On Dick Smith
The performance of Dick Smith has set me reeling. While I am very familiar with the vagaries of the stock market, I am extremely disappointed with your past recommendations for this company.
Thanks for taking the time to contact us. I have certainly been disappointed with the business as well. The company's management has failed to deliver on its promise, and on what was indicated to market in terms of the outlook. That said, a portfolio perspective must be taken. The Income First model portfolio has performed largely in line with the All Ordinaries accumulation index since its inception, (including a terrible performance attribution from DSH). Thus, the importance of a portfolio approach is reiterated, as well as needs for diversification.
In terms of your comments regarding 'blue chip' companies, I think it is important to point out the poor performance of BHP, RIO and the lacklustre recent performance of the big four banks. The current market is challenging, and with the exception of DSH, performance has been quite strong. Certainly across the Growth, Income and LIC portfolio's DSH is a stand out exception.
- James Samson, income analyst.