September 2001 Volume 82 Number 9 "serving the protectors"
Shares
By Ruth McCance, ASX Investor Education

Tracking your shares performance

Reviewing your shares is an important part of share ownership. Without regularly reviewing the performance of your shares and the companies you have invested in, it is difficult to know whether you are still on track to achieve your investment goals. According to the plan you set when you first bought the shares, it may be time to sell, for example, to consolidate profits or because the outlook for the shares has changed. The frequency of the reviews depends on the type of shares you have bought and how long you intend to hold them. Speculative shares may need to be reviewed several times a day, while one of the top 20 largest companies might only need to be reviewed quarterly, or as a specific need arises.

To monitor your portfolio effectively, you need to know where to locate useful share market information and be able to understand how it affects the shares you have in your portfolio. So what are you looking for? Some key things are changes in share price, forecast profits or anything which affects the profitability of the company you have invested in. Monitoring your shares can be very simple and easy to do. You can set up a spreadsheet for each stock, recording the stock name, purchase price, dividends, current price and overall stock performance.

The Internet offers a wealth of information. The knack for many is identifying a few key sites to avoid “information overload”. You can get share prices, analysis and reports from your advisor’s web site. Most now publish their newsletters electronically, too. Other financial websites like www.afr.com.au, www.yourbroker.com.au and www.tradingroom.com.au supply financial data. You can also access prices and company announcements on 20 minutes delay at www.asx.com.au

This site is also a good source for abbreviated company reports. Many of the larger listed companies now post these on their own web site. A number subscribe to CorporateFile at www.corporatefile.com.au which posts quarterly interviews with the CEO.

The financial press in Australia is another influential source of information for many sectors of the community. Most newspapers carry financial stories in their general news section and in a specialist finance or business section. The Australian Financial Review (AFR), a publication of John Fairfax Publications Pty Limited, is a popular, specialist paper giving a national perspective on economic and investment issues.

Share prices are published in the daily newspapers and vary in both style and format. They can be listed in alphabetical order according to the name of the company. The industrial companies are often shown separately from companies in mining and oil (resources sector). These tables provide basic information such as the 52-week high and low (the highest and lowest price the share has reached in the last 52 weeks), the day’s high and low, last sale price and volume traded for the previous day.

Ratios are included in this section. These are used to relate a company’s financial information to its current share price. Ratios help to show how well the share price reflects the financial health of the company. They can then be compared to other companies, usually within the same industry.

One of the most common ratios is earnings per share. This is the portion of the profit earned for every ordinary share on issue. It shows at a glance growth in earnings from one year to the next and the relative size of earnings to dividends.

The Price Earnings ratio (PE) shows the number of times the market price exceeds the current earnings per share. A low PE ratio can suggest that the market expects no growth or a lower profit, while a high PE ratio generally suggests that the market expects high growth and a higher profit. Dividend yield shows the dividend paid in the last 12 months as a percentage of the current share price. To make this relevant to you, take the dividend per share shown in the paper and calculate that as a percentage of the share price you paid.

With all this information, you should be able to work out the real return on your money, in terms of capital gain and dividend, and develop a picture of potential future returns. Tracking your shares performances therefore is a crucial part of planning your investment portfolio and ensuring that you have taken advantage of all opportunities that have been put forward to you.

This article contains general information only. It is not intended as and must not be relied upon as investment advice. You should consult a licensed professional advisor prior to making any investment decision.

The information contained in this article is provided in good faith and derived from sources believed to be accurate as at the date of publication. However, no warranty of accuracy or reliability as to such information is given. Australian Stock Exchange Limited and its associated and related companies will not be liable for any loss or damage arising in any way from or in connection with anything provided in or omitted from this article or from any action taken or inaction in reliance on the article. This article does not contain an invitation or offer to invest in securities or other financial products and nothing in this article is to be taken as ASX endorsing promoting or expressing any opinion on any securities or other financial products.

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