well, and have TGA representing no more than 30% of the total. Finding gems is not easy, and they tend not to be found amongst the blue chips, because the blue chips receive the attention of too many prying minds.