It is also important to consider that convertibles and rights will eventually turn to ordinaries, meaning that those forms of equity do not diversify the risk away from ordinary shares. Time horizon is another consideration to take into account (No author, 2010). The time horizon of an investment is in part related to the risk of that investment, as some risk is related to time. Also, the investor should be wary of investing in securities with a long time horizon for returns if the investor may have a need for that money in the short-term. The time horizon of the investment should match the time horizon of the investor's needs (Ibid).

Finally, the investor should consider the nature of the investment itself and whether they have a full understanding of how that investment works. The ASX and the two mining companies selected are a perfect example of this. While the ASX is home to many sophisticated exploration and mining investors who can understand adequately understand the risks inherent in investing in these companies, not all investors can. These types of companies in particular produce reports heavy on geological analysis that cannot be understood without a background in geology or extensive experience with mining and exploration stocks. Investing in these companies without understanding the nature of the company's business and the risk factors inherent in this business is a poor investing strategy. Diversification across industries can offset some of this risk, but the individual investment in an unfamiliar industry is little more than a trip to the casino.

If I had 5000 Australian dollars and wanted to resell in a month, I would invest in the ANZ preference convertibles. The reason for this is that the short time horizon is inappropriate for investments in risky securities. Both of the mining exploration investments are risky -- the payoff for these investments could be months or years later. Short-term movements are speculative at best. Telstra, unfortunately, is also a risky investment. It has declined steadily in value and with the government efforts to undermine its business at every turn there is little reason to believe that Telstra shares will bounce back in the next month. This leaves the ANZ preference convertibles, by default. However, preference shares are not good short-term investments either. There is unlikely to be significant...

Those dividends are known, and therefore are included in the price of the shares. Thus, even this investment is inappropriate for a short-term purchase. While the risk is very low, the potential return over a one-month time frame is also very low.
Thus, given the choice, I would not invest in any of these securities over the one-month time frame. If a choice had to be made, it would be to invest in the ANZ preference shares in order to reduce the risk associated with the purchase, on the principle that making short-term investments in risky securities is tantamount to gambling, in which case a trip to Macau might be a better use of my $5,000. Even Telstra, which is less of a gamble, remains a speculative investment whose value is largely to be viewed over the long run, as it finds ways to rebuild its business or to influence the government for a more favorable regulatory regime. If Telstra's fortunes were dependent on short-term considerations, it would be a good short-term investment, but this is not the case today.

Works Cited:

Business Spectator. (2009). Resolute to raise capital via convertible notes, restructures debt. Business Spectator. Retrieved August 31, 2010 from http://www.businessspectator.com.au/bs.nsf/Article/Resolute-to-raise-capital-via-convertible-notes-re-VKAJ8?OpenDocument

No author. (2010). Ten steps to choosing the best investment. uSwitch.com. Retrieved September 1, 2010 from http://www.uswitch.com/investments/best-investment/

Pettett, J. & Messer, R. (2010). Pryme Oil and Gas Limited (ASX: PYM) placement and rights issue. Yahoo Finance Australia. Retrieved August 31, 2010 from http://www.proactiveinvestors.co.uk/companies/news/20575/%5Cwww.24hgold.com

Prospectus CPS2. (2009). Retrieved September 1, 2010 from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjM1ODN8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Shareholder.ANZ.com. (2010). ANZ CPS2 offer FAQs. Shareholder.anz.com. Retrieved August 31, 2010 from http://www.shareholder.anz.com/phoenix.zhtml?c=96910&p=irol-cps2faq

Yahoo 7 Finance. (2010). Telstra FPO. Yahoo 7 Finance. Retrieved August 31, 2010 from http://au.finance.yahoo.com/q?s=TLS.AX