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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.
Should you invest £1,000 in BP right now?
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Weak oil
I chose BP (LSE: BP) (NYSE: BP.US) as the portfolio’s oil hope, but the dragging-out of the Gulf of Mexico disaster was more painful than I’d hoped and the share price didn’t 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 that’s crushing oil stocks. BP shares, at 391p as I write, are down 5% so far since the start of January, and we’re 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.
Miners, too
Falling oil prices have damaged confidence in general industrial demand, and that’s 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, we’re sitting on a share price loss of 10% (again after costs), with the Rio Tinto price down 2.5% in January to 2,930p. We’ve enjoyed dividends from Rio, too, but with yields a bit lower than BP’s we’re still about 5% down overall.
Supermarket woe
And then how can we forget Tesco (LSE: TSCO)? We’ve had a disastrous time since adding Tesco to the portfolio in May 2012, with that investment our biggest loss to date. And with dividend yields slashed to around 2%, there really isn’t much cash coming in to compensate.
The question is, what do we do now?
I’m 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 they’ll both make for healthy investments. In the meantime, I’m happy to take 6% a year in dividends from BP and 4.5% from Rio.
Can’t sell now
Tesco is the only company I’m really not sure about, but now could well turn out to be the very worst time to sell — though I know I’ve 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 I’m still holding.
