# Help out a beginner



## Jack108 (20 January 2009)

Hi,

I'm 18 and looking to invest in some shares within the next few months. I'm relatively new to investing (never invested before) and would like to have some help with the basics. I would also appreciate some info on what shares other people think will increase in value over the next year.

Thanks


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## prawn_86 (20 January 2009)

Jack,

Welcome to ASF 

Please note it is against both ASIC and ASF policy for members to give out financial advice directly related to buying and selling.

I suggest you learn to use the search function and the beginners lounge as this type of question is quite common and has been answered many times over.

Thanks

Prawn


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## tcoates (20 January 2009)

Jack,

Welcome. Suggest that you start here. Think that you might get lost searching here  

http://www.asx.com.au/

On the right side of the page there are links

Getting             Started in Shares
Starting             in the Sharemarket
Tracking             your Sharemarket 
​Click on these read away.

Tim


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## investorpaul (20 January 2009)

Jack108 said:


> Hi,
> 
> I'm 18 and looking to invest in some shares within the next few months. I'm relatively new to investing (never invested before) and would like to have some help with the basics. I would also appreciate some info on what shares other people think will increase in value over the next year.
> 
> Thanks




Hi Jack,

I'm around your age, 19, I started buying shares directly when I was 12, the first step is to figure out what type of investor you are. I assume by using the word "invest" you intend to buy and hold?

Either way I work recommend buying/reading a few books (you can get hold of them for free from your local library). Its always good to get a few authors views on a subject and find out what works best for you. 

When I started I read one or two books and throught that would do. I then proceeded to buy a few shares, which after a few months were worth less than what I paid (at the time I was a long term investor so it didnt matter too much) but what that taught me was that I didnt no anywhere near enough and since then I continually read new books, even on the same subject. Each time I read something new there is always a point or two that you can pick up and it is worth the effort. Education and knowledge is a big advantage to have in any industry, especially on the stock market.

The ASX website, www.asx.com.au, also offers some free online courses (just navigate to the education page).

Good luck,


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## korrupt_1 (20 January 2009)

now is the best time to get into investing... perhaps the market can/will go lower still, but its currently very good value... once this turmoil is over, you'll look back and say... wooo... what a bargain... 

The best way to get into investing is to ask around... talk to people... if you can find someone to be your mentor, it'll kick start your education... i think even talking to your bank's financial planners might be a good start... (although they may try to sell you their products)

on the note of looking at the asx website...  it's cluttered and newbie unfriendly... way too much information and is very overwhelming if you're a beginner... i think the website needs much overhaul... 

The only real advice I have for you is to invest with money you CAN AFFORD TO LOOSE... in these volatile and uncertain times, anything can happen... best to not put all your eggs in the one basket - just incase...


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## Julia (20 January 2009)

I disagree with Korrupt about the ASX website.  Any 16 or 18 year old bright enough to want to start investing would be well able to negotiate the info there, and it's necessary basic information before starting to put out money.

I can't comment on the other online brokers, but E-trade also has quite a good Education section.

In terms of starting to buy now, I'd suggest anyone doing so should be prepared to see their capital reduce before it grows.

Also bear in mind that as company profits fall, there will be an increasing likelihood of dividends being cut.


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## fodder-oz (20 January 2009)

Look at some good books like Trend Following: How Great Traders Make Millions in Up or Down Markets, New Expanded Edition. These guys who used this method still made 30% in 2008 when most people lost.

http://trendfollowing.com/

The buy and hold option in a bear market even with great stocks can deplete your assets. You will always hear from the many experts hold for the long term which can be good in the good times but in a bear market you will lose your capital.

Another tip is never fall in love with a company and hold when the signs say sell is something I've had to learn.

If you have a read of this type of strategy you hold your winners and sell when the trend drops, that way locking in your proft, and sell bad choices quickly so you only lose a small % of capital. People that held when shares have retreated 50% or more last year will be waiting a long time to get back into the black.

Hope this helps.


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## wonderrman (20 January 2009)

If you decide to be an investor, I think these books are great,

*Intelligent investor
*One up on wall street
*Common stocks and uncommon profits

I would say read and learn as much as you can before you invest. I did that for about 18 months before I thought about buying something. The market will be here for ever. Yes there are lots of cheap stocks around at the moment but I bet there will still be lots of cheap stocks in 6 months time. 

I would also say be very selective in your investments as well. The next two years are going to be very tough but if your taking a 5 year view I think you will  do well. There is no need for high diversification I think. Five sound stocks with market leading positions and quality earnings and *profits* is the key. You've been given an opportunity to buy these top companies cheap so use it, no need to go for the mid tier spec plays when you can get great companies at great discounts.


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## kam75 (20 January 2009)

Have a read of Stan Weinsteins "The Secrets for Profiting in Bull & Bear Markets".  It's the original classic that other authors tend to just regurgitate.  As far as shares go, all you need to know is there.


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## Sean K (20 January 2009)

At 18, I'd be investing in beer and chasing girls.


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## Ashsaege (20 January 2009)

first thing you should learn about is Money Management! 
Just google Van Tharp's Money Management report, you should be able to find a free PDF. It can get complicated, especially for somebody new.
Knowing 'how much' or 'how many' is a critical concept.


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## 96105251 (20 January 2009)

Ha - i agree with Kennas - much more fun at the moment and better returns.

I suggest you start with Wharf Bar on Sunday nights in Manly before heading into Shore Club.


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## So_Cynical (20 January 2009)

Open a Commsec account and jump right in. :

But seriously your gona need a broker so start shopping around, i just 
switched from Westpac to Commsec and it was easy and hassle free.

Don't let the doom and gloomers put u off...there's lotsa value in the market.


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## Dezza (21 January 2009)

Check out your local TAB and whack some money on Nadal for the Aussie Open! : 

Odds of 4 to 1, hard to find a better return than that!


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## Dowdy (21 January 2009)

Save up as much money as you can, then wait til our housing market crashes. By the time that happens our stock market would probably bottomed.


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## Ashsaege (21 January 2009)

Dezza said:


> Check out your local TAB and whack some money on Nadal for the Aussie Open! :
> 
> Odds of 4 to 1, hard to find a better return than that!




sorry for getting off the topic on this thread but my money is on Federer!


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## Spanning Tree (21 January 2009)

Personally for a beginner I recommend a Commsec account and maybe just buying one of their share packs.


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## MS+Tradesim (21 January 2009)

Some of the comments here are bordering on advice, and unwise advice at that. I use "investment" here interchangeably for investing or trading. 

Go to your local library and pick up a bunch of different books on different styles of investing. Read them all and find something that clicks with you. Find more books on that style by different authors.

Create a plan. You will need to cover many things including:

1) What do you want to achieve? Must be realistic - do not expect to make 100% return on the first $1000 you throw at the market. 

2) What timeframe are you looking at? Years? Months?

3) How much money will you put in any given investment?

4) How will you know when to enter a market?

5) How will you exit the market? If you don't know this before entering then you are gambling.

6) What will you do if you suffer a losing streak? Say 5 or 6 bad investments in a row? 

7) How will you handle winnings? Do you reinvest all your money? Will you divide winnings into 3rds - 3rd for you, 3rd to reinvest, 3rd for the taxman?

8) How will you know if your idea is no good?

And here's a free tip. The very worst thing that can happen to you is your first few investments in shares result in a profit.  You won't start to ask the right questions until you've experienced losses big enough to hurt.

You might think, "C'mon. All I want to do is make some money in the share market." But if you don't think about these things, then any money you do make will just be good luck. And you'll lose it just as fast by going too big, too quick.

The fact that you are 18 and thinking about this is fantastic. Wish I'd started that young. When I did start, I wish I'd listened to the kind of advice I just gave you. But I didn't. And you won't.  But be open to it after you realise that the markets are not a place to make a quick buck.


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## Dezza (21 January 2009)

Once you've figured out your objectives and direction, don't forget to try your hand at paper-trading to test out your theories and strategies. Also, some sites, like the ASX, have trading games using play money allowing you to purchase/sell some stocks. This will give you the feel of trading and help build up your confidence without the risk of exposing your savings.

Always good to practice before entering the main arena...


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## drsmith (21 January 2009)

Jack108 said:


> Hi,
> 
> I'm 18 and looking to invest in some shares within the next few months. I'm relatively new to investing (never invested before) and would like to have some help with the basics. I would also appreciate some info on what shares other people think will increase in value over the next year.
> 
> Thanks



No one knows what a share price will be tomorrow so for someone starting out a good aproach is to invest small amounts and often.

Unless you have conducted your own research on individual companies a good starting point might be an index fund. From there you can expand into individual companies as your knowledge from research grows.

ANZ offer a bank account which tracks the performance of the ASX200 index. It is ideal for those starting out with small amounts to invest through a regular savings plan. The other big banks may also offer a similar style of account so it will pay to check what they offer and compare fees.

For larger amounts you can invest directly into the ASX200 index through a stockbroker more cost effectively than through ANZ's facility.


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## The Edge (24 January 2009)

Friday  23 January 2009

jack108:

Let me recommend a book I think is mandatory for understanding the markets, 
one I just recommended on another thread, and on previous occasions,
"How To Invest In Stocks," by William O'Neil.  You have time on your side, and
this is not going to be an easy market ahead for some time to come, just my
opinion.  

Were I you, I would keep my powder dry until you know exactly what you are
doing, and why.  The trend is the most important element you can learn.  Why?
When you are going with the trend, and you get in on poor timing, the market
momentum will help you out.  If you go against the trend, and you enter poorly,
the trend will undress your capital rather quickly.

Just a few thoughts.

Cheers!


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## sails (25 January 2009)

The Edge said:


> ...Let me recommend a book I think is mandatory for understanding the markets, one I just recommended on another thread, and on previous occasions, "How To Invest In Stocks," by William O'Neil.  You have time on your side, and this is not going to be an easy market ahead for some time to come, just my opinion. ...




Thanks for the recommendation, Edge.  

O'Neil has a few books beside "How To Invest In Stocks" which include: "24 Essential Lessons for Investment Success" and the "The Successful Investor".

Has anyone read these other two books? Does any one of these books cover everything or is it necessary to purchase all three?

With the markets falling so far, I'm feeling it may be a good time to start learning a bit more about fundamentals with the idea of slowly building a portfolio.  Fundamentals is not something I have bothered with so far as the option strategies I use are generally quite short term.

Any comments from anyone who has read the books would be much appreciated.


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## acetrader (25 January 2009)

sails said:


> Thanks for the recommendation, Edge.
> 
> O'Neil has a few books beside "How To Invest In Stocks" which include: "24 Essential Lessons for Investment Success" and the "The Successful Investor".
> 
> ...



I read all of his books. They are about the same thing "CANSLIM" but I recommend "the successful investor" because it comes with more details. His method is not about "buying the bottom" or "slowly building a portofolio". If you want to try the "slowly building" strategy, try "The Little Book that Beats the Market"

CANSLIM can help you find the right stock and get onboard at the right time (obiviously today is not the right time) so you can just read the book and practice your patience now. 

If you are new, I think short term strategies may suit you well, because you don't have much experience to support your long term investment. If you try a scalping strategies, you can learn it within weeks. Because in 2 or 3 weeks you had probably made all the mistakes that you could make while scalping. And this is very important. If you want to try a long term investment now, I don't believe you really have the true confidence to hold your position for a real long term invesment.

Good Luck!


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## sails (25 January 2009)

acetrader said:


> I read all of his books. They are about the same thing "CANSLIM" but I recommend "the successful investor" because it comes with more details. His method is not about "buying the bottom" or "slowly building a portofolio". If you want to try the "slowly building" strategy, try "The Little Book that Beats the Market"
> 
> CANSLIM can help you find the right stock and get onboard at the right time (obiviously today is not the right time) so you can just read the book and practice your patience now.
> 
> ...




Thanks for the comments, Acetrader and will check out your suggestion of "The Little Book that Beats the Market".  

I'm not new to shorter term trading - started about 11 years ago with SPI futures, albeit without much success.  Have since been in options for a few years with short term strategies and happy with the results at the moment.  

Agree that this is not necessarily the time to start entering the market with a longer term positions, but it's probably a good time to start learning a bit more about it.


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## So_Cynical (25 January 2009)

acetrader said:


> (obviously today is not the right time)




It almost certainly is for some stocks, just not the vast majority...im buying next week for the long term.


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## The Edge (26 January 2009)

Sunday  25 January 2009

sails:

In the past 15 years, I have read few books on the market, having read every 
one I cold get my hands on prior to then, so I am not the best source, but I
have confidence in recommending the O'Neil book mentioned because it
encapsulates a bit of fundamental considration in technical format.

Acetrader would be a better source, on that score, for current books.

For me, I have zero use for fundamentals.  Understanding the premise behind
CANCLIM would be an easier explanation as to why.  Fundamentals can change
according to perceptions and those perceptions can lead to a shift in the
underlying fundamentals, the last six months being an example.

From an editorial posture, the days of buy and hold are done, for now.  If
anyone believes a 24 year (+/-) bull market will correct in a single year, simply
does not understand market history.  Those who have been buying breaks or
seeming bargains are most likely unhappy with their purchases.  This is not to
say some buys can show profit, rather, caveat emptor, and we are all free to
choose our pleasure/poison.

The battle of the mind for fundamental v technical will never go away, [much 
like those of differing religions or political views], especially since there are so 
many inept at technicals.  They are fodder for fundamentalists, and rightly so.

I speak from a particular market slant, but one steeped in experience and previous
high tuition payments, in the process.  It is possible to never have a losing
week, in trading.  That discovery was a long road for me, perhaps because I
am a slow learner.  I have seen it come much faster for others.

Let me give you a few other books you may find worthwhile, or at least not a
waste of time, and a decent variety:

"Hot Commodities" by Jim Rogers - very entertaining

"The Hedge Fund Edge" by Mark Boucher - more along the lines of O'Neil, to
satisfy your fundamental bent, and written by a highly successful investor.

"The Disciplined Trader" by Mark Douglas - I have read it no fewer than six times. 
Personal choice.

"Out Of the Crises" by W Edwards Deming - This is a bit off the wall.  It has
nothing to do with investing, but everything to do with quality, for me, as in
quality of decision-making.  Deming is the only non-Japanese to ever receive
Japans highest honor to a businessman.  His credited with turning the Japanese
economy around from the trashy "Made in Japan" on trinkets and cheap goods,
to the world-admired "Made in Japan" products when Japan was at its best.
This book first came out in 1982, when I read it.

There are a slew of others, the first half of "The Black Swan" by Nassim Teleb,
comes to mind.  Much of my reading is from sources long out of print.


Cheers!


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## strudy (30 January 2009)

Just do a Google search *free ebooks on share trading* You will be surprised what is out there.


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## Harro7 (31 January 2009)

MS+Tradesim said:


> Some of the comments here are bordering on advice, and unwise advice at that. I use "investment" here interchangeably for investing or trading.
> 
> Go to your local library and pick up a bunch of different books on different styles of investing. Read them all and find something that clicks with you. Find more books on that style by different authors.
> 
> ...




Can you briefly mention some of the "styles"?

Can you tell me briefly why advice is not to be given? I'm guessing as the result of a court case. Being a part of the punting world for so long I'm wondering why "Apache Cat is a sure thing" can't be construed as similar if not the same.


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## waiter (31 January 2009)

It cant be against the law to give advice in purchasing shares, any more than giving advise in  playing the pokies at crown, " Go ahead, press the button, bet the house, too bad, you lost". Let me know where thts wrong


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## Julia (31 January 2009)

waiter said:


> It cant be against the law to give advice in purchasing shares, any more than giving advise in  playing the pokies at crown, " Go ahead, press the button, bet the house, too bad, you lost". Let me know where thts wrong



Waiter, just read the ASF posting rules.


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## BillyIdol (8 February 2009)

My take is to go and read as much as you can from your local library until it stops telling you much new.  

I went and did a TAFE Sharemarket course in Adelaide, great thing and I would recommend it to anyone.  I went to Centrelink FIS seminars (for free), on personal finance, read magazines (Money, Smart Investor) and as many books as I could.  Some brokers / wealth management houses will also offer seminars through their website.

A lot of great information is free and some authors like Paul Clitheroe, Ashley Ormond, Julia Lee, Ross Greenwood and Noel Whittaker will give you a lot of good pointers.  Build your knowledge foundation first, the time that you take now will save you time and money later.

People are right, the market will be there forever and it's not going to go anywhere just yet....there is no rush to get in - that would be a great way to get burnt, lose money quickly, get really upset and vow never to go back to shares 'because they're stupid', which is sad.  So many people have done this (especially recently) which I find sad - shares are fun and interesting.

Attend whatever seminars you can for free or little money - $5 will get you into an ASX Investor Hour Seminar and they do podcasts on the ASX site.

If you do jump in, I would say to do it very slowly.  My first order was for $1K, which seemed like a lot then, but I quickly graduated to $2K as my confidence grew.  I'm still learning, I haven't touched Forex, options, CFDs etc. and won't do for some time until I feel happy to do so.  It's YOUR money, so take your time to learn, and most of all, ENJOY !


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## inenigma (8 February 2009)

Thanks Guys,

This is some damn good advice and I know one newbie has definitely taken a lot of it on-board.


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