May has been my first full month at Morningstar Australia. Getting familiar with Australia’s markets and Morningstar’s approach to investing has been a lot of fun. It’s also made me think more deeply about my own approach to investing and things I could be doing better. As it turns out, there are a lot of them. 

Reading the work of my new colleagues Mark and Shani has highlighted how easy it is to obsess over individual investments and lose sight of your broader strategy. To fight against that, here is the process that Morningstar recommend for building a suitable portfolio: 

  • Set a well defined goal
  • Calculate your required rate of return
  • Pick a suitable asset allocation
  • Choose individual investments


Top articles in May

For years, I have jumped straight to step four and spent 90% of my time there. But Mark and Shani made me see the error of my ways.Tomake amends, I went about setting a goal and calculating the required return for my retirement savings. Let’s just say it gave me plenty of motivation to do well in my new job. You can see the grizzly details in

My eye-opening pension audit

Of course, finding potential investments is still the most exciting part of the process.A few days ago,I used Morningstar Investor’s screener to find two high quality industries that are currently out of favour. Aussie markets have little exposure to eitherand lower valuations in one of them seem especially interesting. 

Shares in this quality industry rarely look this cheap


The next two articles I’ll mention came from events in my portfolio.  

In mid-April, one of my holdings became subject to an activist campaign. A disgruntled shareholder wrote a letter urging a vote against management and certain board members at the next AGM. The letter exposed a mishap in my research - I hadn’t looked closely at management and how they were being compensated.

I ignored Buffett's advice and it cost me

Then in May, another holding received a low-ball bid from private equity. As I am generally trying to buy shares in good companies that are out of favour, this wasn’t a massive surprise. But after rising 40% in a month, the shares have become my biggest position. A short time ago, I would have been tempted to ‘do something’ and sell. My article “How I set myself up for investing failure” shows you why this would have broken a new rule I set for myself. 

How I set myself up for investing failure

When you talk about investing every day, it’s easy to forget that it is only one piece of the financial pie. It might not even be the best use of your surplus cash right now. This is currently the case for me. You can see which financial goal is taking up most of my salary in ‘Are you too focused on investing?’.I also reveal a non-financial investment that has given me a 7000% return – and a lot of joy – in the past year. 

If you’ve already read all of those, why not check out the work of my colleagues Mark and Shani? My favourite piece from Mark this month was his explanation of why he basically never sells.I also enjoyed snooping on the checklist Shani used to decide against a self-managed super fund. 

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 Joseph Taylor