# Long Term Stock Ideas



## craft

I'm on the hunt for some more candidates to research for a looong term portfolio. 

Anybody want to share some prospects they like?  Price doesn't have to be right at the moment - I can wait for that to occur, but the quality of the management and business economics needs to be already obvious to warrant doing more research.


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## ThirtysixD

craft said:


> I'm on the hunt for some more candidates to research for a looong term portfolio.
> 
> Anybody want to share some prospects they like?  Price doesn't have to be right at the moment - I can wait for that to occur, but the quality of the management and business economics needs to be already obvious to warrant doing more research.




AJA

Normally I would not go near property but its trading at a 30-50% discount to NTA. You get a nice currency hedge and the Olympics should support the property market.


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## systematic

craft said:


> I'm on the hunt for some more candidates to research for a looong term portfolio.
> Anybody want to share some prospects they like?




Hey craft, any market cap or liquidity preferences?


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## craft

ThirtysixD said:


> AJA
> 
> Normally I would not go near property but its trading at a 30-50% discount to NTA. You get a nice currency hedge and the Olympics should support the property market.




Hi 36D

Thanks for the suggestion. 

I’m sure the attributes you mention will make it a good candidate for some However I have dismissed it at first pass *(the stage I make my greatest mistakes of omission)* as a very long term candidate. Doesn’t have the earnings stability I desire and I don’t particularly know much about Japanese Property to be the smartest guy in the room on that front.

But like I say I make the biggest mistakes in my first pass – so if you want to elaborate some more – please do.  It’s normally when something or somebody inspires me to take a second look that the rough diamonds are found.


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## craft

systematic said:


> Hey craft, any market cap or liquidity preferences?




No.


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## McLovin

Well I'd say CAT, but I'm sure you're after companies that are already profitable.


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## Ves

McLovin said:


> Well I'd say CAT, but I'm sure you're after companies that are already profitable.



CAT is basically already profitable,  they're just footing their growth requirements through the P & L.

How profitable it _will be in 10 years_ and whether the market cap justifies such a thing,  well that's where I'm currently stuck.


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## craft

McLovin said:


> Well I'd say CAT, but I'm sure you're after companies that are already profitable.




Reasonably clear pathway to profitable with very little (preferably no) further requirements for external capital to stay alive (external capital for additional growth is O.K)

CAT seems to fit the bill and I have started looking but haven't got far on it yet.


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## skc

APX, ELX, PPS, LAA, PGC, PRO.

Don't have time to run through each name now...but perhaps posting in their respective threads will generate more discussion.


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## Ves

NAN 

Recurring revenue
Bugger all (visible) competition
Almost self-funded
Global market
Disruptive technology
Medical hygiene device & also sells the consumables and does the maintenance
Fairly sure there are reams of clinical studies endorsing its effectiveness compared to alternatives

Fairly sure they raised a big chunk of capital to help them grow earlier in the year and there was around $45m left.

I had a spread sheet model for this done up 18 months ago and worked out a lot of the cost structure (most likely out of date I'd say) when it was trading at about 60-70 cents.  Never did pull the trigger. :frown:


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## Muschu

skc said:


> APX, ELX, PPS, LAA, PGC, PRO.
> 
> Don't have time to run through each name now...but perhaps posting in their respective threads will generate more discussion.




Unless I've got this wrong.... Every one of the above stocks went up today [along with AJA and NAN] in a down market....

??


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## shouldaindex

I'm also interested in this topic, I think I've been screening every week with different ideas for 2 years!  

More into the proven history sort of stocks.  I've been keen on ANZ, WOW and TLS once their rebasing occurs at the cycle bottom.

ANZ will hit a bad debt peak at some stage (similar to 74, 82, 91, 08 - every decade has had a crisis that sees it go through the roof)
WOW is rebasing their margins to achieve sustainable growth (-30% Margin / Profit for H1, but it's a 3 year strategy that could go lower)
TLS is low growth, high yield so is more tied into a cyclical valuation drop via a macro downturn, but a company specific opporunity is possible like 2011 too (competitive threads led to reducing margins by about 10%).

I've also been wanting to get onto the Health and Agriculture macros but haven't found a specific company with the right characteristics in terms of quality and price, so open to any suggestions.

I've looked at the IPOs- MGC had me interested, but decided against it due to dairy price volatility and some animal welfare concerns.  SunRice is coming up next year, but it's exposed to weather.  Health IPOs seem to be expensively priced due to the perceived macro.

If nothing presents, I'm happy to wait for the next 20-30% market drawdown and gradually buy a bit of everything.


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## So_Cynical

At the Micro end of the scale.


 HZR - Hazer, has blue sky technology commercialising Iron + NG to Graphite & Hydrogen.
 CTT - Food Revolution, Health drinks targeting the Chinese market.
 NRR - Alcidion Corporation, Patient/hospital management software.

All 3 just starting their journeys, CTT & NRR have cash flow, all 3 zero debt and some potential, i hold.


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## galumay

Lots of interesting suggestions coming up, quite a few that had escaped my radar!


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## silence

BAL

Yes it's gone up 1300% already since float, but try to find a reason that selling baby formula to rich chinese won't continue to work out.

The only issues are getting supply to make enough of their product. Management seems strong, and it's an easy one to chart. It just.... goes up.
Down days are never that bad, and up days are amazing.


I hold, traded in and out since about $6. Not selling again until my shares are worth an apartment deposit or an outright Tesla purchase 


If it isn't $20 by the end of next year, I'll be very surprised. Look at Blackmores which is mostly pseudoscience products that don't benefit the people who buy them at all.


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## howmanyru

I hold and trade DUB. Boring stock, just call recording in the cloud, but I like boring as it keeps the punters away.


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## Klogg

Pro-Medicus (PME)

Business itself is impressive - not so sure about the price.


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## sasch

Adslot (ADJ)

Global digital publishing platform for advertising. Just about to become profitable based on trend of sales. But not anticipated to become profitable ~2017 due to ongoing expansion of the business throughout various countries.

Risks - other than the obvious one of running out of money - being beaten in this space by another competitor;
or if successful, being bought out before the upside is fully realised. 

One to take a punt on.



Disclosure - holding via FAC purchase.


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## systematic

As always; no story - just running numbers.

Caveat:  Completely ignoring price.  I'm going for 'quality' here.  I base that on your comment that the price does not have to be right.  Therefore I wouldn't (necessarily) be investing in these, as of course just like yourself - the price has to be right (amongst other things)

Anyway...on quality alone:

Vita Group
Navitas
Cochlear
JB Hi-Fi
Blackmores


Saunders International
Nick Scali
Oz Forex
DWS
AMA Group


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## Muschu

systematic said:


> As always; no story - just running numbers.
> 
> Caveat:  Completely ignoring price.  I'm going for 'quality' here.  I base that on your comment that the price does not have to be right.  Therefore I wouldn't (necessarily) be investing in these, as of course just like yourself - the price has to be right (amongst other things)
> 
> Anyway...on quality alone:
> 
> Vita Group
> Navitas
> Cochlear
> JB Hi-Fi
> Blackmores
> 
> 
> Saunders International
> Nick Scali
> Oz Forex
> DWS
> AMA Group




I like your top group apart from NVT which I consider has seen the best of its days.  Other comments on that thread.


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## craft

Thanks people for the suggestions - Most of them are certainly making me look into areas that I otherwise wouldn't.  




systematic said:


> As always; no story - just running numbers.




Interested in what criteria you used to run the numbers - if you care to elaborate.




Muschu said:


> I like your top group apart from NVT which I consider has seen the best of its days.  Other comments on that thread.




Interesting - If I was to pick an example of the sort of business I am looking for over the long term it probably would be NVT. - That's why its good to get a diversity of input on this thread - but not sure I'll be able to see what others see - hopefully some more in-depth thread discussion may follow at some stage on some of these stocks.  

Thanks everybody.


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## Value Collector

craft said:


> I'm on the hunt for some more candidates to research for a looong term portfolio.
> 
> Anybody want to share some prospects they like?  Price doesn't have to be right at the moment - I can wait for that to occur, but the quality of the management and business economics needs to be already obvious to warrant doing more research.




Capilano Honey (CZZ)

It's already had a big run up in price, But it certainly is going to be a good long term hold in my opinion.

If you invest internationally, I think The Walt Disney Company (NYSE DIS) is a wonderful company with a lot going for it over the long to medium term, they have another theme park destination opening in shanghi, a high quality movie pipeline over the next 5 years eg starwars, marvel, Pixar and Disney, and the growth in on demand TV such as net flix is allowing them to get great cashflow from their back catalogue of older films.

My US portfolio is about 95% Disney with the balance in Berkshire, I invest all Disney dividends into Berkshire hatchway B shares, its been a great set and forget US stock stratergy for me.


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## Value Hunter

Credit Corp (CCP)

The management are world class in their industry, the track record is good and the balance sheet is strong. Earnings are relatively consistent with the company only having one year since listing in 2000 where earnings went down. 

Ultimately it is a commodity business with no sustainable competitive advantage that consistently generates superior returns than its competitors by having better management. The downside is that the company is very dependent on having good management to do well. Things will go downhill quickly should the successor management be less than outstanding. Fortunately the current management team have been in place for some time and in my opinion look likely to remain in place for many years to come. The other risk is that its competitors get better management and catch up. However I would say in terms of IT and HR systems, expansion into related business areas, etc the company is at least 18 months ahead of its competitors which does give it some breathing space.

disclosure: Its my largest shareholding and constitutes over 90% of my share portfolio.

The company has a long growth runway ahead of it and in my opinion will have ample opportunity to reinvest a meaningful (at least half) chunk of earnings at returns north of 20% well into the future.


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## shouldaindex

Anyone have suggestions for companies with a - 

Competitive Advantage (ROE 15%+)
At Value (PE <15)
Proven Earnings (Dividend Yield > 0)

About 65 companies pop up.


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## Ves

shouldaindex said:


> Anyone have suggestions for companies with a -
> 
> Competitive Advantage (ROE 15%+)
> At Value (PE <15)
> Proven Earnings (Dividend Yield > 0)
> 
> About 65 companies pop up.



Be careful when using ROE,  it can be distorted by the financial structure of the company  (ie.  more debt).


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## systematic

craft said:


> Interested in what criteria you used to run the numbers - if you care to elaborate.




Sure, no problem.  This was just a composite profitability score/ranking (not quite as extensive as what I'd normally do - this was a bit of a "whip up" - but still good)...combined with a decent Piotroski score.


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## systematic

craft said:


> Interesting - If I was to pick an example of the sort of business I am looking for over the long term it probably would be NVT.




...Anybody into an intrinsic value type / not purely 'quant' approach who is interested in how craft has done so well as a 'stock picker' (and would no doubt like to do the same)...should now be taking NVT apart.  Perhaps posting your insights in this thread will be an educational experience for you, as craft responds etc.





craft said:


> That's why its good to get a diversity of input on this thread - but not sure I'll be able to see what others see - hopefully some more in-depth thread discussion may follow at some stage on some of these stocks.




...Fun thread!  Hope it continues...


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## shouldaindex

systematic said:


> ...Anybody into an intrinsic value type / not purely 'quant' approach who is interested in how craft has done so well as a 'stock picker' (and would no doubt like to do the same)...should now be taking NVT apart.  Perhaps posting your insights in this thread will be an educational experience for you, as craft responds etc.
> 
> 
> 
> 
> 
> ...Fun thread!  Hope it continues...




Contract Risk, Limited Negotiating Power, No Unique Offering, Low Capital Need Competitors, Alternative Pathways.

I see it as a macro play in an expanding industry, but with limited defence if threatened as a business.

I think we've seen both those sides playout in the past year.


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## systematic

I missed this comment:



Value Hunter said:


> Credit Corp (CCP)
> disclosure: Its my largest shareholding and constitutes over 90% of my share portfolio.




Woh! :bowdown:


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## leyy

CAJ, MBE, DWS, AMA, FLN, RNT, WEB

are a few long-term ones, i'll have to find time to write some comments about each one.


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## Value Hunter

Systematic, I am youngish (25-30 age bracket). Also shares only constitute a part of my total investment portfolio. I also own commodities and residential property as well. Credit Corp constitutes over 90% of my share portfolio but a much smaller (but still significant) part of my total investment portfolio.


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## systematic

Value Hunter said:


> Systematic, I am youngish (25-30 age bracket). Also shares only constitute a part of my total investment portfolio. I also own commodities and residential property as well. Credit Corp constitutes over 90% of my share portfolio but a much smaller (but still significant) part of my total investment portfolio.







Way to go, at your age.  Sounds like you're well and truly setting yourself up for life!


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## systematic

craft said:


> I'm on the hunt for some more candidates to research for a looong term portfolio.
> 
> Anybody want to share some prospects they like?




Going back to the OP, I realised that I don't _have_ to look at quality (as I did in a previous comment) - the request is for prospects liked.

Okay, so if I had to pick some stocks that I *had *to hold for (say) 5 years...I'd stick to value / cheap stuff.  I wouldn't worry too much about quality.  I wouldn't look at momentum as I normally do.  I'd be going for a basket of cheap stuff based purely on the mean reversion of value.  This is usually the sort of list of stocks that normal people wouldn't want to own; too scary!

Top (bottom?) 25, I've got:

LCM	Logicamms
MLD	MACA
DOW	Downer EDI
MND	Monadelphous Group
EPW	ERM Power
DCG	Decmil Group
PRT	Prime Media Group
LGD	Legend Corporation
SGM	Sims Metal Management
PTL	Pental
KSC	K & S Corporation
MCE	Matrix Composites & Engineering
STS	SRG
CSR	CSR
CDA	Codan
BYI	Beyond International
UOS	United Overseas Australia
CAB	Cabcharge Australia
OZL	OZ Minerals
RCR	RCR Tomlinson
SPO	Spotless Group Holdings
WPL	Woodside Petroleum
GNG	GR Engineering Services
DSH	Dick Smith Holdings
FMG	Fortescue Metals Group

A variety of sectors covered (industrials appearing most frequently), and a variety of market caps (from Woodside to ~$40m)


From the same group, but with an afterthought nod to quality and sticking to microcap territory, I'd be left with:

LCM	Logicamms
LGD	Legend Corporation
PTL	Pental
MCE	Matrix Composites & Engineering
STS	SRG


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## robusta

I've been trying ALU - Altium out for size in my portfolio. Seems to be a decent fit.

Also DNA - Donaco should show some decent growth in the future.


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## Wysiwyg

TOX free solutions on face value appears to be a smartly run business and so run right they should get the recurring domestic and S.M.E. business. The share price trend since 2004 is up and the gross dividend yield is around 5% at $2.30. I don't like prices that bounce very near off old lows (learned lesson) as it did today and as such look for lower price entry. 

Something to consider is their business from mining and construction that has declined and is reflected in the medium term downtrend since 2014. Trading volumes have remained subdued on a monthly basis.
Reiterating again I believe there is a lower share price to be had but for a long term hold at the right entry price, I like. 

They should stick around for many years to come but any negative feedback is welcome?


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## systematic

craft said:


> I'm on the hunt for some more candidates to research for a looong term portfolio.
> 
> Anybody want to share some prospects they like?





SHM Shriro Holdings caught my eye whilst considering the longer term.

craft - your thoughts?  No comments in the relevant thread


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## Ves

systematic said:


> SHM Shriro Holdings caught my eye whilst considering the longer term.
> 
> craft - your thoughts?  No comments in the relevant thread



Wonder why they wrote down the goodwill in the 2-3 years before the IPO?  (then restated the numbers in the Accounts so they didn't show a goodwill write-down)

I also don't like companies that distribute brands that they don't own. You're basically building the business in a territory for the brand owner and giving them a free option to reap the benefits if it's successful long-term.  It's great while it lasts for the distributor if it's a good brand,  but look at say Oroton (ORL) for instance,  which was decimated when Ralph Lauren ripped up the agreement and took it back in-house.

edit:  also a few rumours floating around that the two major director / management shareholders may be willing to sell down their holdings  (limited to 25% as per "trading window update" accouncement).


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## Muschu

Disclosing that I have small holds in both of these

GXY  due to the potential of lithium and the productuin stage the company has reached;

HZR due to potentially revolutionary approach to production of clean and low cost graphite and hydrogen - 2 recent very encouraging announcements.


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## ggkfc

I wonder if systemic bought into DSH last year.. what a disaster!


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## systematic

ggkfc said:


> I wonder if systemic bought into DSH last year.. what a disaster!




Are you referring to me?  I assume not, but just checking.


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## ggkfc

systematic said:


> Are you referring to me?  I assume not, but just checking.




Glad for you.

On the other hand anyone picking up BEAR/ BBOZ and waiting for the market to crash?


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## systematic

ggkfc said:


> Glad for you.




Sorry?  I don't understand.


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## galumay

systematic said:


> Sorry?  I don't understand.




I am glad you are confused! I thought it was just me.


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## skc

ggkfc said:


> I wonder if systemic bought into DSH last year.. what a disaster!






systematic said:


> Are you referring to me?  I assume not, but just checking.




I think ggkfc is asking because you produced a list containing DSH (and others) back in Dec.



systematic said:


> Going back to the OP, I realised that I don't _have_ to look at quality (as I did in a previous comment) - the request is for prospects liked.
> 
> Okay, so if I had to pick some stocks that I *had *to hold for (say) 5 years...I'd stick to value / cheap stuff.  I wouldn't worry too much about quality.  I wouldn't look at momentum as I normally do.  I'd be going for a basket of cheap stuff based purely on the mean reversion of value.  This is usually the sort of list of stocks that normal people wouldn't want to own; too scary!
> ...
> DSH	Dick Smith Holdings




FWIW, the 3 month performance of your list looks like this (last column = percentage change since 14 Dec 2015).




If you put DSH at -100%, you'd still left with an average of +4.2% across the 25 stocks. Obviously 3-month performance is hardly befitting the "long term" thread idea.


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## systematic

skc said:


> I think ggkfc is asking because you produced a list containing DSH (and others) back in Dec.




...Thanks, skc.  I wondered whether that was the case (and made a typo with, 'systematic') or whether he was talking about systemic issues with DSH or somesuch!



skc said:


> FWIW, the 3 month performance of your list looks like this (last column = percentage change since 14 Dec 2015).
> 
> If you put DSH at -100%, you'd still left with an average of +4.2% across the 25 stocks. Obviously 3-month performance is hardly befitting the "long term" thread idea.




Thanks, skc.  After ggkfc's post I had a look at that today with pretty much same result (used open price 14.12.15) but agree with you...3 months is kinda opposite to the whole 'long term' idea!  Which is interesting in itself, really.  I think it's a lot harder for investors to be longer term than many realise, because of many factors (the news and prices so readily available, along with our own need for instant gratification).  
I'm shocking for it, myself.  I've often habitually checked prices daily (of stocks I actually own)...with absolutely no need whatsoever (there is nothing checking a daily price could do to my plan).  But I still often do it!  I've often thought of doing a one month challenge of not checking prices of the stocks I own...don't like my chances!


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## ggkfc

skc said:


> I think ggkfc is asking because you produced a list containing DSH (and others) back in Dec.
> 
> 
> 
> FWIW, the 3 month performance of your list looks like this (last column = percentage change since 14 Dec 2015).
> 
> View attachment 66090
> 
> 
> If you put DSH at -100%, you'd still left with an average of +4.2% across the 25 stocks. Obviously 3-month performance is hardly befitting the "long term" thread idea.




haha you are right!

i thought he had bought into DSH!


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## systematic

ggkfc said:


> haha you are right!
> 
> i thought he had bought into DSH!




But even if someone had bought DSH as part of this portfolio, it would have been a 4% loss.  Is that a, 'disaster' in your world?


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## sasch

sasch said:


> Adslot (ADJ)
> 
> Global digital publishing platform for advertising. Just about to become profitable based on trend of sales. But not anticipated to become profitable ~2017 due to ongoing expansion of the business throughout various countries.
> 
> Risks - other than the obvious one of running out of money - being beaten in this space by another competitor;
> or if successful, being bought out before the upside is fully realised.
> 
> One to take a punt on.
> 
> 
> 
> Disclosure - holding via FAC purchase.




Adslot is tracking along nicely and slowly building momentum. 

Priced at 9c at the time of my original posting, closed at 15c on Friday following the announcement of 
a major contract:

"Adslot Signs Multi-Year Global Deal with World’s Largest Media Buyer
• Long term Symphony contract signed with the world’s largest media buyer, groupm (the
   media buying division of WPP)
• Global deal with immediate focus on multiple market deployments across Europe and APAC
• Immediate, significant impact on Trading Technology revenues anticipated via increased,
   contracted Licence Fees
• Value of media executed via Symphony expected to more than double from circa $3 billion per annum to more       than $6 billion per annum over the next 2 – 3 years
• Represents an effective doubling of the future Trading Fees revenue opportunity via AdslotSymphony integration
• Positions Adslot as a leading provider of media workflow and trading technology globally"


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## So_Cynical

So_Cynical said:


> (4th-December-2015) At the Micro end of the scale.
> 
> 
> HZR - Hazer, has blue sky technology commercializing Iron + NG to Graphite & Hydrogen.
> CTT - Food Revolution, Health drinks targeting the Chinese market.
> NRR - Alcidion Corporation, Patient/hospital management software.
> * i hold*





HZR, Share price has tripled, up 220% ~ uptrend with some sideways.
CTT now FOD, Share price down a lot, 25% ~ downtrend.
NRR now ALC, Share price down a little, 5% ~ down trend that has just turned.
Im still holding HZR and options, FOD i sold for a small profit and ALC have averaged (double position size) down to now be in a profitable position...picking them is only half the fun.


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## Cashflows

One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:

The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business. 

The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital. 

in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes. 

In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that. 

I would love to hear what other members thought.


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## Triathlete

Cashflows said:


> One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:
> 
> The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business.
> 
> The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital.
> 
> in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes.
> 
> In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.
> 
> I would love to hear what other members thought.




It may have a good story in your view....but I can only see one financial statement at present Dec 15 on Lincoln indictors which shows that the company based on the financials is in a *Distressed state presently*.

So based on that alone any investment in this company at present is nothing more than a punt until we can see some improvements.

It is also an illiquid stock so that is a problem also IMO if you need to get out quickly.   

Market cap is only 144mill
$69k traded daily.

Nothing stands out Technically either......


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## Klogg

Cashflows said:


> One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:
> 
> The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business.
> 
> The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital.
> 
> in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes.
> 
> In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.
> 
> I would love to hear what other members thought.




Where did you find the information about $30M EBITDA from 100tonnes?


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## Cashflows

''....but I can only see one financial statement at present Dec 15 on Lincoln indictors which shows that the company based on the financials is in a Distressed state presently.'

- My view is that with major shareholders such as Washington H. Soul Pattinson and Thorney group, the chance of such major players letting this business go bankrupt is unlikely. The evidence of this being the July 27 announcement of the extension of the $30m loan facility from WHSP and the recent raising of $4m from the incoming director - simon moore. 

'Where did you find the information about $30M EBITDA from 100tonnes? '

page 24 of the AGM presentation:


----------



## Klogg

Cashflows said:


> 'Where did you find the information about $30M EBITDA from 100tonnes? '
> 
> page 24 of the AGM presentation:
> View attachment 67820




Thanks, much appreciated.




Cashflows said:


> ''....but I can only see one financial statement at present Dec 15 on Lincoln indictors which shows that the company based on the financials is in a Distressed state presently.'
> 
> - My view is that with major shareholders such as Washington H. Soul Pattinson and Thorney group, the chance of such major players letting this business go bankrupt is unlikely. The evidence of this being the July 27 announcement of the extension of the $30m loan facility from WHSP and the recent raising of $4m from the incoming director - simon moore.




I wouldn't pay too much attention to what Lincoln indicators has to say...


----------



## galumay

Klogg said:


> I wouldn't pay too much attention to what Lincoln indicators has to say...




Normally I would agree, but a quick scan of the financials shows a VERY distressed company!!

I doubt they are a good long term stock idea - mainly because unless there is a massive change in the fortunes of this business it wont be round in the long term!


----------



## luutzu

Cashflows said:


> One share that I have been buying into with a long term view (more than five years) is TPI enterprises (TPE). It manufacturers/refines narcotics into the concentrates that can be used to produce pain killers. It has a few strong competitive advantages that I like:
> 
> The first is the regulatory barriers to entry. It takes substantial time and effort to get through all the red tape to receive a license to manufacture narcotics legally. I believe there is also a limit on how many licenses are given out, or something to that extent - at least the cost of invested capital and the required return to justify the time and money needed to get into the business.
> 
> The second is their unique way/technology of refining the narcotics. They use a water based refining process which costs about 20% of the initial required invested capital when compared to the traditional method. Moreover, expanding the facilities and they're production capacity has similarly reduced costs. lower required capital expenditure means less shareholder dilution from the company needing to raise additional cash and also greater return on the invested capital.
> 
> in conjunction with their refining process, TPE has also modified the traditional harvester to reduce the amount of chaff that gets collected in the machine. The result is that the raw material brought in has a much higher concentration of raw narcotics, and the production capacity has jumped by about 50% from 100 tonnes to 150 tonnes.
> 
> In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.
> 
> I would love to hear what other members thought.




In these kind of situation, you're not really investing for the long term... you're investing for the future and are willing to wait a long time for reality to catch up with the potentials.

LT investment ought to be companies so great that you don't really mind overpaying a bit for, and obviously better if cheaply bought for, because you know its future is bright and you're gonna stick around.

Why the semantic?

If a company is the one where you'll have to wait a while to see if its potentials are realised or not... that company's payback, if any, ought to be so over the moon that it'll pay your kids' education and half a mortgage.

Why else would you want to risk putting good cash on hold for a few years, and still risk that nothing might come of it?

So is this company worth that risk?




> In terms of profitability, they hit break even at 30 tonnes and recently announced a contract worth $30m - or about 14 tonnes. if they hit 100 tonnes in sales by 2019 - they're own stated goals - they will hit $30m in ebitda a year with minimal expenses after that.




At $30m/14Tonnes, that's $2.14M rev per tn, or for 100T revenue would be $214M.

With $30M EBITDA at $214M sales, operating [?] margin about 14%... tax won't be much at that point; DA would be pretty high I'd imagine; Interests owed would also be high given the investment/borrowings... 

So net profit might be $10M or $15M at best.

This profit is when the company would gain another 6 similar contract [100/14 = 7].

For sales to increase 6 times current pipeline, profit is around $15M at best.

How likely will this company win that many contracts; how much would a company that earn $15M be valued at by the market? What's the company's current market cap compare to that... and will that potential, once realised, if realised, be enough for you to hang around.


That's how  I would approach it.


----------



## Klogg

galumay said:


> Normally I would agree, but a quick scan of the financials shows a VERY distressed company!!
> 
> I doubt they are a good long term stock idea - mainly because unless there is a massive change in the fortunes of this business it wont be round in the long term!




Agreed, I've looked at TPE in the past and its financials don't scream 'buy me'. It's more the idea of relying on someone else's analysis without backing it up yourself that I find incorrect.


----------



## systematic

While we're updating:

SHM +35% (only 5 months though)

Portfolios from this *post*


5 stock portfolio:
+13.8%

25 stock value portfolio (with 100% loss on DSH):
+30%

But - it's not even a year yet, so plenty of time to fall!


----------



## galumay

Klogg said:


> ... It's more the idea of relying on someone else's analysis without backing it up yourself that I find incorrect.




Absolutely, its lazy.


----------



## sasch

So_Cynical said:


> HZR, Share price has tripled, up 220% ~ uptrend with some sideways.
> CTT now FOD, Share price down a lot, 25% ~ downtrend.
> NRR now ALC, Share price down a little, 5% ~ down trend that has just turned.
> Im still holding HZR and options, FOD i sold for a small profit and ALC have averaged (double position size) down to now be in a profitable position...picking them is only half the fun.




There is always someone that goes one better  - well done on HZR So Cynical.

I agree that picking an approach to trading/investing/gambling? in micro stocks is fun.

Along with my initial holding, have been trading in and out of ADJ regularly, as it has presented good
trading opportunities and liquidity for $10000 parcel sizes. Never want to completely close a position in these
types of stocks, as I am always paranoid that there will be massive price spike when sitting on the sidelines.


----------



## Cashflows

luutzu said:


> In these kind of situation, you're not really investing for the long term... you're investing for the future and are willing to wait a long time for reality to catch up with the potentials.
> 
> LT investment ought to be companies so great that you don't really mind overpaying a bit for, and obviously better if cheaply bought for, because you know its future is bright and you're gonna stick around.
> 
> 
> For sales to increase 6 times current pipeline, profit is around $15M at best.
> 
> How likely will this company win that many contracts; how much would a company that earn $15M be valued at by the market? What's the company's current market cap compare to that... and will that potential, once realised, if realised, be enough for you to hang around.
> 
> 
> That's how  I would approach it.




Thanks mate, I really appreciate you taking the time to work through this. I suppose you could say that I am stretching the concept of long term investing but I was looking at it from the perspective that you pay good money for competitive advantages that provide the 'moat' that warren buffet is always talking about. It is a risky investment but it's okay in terms of recommended portfolio allocation to higher risk assets based on age and overall exposure to loss - I'm 21, it is a small portion of both my income and also my overall net assets etc. I also hold other investments that have good earnings and pay good dividends - it's weird but I honestly find it hard to invest on companies based on quality as I find that they generally sell at too high a price. So I either invest mostly based on the net profits and earnings over the next 2-3 years, or invest for the much longer term with companies like TPE. 

Honestly, I suppose it is a speculative investment based on the potential fundamentals which I think will likely occur within the next 5 years. Also, with that calculation it's important not to forget the potential to reach 150 tonnes and the improved profitability that comes with economies of scale. I'd also like to point out that they make pain killers - so if there is a recession or a war etc people will be prescribed pain killers to dull the emotional and physical pain - a bit dark I guess but I see it as a potential counter-cyclical investment... As long as it doesn't go bankrupt before then haha. 

Sorry for the excessive rambling/incoherent post but I hope it provides a little more understanding behind my recommendation.


----------



## So_Cynical

galumay said:


> Normally I would agree, but a quick scan of the financials shows a VERY distressed company!!
> 
> I doubt they are a good long term stock idea - mainly because unless there is a massive change in the fortunes of this business it wont be round in the long term!




I hold TPI and have done for a while, Brilliant long term stock in my humble opinion, the business they are in, the global demand projections, the all season production strategy, 20 years of experience and intimate market knowledge.

SP going sideways with some volatility, pick the lows for a great entry and wait, could build a position range trading and leaving a little in, one of my top 5 potential goers for the long term especially because they are a company coming out of a major change and transition period....i really like buying transition stocks because so many investors are spooked by change.


----------



## Triathlete

Klogg said:


> Agreed, I've looked at TPE in the past and its financials don't scream 'buy me'. It's more the idea of *relying on someone else's analysis without backing it up yourself that I find incorrect*.




I do back it up by using technical's ( which is my specialty and what I enjoy) it is much easier and simplier to check the fundamentals in relation to the market doing it this way.

 I cannot think of anything *more boring *than spending your time reading through half yearly and yearly reports to try and make sense of it all. 

I will leave the fundamentals to those that specialise in it and* is a cost I am willing to pay for.*

I have seen many examples on this forum by those that just follow Fundamentals that start beating there chest about how good their stock selections have been ,but also do not tell the whole story that when they originally bought at a price that was fundamentally good to them in regards to their fundamental analysis only to see the price drop 40% to 50% before recovering 6 month later, so what that tells me that *even they cannot make sense of the reports.....*

Anyway best of luck in which ever method you use and hope your are successful.


----------



## Klogg

Triathlete said:


> I cannot think of anything *more boring *than spending your time reading through half yearly and yearly reports to try and make sense of it all.




It's also very profitable.


----------



## galumay

Triathlete said:


> I cannot think of anything *more boring *than spending your time reading through half yearly and yearly reports to try and make sense of it all.




I am not sure how its possible to invest if you dont understand the financial health of a business, but if you find it boring then I guess its hard.


----------



## Triathlete

galumay said:


> *I am not sure how its possible to invest if you dont understand the financial health of a business,* but if you find it boring then I guess its hard.




I already told you how I find that out by using my stock doctor subscription.

I like to use my time more efficiently, so at a press of a button I have all the financially healthy companies on the ASX at hand  and since their analysis suits my style that is all I need.

You have got me curious though....

 I would be interested to know how many hours per company per year does it take for you to analyse these companies that you are interested in and are satisfied that they are worth investing in.??

At a guess I would say between 10 and 20 hours per company per year???

So lets see a 15 company portfolio and we will take an average 15hours @ your time $100 per hour

=225hours x $100=$22,500 of your time and cost to your business.

I on the other hand take the easier route and pay for this Fundamental analysis @ 2k a year and have more time to myself.

However I do spend more time as I need to put these Financially healthy companies into two groups after looking at each one for a couple of minutes at both the monthly and weekly charts, they are split into those that are ready to invest in and need further investigation using technical analysis and those that go into the watch list for now.

So my breakdown would be:

15 companies @ 2 hours each for Technical analysis check  @ $100 per hour

=30hours x $100 = $3000 + $2000 subscription = $5000 of my time and cost to business. 

So here is my final view.......

 I have more time for myself doing it my way.

 It is cheaper and since I use both types of analysis I have a far greater advantage of being correct.

Doing it your way costs you more time and effort.

You only get one shot at being correct since you put everything into Fundamentals only.....just my opinion though....

All the best to whichever way you do things though and as long as you are profitable as Klogg said above that's all that really counts.


----------



## Klogg

Triathlete said:


> I would be interested to know how many hours per company per year does it take for you to analyse these companies that you are interested in and are satisfied that they are worth investing in.??
> 
> At a guess I would say between 10 and 20 hours per company per year???
> 
> So lets see a 15 company portfolio and we will take an average 15hours @ your time $100 per hour
> 
> =225hours x $100=$22,500 of your time and cost to your business.
> 
> I on the other hand take the easier route and pay for this Fundamental analysis @ 2k a year and have more time to myself.




That is ridiculous. You're assuming that the information you're paying for is the equivalent of galumay's research. 

Its a lot like entering your symptoms online and getting a diagnosis. I prefer to go to the doctor instead...


----------



## galumay

Klogg said:


> That is ridiculous.




Yes, not just on that assumption either, the post is riddled with them!


----------



## Triathlete

Klogg said:


> That is ridiculous. You're assuming that the information you're paying for is the equivalent of galumay's research.
> 
> Its a lot like entering your symptoms online and getting a diagnosis. I prefer to go to the doctor instead...




Yes, I guess you could be right....just an opinion though.


----------



## Triathlete

galumay said:


> Yes, not just on that assumption either, the post is riddled with them!




I do not mind being wrong....it is one of the ways I continue to increase my knowledge..... 

 Since their is new members always starting out in this investing field it may help to explain to all of us from our more *experienced members of this forum how long it does take to analyse companies Fundamentally*.

It would be great if we could get the opinions of all those that do undertake this type of analysis only so that those starting out can have an idea of what it takes....

Cheers
Triathlete.


----------



## Newt

opcorn:

Me too....


----------



## luutzu

Triathlete said:


> I do not mind being wrong....it is one of the ways I continue to increase my knowledge.....
> 
> Since their is new members always starting out in this investing field it may help to explain to all of us from our more *experienced members of this forum how long it does take to analyse companies Fundamentally*.
> 
> It would be great if we could get the opinions of all those that do undertake this type of analysis only so that those starting out can have an idea of what it takes....
> 
> Cheers
> Triathlete.




Not sure if I'm what you'd call experienced... but I am pretty smart though, so that counts too right? 

Takes 5 minutes to get to a company you think might be interesting.

If interesting, takes about 4 hours to scan through the latest financials and business operations from presentations.


If look really, really interesting... takes about 1 to 2 weeks to study indepth. Though I'd expect this indepth analysis would be faster after more experience/knowledge of the business and its industry.


Just spent a week going through what I figured would be an awesome buy... put through an order last week but it never got to my price. It's now up by about 22% since I first noticed it some 3 weeks ago.

Serve me right for wanting that extra few percent... dam it! 

Though to be fair to myself, I've bought a few just to watch it drop like a rock next couple weeks... so was too cautious. 

Lesson: you can't predict the market; by when the price is below your value by "enough"... can't always get the last penny.

Lesson 2:  you're buying businesses; two weeks isn't really enough to know the company well. So either pick a smaller/simpler business; one you know well; and one where margin of safety is pretty dam good. This mean you'll miss out reasonably priced, very large company with possibly better future than smaller ones... but one step at a time.


----------



## Triathlete

luutzu said:


> Not sure if I'm what you'd call experienced... but I am pretty smart though, so that counts too right?
> 
> Takes 5 minutes to get to a company you think might be interesting.
> 
> If interesting, takes about 4 hours to scan through the latest financials and business operations from presentations.
> 
> 
> If look really, really interesting... takes about 1 to 2 weeks to study indepth. Though I'd expect this indepth analysis would be faster after more experience/knowledge of the business and its industry.
> 
> 
> Just spent a week going through what I figured would be an awesome buy... put through an order last week but it never got to my price. It's now up by about 22% since I first noticed it some 3 weeks ago.
> 
> Serve me right for wanting that extra few percent... dam it!
> 
> Though to be fair to myself, I've bought a few just to watch it drop like a rock next couple weeks... so was too cautious.
> 
> Lesson: you can't predict the market; by when the price is below your value by "enough"... can't always get the last penny.
> 
> Lesson 2:  you're buying businesses; two weeks isn't really enough to know the company well. So either pick a smaller/simpler business; one you know well; and one where margin of safety is pretty dam good. This mean you'll miss out reasonably priced, very large company with possibly better future than smaller ones... but one step at a time.




Thanks for your  contribution luutzu....so your in depth looks about what I thought 10-20 hours including 4hr scan ?.....and even more time for a far more complex business...???

That is one of my points...I do not have time for that myself...

Some such as yourself have the skills and *enjoy?? *to look over the companies financials and understand what you are looking for.....and I do not, as I prefer to be skilled in the Technical side...it is less time for me now but I still want to invest in great healthy financial companies that is why I use the service that I do.

Some of us do not have the time to spend analysing companies ,so we need to rely on others information even if I need to pay for it from our investment profits and  any market issues will be sorted out when I run my technical over the companies charts..

Thanks again
Cheers
Triathlete


----------



## craft

Triathlete said:


> I do not mind being wrong....it is one of the ways I continue to increase my knowledge.....
> 
> Since their is new members always starting out in this investing field it may help to explain to all of us from our more *experienced members of this forum how long it does take to analyse companies Fundamentally*.
> 
> It would be great if we could get the opinions of all those that do undertake this type of analysis only so that those starting out can have an idea of what it takes....
> 
> Cheers
> Triathlete.




At least 90-95% of the stocks on the ASX I would dismiss in seconds. Yes I let a couple of gems slip through with the big sieve but they tend to keep poking there nose back up if your not to stubborn to forgive yourself missing them the first pass. 

The other 5-10ish % take a varying amount of time and the payback is not always immediate. But here's the thing, the knowledge always stays valuable and is scalable. Some companies I would have put hundreds of hours in over the years but patiently applying the knowledge eventually results in very high profit per hour.  

Buffett has accrued 99% of his wealth since turning 50. Having scrapped a couple of bucks together and learned a little along the path, at 46 that statistic blows my freaking mind!!!

The knowledge of true wealth creation is hiding in plain sight. (actually its slightly obscured behind instant gratification and slightly to the right of a bit of hard work but clearly marked on the road less travelled)


----------



## Boggo

I, and I guess that others wouldn't mind seeing some of this in action, purely as a how it is done educational exercise obviously for everyone's benefit.

Something similiar to the exercise peter2 is doing with the Momentum thread perhaps.


----------



## craft

Boggo said:


> I, and I guess that others wouldn't mind seeing some of this in action, purely as a how it is done educational exercise obviously for everyone's benefit.
> 
> Something similiar to the exercise peter2 is doing with the Momentum thread perhaps.




The level of activity doesn't lend itself to a similar thread.
My level of dedication to such a thread wouldn't be a scratch on Peter2 awesome effort.
If its education content, most of my thoughts for what they are worth are in the Present Value of cash flows thread, SMSF returns and various stock codes, actually I've probably dribbled all over the place, but if you really want it all on a platter try Berkshire Hathaway Shareholder Letters.


----------



## Boggo

craft said:


> The level of activity doesn't lend itself to a similar thread.
> My level of dedication to such a thread wouldn't be a scratch on Peter2 awesome effort.
> If its education content, most of my thoughts for what they are worth are in the Present Value of cash flows thread, SMSF returns and various stock codes, actually I've probably dribbled all over the place, but if you really want it all on a platter try Berkshire Hathaway Shareholder Letters.




Understood craft, probably a few too many variables.
I have never been able to make it work, maybe I am too impatient. Thought it would be interesting to see a new analysis, entry and follow through etc.

I tend to think of the average investor who is trying to analyse reports being compared with Berkshire Hathaway as being similiar to comparing the average chart guy with the Matlab bots of Goldman Sachs etc.

Cheers craft.


----------



## craft

Boggo said:


> I tend to think of the average investor who is trying to analyse reports being compared with Berkshire Hathaway as being similiar to comparing the average chart guy with the Matlab bots of Goldman Sachs etc.
> 
> Cheers craft.




Goldman Sachs probably doesn't lay out the educational content that Buffett  does. It's not the comparison with BH that matters, it's there provision of the education material that counts. Implementing it is more about temperament than IQ though.


----------



## Miner

I am holding clean way. It has given me a good return . With depressed economy in minefront, if Cleanway is dong well it will do far better when market returns. Veolia is a strong competitor but Cleanway management is smarter.

Another long term for me is BPT .


----------



## Boggo

Miner said:


> I am holding clean way. It has given me a good return . With depressed economy in minefront, if Cleanway is dong well it will do far better when market returns. Veolia is a strong competitor but Cleanway management is smarter.
> 
> Another long term for me is BPT .




Funny you should mention those, I have held CWY in SMSF since Jan 16 and BPT has come on to the radar tonight although it is a weekly signal so not complete until Fri night.

(click to expand)


----------



## Triathlete

craft said:


> At least 90-95% of the stocks on the ASX I would dismiss in seconds. Yes I let a couple of gems slip through with the big sieve but they tend to keep poking there nose back up if your not to stubborn to forgive yourself missing them the first pass.
> 
> *The other 5-10ish % take a varying amount of time and the payback is not always immediate. But here's the thing, the knowledge always stays valuable and is scalable. Some companies I would have put hundreds of hours in over the years but patiently applying the knowledge eventually results in very high profit per hour.  *
> 
> Buffett has accrued 99% of his wealth since turning 50. Having scrapped a couple of bucks together and learned a little along the path, at 46 that statistic blows my freaking mind!!!
> 
> The knowledge of true wealth creation is hiding in plain sight. (actually its slightly obscured behind instant gratification and slightly to the right of a bit of hard work but clearly marked on the road less travelled)




Thanks Craft....I think that is the problem for most that want instant success we do not want to wait for the fruits of our labour....It gets harder the older we get...

 Maybe the way around it is to run two portfolios .

1.   Based on looking for those hidden gems that take many years to come to fruition and
2.   Another portfolio where you are to trade in and out as required.

I see what you mean about Buffet and his wealth after 50......although if I had what he did at 50 that would 
do me


----------



## tech/a

Klogg said:


> It's also very profitable.




I don't know and haven't seen it presented here or elsewhere as being any more profitable than Experienced Systems/discretionary traders using shorter or longer term strategies.I'm sure there are profitable traders using Fundamental Analysis but I've not seen Very Profitable.(Which is a relative statement)



galumay said:


> I am not sure how its possible to invest if you dont understand the financial health of a business, but if you find it boring then I guess its hard.




Just like it is possible to analysis any data in any number of ways to bring about a long or short term positive result.
You don't have to use an exclusive form of analysis. Fundamental can be as wrong as any other analysis.



Triathlete said:


> I do not mind being wrong....it is one of the ways I continue to increase my knowledge.....
> 
> Since their is new members always starting out in this investing field it may help to explain to all of us from our more *experienced members of this forum how long it does take to analyse companies Fundamentally*.
> 
> It would be great if we could get the opinions of all those that do undertake this type of analysis only so that those starting out can have an idea of what it takes....




Perhaps Know the past can expand a little on his selection process.



> Just spent a week going through what I figured would be an awesome buy... put through an order last week but it never got to my price. It's now up by about 22% since I first noticed it some 3 weeks ago.




I find this interesting. If your investing longer term why would you "miss your price?"
Surely you'd buy at market---As a pro trader once said--"Don't be a dick for a tick'
In this case you missed out when you needn't have.



> Buffett has accrued 99% of his wealth since turning 50. Having scrapped a couple of bucks together and learned a little along the path, at 46 that statistic blows my freaking mind!!!




I think this would be the case with most who have reached 50 with any form of success---not necessarily Buffets Success!
Money makes Money and creates opportunity. I and many of those I know at 50 + had the same experience.
They Had and Have Experience, Collateral, and Money in abundance---compared with 25-30.
Those in that position given the knowledge of *HOW* will/can grow financially exponentially.

Really any form of serious increase of wealth needs a great deal of luck.--Right Place Right time.
Then it needs LOTS of Money.
100% on $50K isn't a lot of money in the scheme of a lifetime.
25% (A seriously good return) isn't a lot on $100K
Take out Tax and have another look!

Compounding
Sure on paper year on year and you'll get ridiculous looking *POTENTIAL* figures.
In reality opportunity is often fleeting and serious return cannot be sustained.

Personally I think if you can see it as clear as day---like our friend above (22% in a week) you need to put as much as you can in front of it.
Not a time to be conservative.

Financial freedom is like any endeavour in life.
It takes time to become good at it.
There are many many ways to go about it.

Everyone sees a way over their lifetime but few
know how to take advantage of it.

Woulda Coulda Shoulda


----------



## Klogg

tech/a said:


> I don't know and haven't seen it presented here or elsewhere as being any more profitable than Experienced Systems/discretionary traders using shorter or longer term strategies.I'm sure there are profitable traders using Fundamental Analysis but I've not seen Very Profitable.(Which is a relative statement)




Well, I can't say I've compared the two in a lot of detail, but I don't know that it's a worthwhile comparison to make. 
Those investing using FA principles can use the same technique and scale up. Furthermore, work done now can pay off for years at a time... It's not uncommon for someone to hold a company for 5 years and make 25% p.a.

From what I know (which is little, so please correct me if need be) TA has upper limits on the amount of capital you use. I guess that would depend on which securities/markets you're trading.

Just out of curiousity, what do you define as 'very profitable' using your methods? (Framed in terms of CAGR, after tax)




> Really any form of serious increase of wealth needs a great deal of luck.--Right Place Right time.
> Then it needs LOTS of Money.




Right place Right time is only the half of it. You need to have learnt enough, done enough work to identify the opportunity. And if you've been doing this consistently, you'll have lots of money for that particular opportunity.


----------



## tech/a

Very profitable is a return of over 20% particularly after tax.
But what I'm getting at is 20% on a Grand while very profitable for that Grand invested
wont have a life changing impact.

You need serious $$s to impact.

AND
Having lots of money available for an opportunity is also half of it.
You've actually got to do it.
I know many with plenty of $$s sit by in 1996-2008 and watch the 
Housing boom go by.
They also watched Gold Rise from $250 to $1600 and more.
The AUD go from 50c to $1.03

The Bull run of 2000-2008
Short Oil.

There are many more.


----------



## craft

tech/a said:


> I don't know and haven't seen it presented here or elsewhere as being any more profitable than Experienced Systems/discretionary traders using shorter or longer term strategies.




The profitability of other approaches is none of my concern when I'm presenting the merits of investing. The comparison seems to always come from other quarters in the form of one upmanship. If you have better opportunities then by all means peruse them. 



tech/a said:


> I'm sure there are profitable *traders* using Fundamental Analysis but I've not seen Very Profitable.(Which is a relative statement)



 Not talking trading - talking investing.  And yes Very Profitable is a relative statement - what do you consider Very Profitable. I consider the results documented in the SMSF Returns to meet the definition. 



tech/a said:


> Just like it is possible to analysis any data in any number of ways to bring about a long or short term positive result.
> You don't have to use an exclusive form of analysis. Fundamental can be as wrong as any other analysis.



No arguments from me I don't see anybody saying any different. 



tech/a said:


> I think this would be the case with most who have reached 50 with any form of success---not necessarily Buffets Success!
> Money makes Money and creates opportunity. I and many of those I know at 50 + had the same experience.
> They Had and Have Experience, Collateral, and Money in abundance---compared with 25-30.
> Those in that position given the knowledge of *HOW* will/can grow financially exponentially.




Yes money makes money - but how much money depends on the scalability of your opportunities within your area of acquired knowledge. This is where Fundamental Investing Knowledge starts paying out in spades.



tech/a said:


> Really any form of serious increase of wealth needs a great deal of luck.--Right Place Right time.




Its all luck in one form or another starting with which crutch you were snatched out of and in what country and whether what interest you is rewarded by society at the time you are kicking around the globe.



tech/a said:


> Then it needs LOTS of Money.
> 100% on $50K isn't a lot of money in the scheme of a lifetime.
> 25% (A seriously good return) isn't a lot on $100K
> Take out Tax and have another look!
> 
> *Compounding*
> Sure on paper year on year and you'll get ridiculous looking *POTENTIAL* figures.
> *In reality opportunity is often fleeting and serious return cannot be sustained*.



 Again this is where fundamental investing pays in spades.

99% after 50 requires a compound Growth rate of 14.06% for 35 Years. Its not the stretch created by the required return hurdle that is the limiting factor to becoming a Billionaire its the scalability transaction size and pool of opportunities.  


tech/a said:


> Personally I think if you can see it as clear as day---like our friend above (22% in a week) you need to put as much as you can in front of it.
> Not a time to be conservative.
> 
> Financial freedom is like any endeavour in life.
> It takes time to become good at it.
> There are many many ways to go about it.
> 
> Everyone sees a way over their lifetime but few
> know how to take advantage of it.
> 
> Woulda Coulda Shoulda




Fundamental Investing is one of those ways hiding in plain sight for most people. That's all I'm trying to point out - the opportunity. If I keep doing what I'm doing which is easily managed enjoyable and scalable the highest probability if I don't die or stop is that I will become a Billionaire and If I can do it - Uneducated, wrong demographics blah Blah Blah - then it can't be too hard especially as the Master of it Buffett has laid out the blue print for anybody interested. - problem is you often have to go back after you have reached your own revelations to see he has already beaten you to your insights.

Woulda Coulda Shoulda - exactly.


----------



## Klogg

tech/a said:


> Very profitable is a return of over 20% particularly after tax.
> But what I'm getting at is 20% on a Grand while very profitable for that Grand invested
> wont have a life changing impact.




Using an FA approach, my CAGR since I began (I started 5 years and 1 month ago) is 29.4%. This includes open positions, but given the duration which I hold things, I'm not sure I should be excluding them...
That said, I've had a good run of late, so some mean reversion would not be unexpected. Lets revise it downward to adjust - say 23%.

(FWIW - results tracked with Sharesight, and includes any cash available for investment)

The best part is, I'm not particularly good at it. There are many here much better than me... Furthermore, this includes a whole bunch of mistakes that are particularly bad (as I had just started), so I am hopeful there's a lot of room for improvement.

As for the size of total capital, I'd much rather not discuss that in an open forum.


On a different note, craft mentioned this:


> If its education content, most of my thoughts for what they are worth are in the Present Value of cash flows thread, SMSF returns and various stock codes, actually I've probably dribbled all over the place, but if you really want it all on a platter try Berkshire Hathaway Shareholder Letters.




If anyone is trying to learn these concepts, I would suggest taking a copy of the "Present value of discounted cash flows" thread and re-reading it until the concepts come naturally to you. I did this, some of it stuck, and I'm much better for it. Great content from great investors in there.


----------



## galumay

Klogg said:


> If anyone is trying to learn these concepts, I would suggest taking a copy of the "Present value of discounted cash flows" thread and re-reading it until the concepts come naturally to you. I did this, some of it stuck, and I'm much better for it. Great content from great investors in there.




Totally agree, craft's and other's contributions in that thread are invaluable. Its a thread I dive back into everynow and then when I am not actively reading elsewhere and I always find a little more sticks.

We are very lucky to have people like craft, klogg, skc, ktp, systematic, etc who are happy to share their knowledge, wisdom and insights.


----------



## tech/a

Klogg said:


> Using an FA approach, my CAGR since I began (I started 5 years and 1 month ago) is 29.4%. This includes open positions, but given the duration which I hold things, I'm not sure I should be excluding them...
> That said, I've had a good run of late, so some mean reversion would not be unexpected. Lets revise it downward to adjust - say 23%.
> 
> (FWIW - results tracked with Sharesight, and includes any cash available for investment)




Its a good effort any profit is acceptable.
I should have qualified --- 20% in anyone year.



> The best part is, I'm not particularly good at it. There are many here much better than me... Furthermore, this includes a whole bunch of mistakes that are particularly bad (as I had just started), so I am hopeful there's a lot of room for improvement.




I don't think your alone here.



> As for the size of total capital, I'd much rather not discuss that in an open forum.




My comment was meant just as that.




> On a different note, craft mentioned this:
> 
> 
> If anyone is trying to learn these concepts, I would suggest taking a copy of the "Present value of discounted cash flows" thread and re-reading it until the concepts come naturally to you. I did this, some of it stuck, and I'm much better for it. Great content from great investors in there.




Ill have a look.


----------



## Roller_1

craft said:


> Fundamental Investing is one of those ways hiding in plain sight for most people. That's all I'm trying to point out - the opportunity. If I keep doing what I'm doing which is easily managed enjoyable and scalable the highest probability* if I don't die or stop is that I will become a Billionaire* and If I can do it - Uneducated, wrong demographics blah Blah Blah - then it can't be too hard especially as the Master of it Buffett has laid out the blue print for anybody interested. - problem is you often have to go back after you have reached your own revelations to see he has already beaten you to your insights.
> 
> Woulda Coulda Shoulda - exactly.




Did i miss read or miss something here?


----------



## Klogg

Roller_1 said:


> Did i miss read or miss something here?




I don't think so.


----------



## KnowThePast

It's been some months since we had a fundamental vs technical debate. I missed it about as much as food poisoning 

It's pretty simple, like with everything else - pick something, get very good at it and you'll do well sooner or later.


----------



## Triathlete

Klogg said:


> Well, I can't say I've compared the two in a lot of detail, but I don't know that it's a worthwhile comparison to make.
> Those investing using FA principles can use the same technique and scale up. Furthermore, work done now can pay off for years at a time... It's not uncommon for someone to hold a company for 5 years and make 25% p.a.
> 
> *From what I know (which is little, so please correct me if need be) TA has upper limits on the amount of capital you use. I guess that would depend on which securities/markets you're trading.*
> 
> Just out of curiousity, what do you define as 'very profitable' using your methods? (Framed in terms of CAGR, after tax)
> 
> 
> 
> 
> Right place Right time is only the half of it. You need to have learnt enough, done enough work to identify the opportunity. And if you've been doing this consistently, you'll have lots of money for that particular opportunity.




Here is the thing...if you are trading short term then you may have a point in regards to the amount of capital you wish to use..again depends on what markets, liquidity etc

At the same time both you and I could select the same company to invest in as we can see a future going forward and am willing to take a longer term view so the only difference maybe as to when we may take an entry into the same stock.

For example you may have come up that the company represents good value at present so you take an entry....

Since I like to use TA for my entries at the same time I may concluded that the stock currently is on a Elliott wave 2
or EW 4 and so expect the stock to fall in price in the near future and so I will wait till the market tells me otherwise before continuing on its upward move....when I then decide to take my entry....Of course I may miss out on the first 10% of a move but as long as I can pick up the next 80% that is fine by me..

Same company just different views and entry and exits I guess.......


----------



## tech/a

KnowThePast said:


> It's been some months since we had a fundamental vs technical debate. I missed it about as much as food poisoning
> 
> It's pretty simple, like with everything else - pick something, get very good at it and you'll do well sooner or later.




Why is it that when F/A and T/A are mentioned in the same thread its looked at as T/A *V* F/A
*Its analysis of data *no matter which method is used.

Just as science looks at test data for cancer research there are 1000s of ways of looking for that one 
set of data which shows something promising enough to follow.

Some pan out others don't.----in *ALL* forms of analysis.



> Those investing using FA principles can use the same technique and scale up. Furthermore, work done now can pay off for years at a time... It's not uncommon for someone to hold a company for 5 years and make 25% p.a.




I don't know that is that common. Take a look at long term performance of Funds, very few ever have 25% p/a over 5 yrs.



> From what I know (which is little, so please correct me if need be) TA has upper limits on the amount of capital you use. I guess that would depend on which securities/markets you're trading.




The only limit any analysis has is your Account size and what your willing to put up.


----------



## Roller_1

Klogg said:


> I don't think so.




It's good to have goals i guess...

I might have to reassess my long term goal of having a 7 figure account


----------



## skc

craft said:


> Fundamental Investing is one of those ways hiding in plain sight for most people. That's all I'm trying to point out - the opportunity. If I keep doing what I'm doing which is easily managed enjoyable and scalable the highest probability if I don't die or stop is that *I will become a Billionaire *and If I can do it - Uneducated, wrong demographics blah Blah Blah - then it can't be too hard especially as the Master of it Buffett has laid out the blue print for anybody interested. - problem is you often have to go back after you have reached your own revelations to see he has already beaten you to your insights.






I hope you get there mate... it'd be a great inspiration for the mass.


----------



## tech/a

Forget trading---Start singing


----------



## CanOz

For all we know Craft could be managing several million, even 10s of millions of his own funds. As he said, if he keeps doing it and can still achieve the CAGR its very possible. If he has 5m now, achieves 20% and keeps compounding, he could be a billionaire in 30 years or so.

If he has 10 million now, and achieves 25% then its less than 21 years...


----------



## Miner

Boggo said:


> Funny you should mention those, I have held CWY in SMSF since Jan 16 and BPT has come on to the radar tonight although it is a weekly signal so not complete until Fri night.
> 
> (click to expand)




Thanks Boggo for resounding my decision with your experience. I also have added BPT and gave me good return when it depressed. With oil scene having a bit change, as well as looking into your chart, I do continue to hold BPT as well.
It is a great forum indeed when we exchange our thoughts.
Watch LOM purely from speculative perspective. Diamonds are not for ever though !


----------



## Roller_1

CanOz said:


> For all we know Craft could be managing several million, even 10s of millions of his own funds. As he said, if he keeps doing it and can still achieve the CAGR its very possible. If he has 5m now, achieves 20% and keeps compounding, he could be a billionaire in 30 years or so.
> 
> If he has 10 million now, and achieves 25% then its less than 21 years...




That's true. The long term key to success is compounding!! The ASX might seem a little small at that size.


----------



## craft

CanOz said:


> For all we know Craft could be managing several million, even 10s of millions of his own funds. As he said, if he keeps doing it and can still achieve the CAGR its very possible. If he has 5m now, achieves 20% and keeps compounding, he could be a billionaire in 30 years or so.
> 
> If he has 10 million now, and achieves 25% then its less than 21 years...






Roller_1 said:


> That's true. The long term key to success is* compounding*!! The ASX might seem a little small at that size.



 Nah I reckon The ASX would still be fine as an investor. 

I have funds now beyond what I need to generate my desired income – so some pure risk capital that is free to do nothing but snowball. Taking that amount, my life expectance and using my hurdle rate as a projected return figure (which is less than half my actual return from the last 12 years) whack it into a FV equation and Billionaire Bobs your uncle.

Yep it sounds ridiculous, but math is math and its one potential possibility that needs to be prepared for. Failing to dream big enough and being mentally behind the eight ball as reality unfolds has presented me with some of my biggest challenges in the journey to date. 

Making X amount of money is not a goal for me – But investing is just what I do – and I like to do it as well as I can and I doubt that I will ever stop – I think I got a problem!! I have set up a PAF and it has a minimum distribution requirement of 5% so if things get too out of hand I will just throw more into there earlier and that should put the hand brake on and keep me in my comfort zone.

I think in some ways it would be easier to lose the risk capital then blow the lights out. Both Scenarios need a lot of pre - thought. It’s easy to stay roughly within what you know but big Paradigm shift take (me at least) some getting used to. 

So dream big guys (girls) and start preparing early – especially if you have the intellect, persistence and youth of people like VES, VSntchr, SKC etc. You just never know.


----------



## skc

craft said:


> Nah I reckon The ASX would still be fine as an investor.
> 
> I have funds now beyond what I need to generate my desired income – so some pure risk capital that is free to do nothing but snowball. Taking that amount, my life expectance and using my hurdle rate as a projected return figure (which is less than half my actual return from the last 12 years) whack it into a FV equation and Billionaire Bobs your uncle.




Just for the regular viewers... here's the maths (I think).

Life expectancy of male in Australia ~82 yrs
Current age ~46 
Years of compounding remaining ~36
Assumed hurdle rate ~15%
FV multiplier = 1.15 ^ 36 = 153
FV of a Billionaire = $1B (duh)
PV of portfolio = $6.5m (i.e. not unimaginably large)

BTW, if inflation is 2.5% for the next 36 years, the actual purchasing power of $1B in 36 years time is ~$410m in today's dollar.

If you are only 30 years old with $100k to invest, you can potentially turn that into $1B (@15% return) by age 80.

Disclaimer: Past returns do not guarantee future returns. Individual results may vary.



craft said:


> I think in some ways it would be easier to lose the risk capital then blow the lights out. Both Scenarios need a lot of pre - thought. It’s easy to stay roughly within what you know but big Paradigm shift take (me at least) some getting used to.




I agree. There's an old Chinese saying... something along the lines of "The higher you climb the further you can see". Which also implies that it's not easy to see that far when you are not high enough. Dream big but take little steps. Then the dream will turn more vivid as the numbers start to grow and compound. 



craft said:


> So dream big guys (girls) and start preparing early – especially if you have the intellect, persistence and youth of people like VES, VSntchr, SKC etc. You just never know.




I will start preparing early by spending like a billionaire... is that what you meant?


----------



## Miner

skc said:


> Just for the regular viewers... here's the maths (I think).
> 
> Life expectancy of male in Australia ~82 yrs
> Current age ~46
> Years of compounding remaining ~36
> Assumed hurdle rate ~15%
> FV multiplier = 1.15 ^ 36 = 153
> FV of a Billionaire = $1B (duh)
> PV of portfolio = $6.5m (i.e. not unimaginably large)
> 
> BTW, if inflation is 2.5% for the next 36 years, the actual purchasing power of $1B in 36 years time is ~$410m in today's dollar.
> 
> If you are only 30 years old with $100k to invest, you can potentially turn that into $1B (@15% return) by age 80.
> 
> Disclaimer: Past returns do not guarantee future returns. Individual results may vary.
> 
> 
> 
> I agree. There's an old Chinese saying... something along the lines of "The higher you climb the further you can see". Which also implies that it's not easy to see that far when you are not high enough. Dream big but take little steps. Then the dream will turn more vivid as the numbers start to grow and compound.
> 
> 
> 
> I will start preparing early by spending like a billionaire... is that what you meant?



Good discussions folks. But did we started discussing stepping over the focus line ? Topic is Long Term Stock Ideas I thought !!


----------



## tech/a

> Good discussions folks. But did we started discussing stepping over the focus line ? Topic is Long Term Stock Ideas I thought !!




Probably but I think there are some really important snippets in there.
In particularly this sobering thought.



> BTW, if inflation is 2.5% for the next 36 years, the actual purchasing power of $1B in 36 years time is ~$410m in today's dollar.




Even for those who never attain Billionaire status.

A modest $5 million will be worth in todays terms $2 million with the associated costs of living at that time.
And to *most* a $5 million figure is but a dream.

So to the topic.

To maintain that compounding investment I really think it will or could be done by the few who can develop a method which can be profitable and can be monitored for its health.
This would be in my view a robust mechanical method that is designed for simplicity and adaptability.
Capable of trading through Bull Bear and Flat
Being In, Out ,All in OR All out.


----------



## Value Collector

tech/a said:


> A modest $5 million will be worth in todays terms $2 million with the associated costs of living at that time.
> And to *most* a $5 million figure is but a dream.
> 
> .




If the assets are chosen correctly, the inflation side of things takes care of itself.

If you spoke to the average 20 year old guy in 1960 and asked him if he could ever afford to own a $500k house, he would have said no way that figure is but a dream, but today his family home is probably worth $500k to $1000k, by owning a real (non cash) asset his capital has been protected from inflation.

Now, you might have been able to scare him by saying " you know if you want to retire you are going to have to own a $500k house" and he might have freaked out thinking he could never own one because he only earned $2000 per year, and if his stratergy was to save cash until retirement and then by the house he should freak out, but if his stratergy is to accumulate assets either directly or through the stock stock market that are inflation hedged, he shouldn't worry about inflation.

Picture a farmer with  2000 head of cattle, that earn him a decent wage in 1960 of $10,000 per year, if you said in the year 2016, you will need $100,000 to live, he might incorrectly think that between now and then he needs to increase his herd to by x10 to 20,000 head of cattle so he can earn the $100k, but he doesn't, because inflation will increase the value of his cattle, and he could continue living off the 2000 head of cattle, because now that same 2000 cattle would earn $100k instead of the $10k they used to.

--------------------

Offcourse these are simplistic examples, but the underlying theory holds true, owning real assets with longterm inflation hedging built in, gives you protection.


----------



## tech/a

Value Collector said:


> If the assets are chosen correctly, the inflation side of things takes care of itself.
> 
> If you spoke to the average 20 year old guy in 1960 and asked him if he could ever afford to own a $500k house, he would have said no way that figure is but a dream, but today his family home is probably worth $500k to $1000k, by owning a real (non cash) asset his capital has been protected from inflation.
> 
> Now, you might have been able to scare him by saying " you know if you want to retire you are going to have to own a $500k house" and he might have freaked out thinking he could never own one because he only earned $2000 per year, and if his stratergy was to save cash until retirement and then by the house he should freak out, but if his stratergy is to accumulate assets either directly or through the stock stock market that are inflation hedged, he shouldn't worry about inflation.
> 
> Picture a farmer with  2000 head of cattle, that earn him a decent wage in 1960 of $10,000 per year, if you said in the year 2016, you will need $100,000 to live, he might incorrectly think that between now and then he needs to increase his herd to by x10 to 20,000 head of cattle so he can earn the $100k, but he doesn't, because inflation will increase the value of his cattle, and he could continue living off the 2000 head of cattle, because now that same 2000 cattle would earn $100k instead of the $10k they used to.
> 
> --------------------
> 
> Offcourse these are simplistic examples, but the underlying theory holds true, owning real assets with longterm inflation hedging built in, gives you protection.





Yes I agree.

Its when one stops working/earning that the problem hits.
EG living 30 yrs. beyond retirement.


----------



## Value Collector

tech/a said:


> Its when one stops working/earning that the problem hits.
> EG living 30 yrs. beyond retirement.




Provided you are sourcing your income from assets that have inflation protection, you should be fine, because over time as the cost of living rises, so should the income from these inflation hedged assets.

Living to long only becomes a problem if you are relying on using a large portion of your principle each year, or you fall into the trap of believeing you need to hold lots of cash in retirement, so you get burned by the one two punch of low interest rates and inflation.


----------



## luutzu

Value Collector said:


> If the assets are chosen correctly, the inflation side of things takes care of itself.
> 
> If you spoke to the average 20 year old guy in 1960 and asked him if he could ever afford to own a $500k house, he would have said no way that figure is but a dream, but today his family home is probably worth $500k to $1000k, by owning a real (non cash) asset his capital has been protected from inflation.
> 
> Now, you might have been able to scare him by saying " you know if you want to retire you are going to have to own a $500k house" and he might have freaked out thinking he could never own one because he only earned $2000 per year, and if his stratergy was to save cash until retirement and then by the house he should freak out, but if his stratergy is to accumulate assets either directly or through the stock stock market that are inflation hedged, he shouldn't worry about inflation.
> 
> Picture a farmer with  2000 head of cattle, that earn him a decent wage in 1960 of $10,000 per year, if you said in the year 2016, you will need $100,000 to live, he might incorrectly think that between now and then he needs to increase his herd to by x10 to 20,000 head of cattle so he can earn the $100k, but he doesn't, because inflation will increase the value of his cattle, and he could continue living off the 2000 head of cattle, because now that same 2000 cattle would earn $100k instead of the $10k they used to.
> 
> --------------------
> 
> Offcourse these are simplistic examples, but the underlying theory holds true, owning real assets with longterm inflation hedging built in, gives you protection.




Inflation don't take care of themselves. They're taken care of by gov't policies to first, protect the assets of those who own most of the country; and two, to encourage the rest of the plebs to better get into debt (borrow money from, guess who) to own that slice of the Australian dream before it's gone.

While people should definitely get into the owning of assets game, it serves them well to know the political and statecraft side of that game too. 

That while big brother will protect asset owners in general - fighting evil inflation, for one - protection are also achieved when the price is high enough you then halved it, giving those late to the game a chance to get in at their level; and to give those who had enough assets to have sold at the peak and are now sitting on a lot of liquidity to take a second dip.


----------



## Klogg

luutzu said:


> Inflation don't take care of themselves. They're taken care of by gov't policies to first, protect the assets of those who own most of the country; and two, to encourage the rest of the plebs to better get into debt (borrow money from, guess who) to own that slice of the Australian dream before it's gone.




Not intending to speak for VC, as he's clearly more than capable of doing that himself. But, I think he means that you should look for assets where price sensitivities aren't great - e.g. businesses that have some form of pricing power so they can raise prices at least in line with inflation.


----------



## luutzu

Klogg said:


> Not intending to speak for VC, as he's clearly more than capable of doing that himself. But, I think he means that you should look for assets where price sensitivities aren't great - e.g. businesses that have some form of pricing power so they can raise prices at least in line with inflation.




Oh yea. We should invest/own assets that are able to at least keep up with inflation. Average wage raise and bank deposits aren't going to cover it.

Speak of pricing power, my electricity bill just gone up 35% since last quarter. woohoo! Not sure why or how we use more power in Sept. than during Jun/july/aug. Better get ourselves into AGL stock and share in the gouging.


----------



## Ves

craft said:


> Yep it sounds ridiculous, *but math is math and its one potential possibility that needs to be prepared for*. Failing to dream big enough and being mentally behind the eight ball as reality unfolds has presented me with some of my biggest challenges in the journey to date.



That is interesting, because I have always looked at it as a double-edged sword.   You need to be prepared for both unexpected upside and downside.   Thankfully,  it looks like (at least with the current results), your biggest surprises have probably been well in excess of your dreams.

At the moment,  I'm struggling with the opposite issue. Because of life circumstances (wife unable to work) I have been unable to save any additional investible capital for quite some time.  I'm bloody impatient and feel rightly or wrongly that I am wasting prime (compounding) investing time (and actual time) going to work each day and not having much in the way of savings to show for it!  Probably the wrong attitude because there is definitely more to life than investing and it really is a first world problem, but it is a significant mental challenge to refine thinking around the goal of wanting to retire way earlier than most people do when a big obstacle suddenly wedges itself in the way and makes it that much harder to achieve going on the maths. /rant over


----------



## Klogg

Ves said:


> At the moment,  I'm struggling with the opposite issue. Because of life circumstances (wife unable to work) I have been unable to save any additional investible capital for quite some time.  I'm bloody impatient and feel rightly or wrongly that I am wasting prime (compounding) investing time (and actual time) going to work each day and not having much in the way of savings to show for it!  Probably the wrong attitude because there is definitely more to life than investing and it really is a first world problem, but it is a significant mental challenge to refine thinking around the goal of wanting to retire way earlier than most people do when a big obstacle suddenly wedges itself in the way and makes it that much harder to achieve going on the maths. /rant over




FWIW, I had this same issue a while back. It's really frustrating when life gets in the way of investing, but only because I enjoy it so much. In my case, I chose to bail out a family member for a 6 digit sum - I was 26, it was a fair chunk of my capital. I got it back a few years later, but I did miss 2 years of a larger pool of capital...

Not quite the same situation as mine was a choice, but still annoying.

In any case, what helped me adjust my mindset was to remember the compounding effect of knowledge. You may not have the capital now, but you definitely have the capability to grow your knowledge base of companies you wish to purchase. That will likely be the biggest benefit to your future self (at least that's what I tell myself


----------



## McLovin

Klogg said:


> FWIW, I had this same issue a while back. It's really frustrating when life gets in the way of investing, but only because I enjoy it so much. In my case, I chose to bail out a family member for a 6 digit sum - I was 26, it was a fair chunk of my capital. I got it back a few years later, but I did miss 2 years of a larger pool of capital...




Having six figures at 26 puts you well ahead of the curve anyway. Think about that.

The worst thing you can do is get impatient and start looking for quick gains. That'll blow a hole in your compounding.


----------



## tech/a

> Yep it sounds ridiculous, but math is math and its one potential possibility that needs to be prepared for. *Failing to dream big enough *and being mentally behind the eight ball as reality unfolds has presented me with some of my biggest challenges in the journey to date.




Seriously Craft Buy this


----------



## Klogg

McLovin said:


> Having six figures at 26 puts you well ahead of the curve anyway. Think about that.
> 
> The worst thing you can do is get impatient and start looking for quick gains. That'll blow a hole in your compounding.




Haha, thanks. I was lucky early on with IT contracting work (skipped grad programs and went straight to contract work because of right place, right time) - helped me save a lot.

And I've made the mistake of looking for quick gains... it blew a hole in my performance that I've only just mended.
Funnily enough, it came around about the same time that I learnt (the hard way) that lower churn of holdings correlated with higher returns.
I guess that supports the theme of "Long Term Stock Ideas"


----------



## Value Collector

Klogg said:


> - e.g. businesses that have some form of pricing power so they can raise prices at least in line with inflation.




Basically yeah,

The symptom of inflation that people are worried about most is loss of purchasing power, eg it takes more dollars to buy the things we want and need now than it did 20 years ago, and in 20 years it will take more dollars than it does now.

But it only takes more dollars to buy things, because the prices have gone up, and companies that have been able to continue earning the same profit margin on their new higher level of revenue, can pass along bigger dividends.

By owning part of the system that produces the goods and services your share of the income and capital pie will stay the same, if not grow. Even if you just own an asx index through all the ups and downs, you are going to be far better off than holding cash

eg, In 20 years I probably still want to drink a scotch mist at the Cove Bar at the Disneyland resort, and it will probably cost twice as much as it does now, But on average Disney's profit margin is about 20% on every dollar collected by their parks and resorts division, So if inflation doubles the price of my scotch mist (and every other thing at the park), then Disney's profit would double, and dividends would be raised and my scotch mist will still be funded by my dividends, and I won't see a reduction in my standard of living.

But, 

If Luutzu tries to fund his retirement by holding cash, he won't see a sustained growth in income of enough to offset the rising prices, and instead of a scotch mist at the cove bar, he may have to settle for a paper cup of tap water, dreamworld lol.


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## Ves

Klogg said:


> In any case, what helped me adjust my mindset was to remember the compounding effect of knowledge. You may not have the capital now, but you definitely have the capability to grow your knowledge base of companies you wish to purchase. That will likely be the biggest benefit to your future self (at least that's what I tell myself






Klogg said:


> And I've made the mistake of looking for quick gains... it blew a hole in my performance that I've only just mended.
> Funnily enough, it came around about the same time that I learnt (the hard way) that lower churn of holdings correlated with higher returns.
> I guess that supports the theme of "Long Term Stock Ideas"




Thanks!   Really sage pieces of advice that any long term investor can benefit from.


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## skc

Ves said:


> At the moment,  I'm struggling with the opposite issue. Because of life circumstances (wife unable to work) I have been unable to save any additional investible capital for quite some time.




Hope she's fine and it all works out. While it's important to take care of the financial side of life... the only real reason to do that is so we can look after other more important things in life.


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## craft

tech/a said:


> Seriously Craft Buy this
> 
> View attachment 68357




Why?


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## Ves

skc said:


> Hope she's fine and it all works out. While it's important to take care of the financial side of life... the only real reason to do that is so we can look after other more important things in life.



Cheers mate,  without going into much detail she developed mental health issues after being over-worked by one of the Big4 banks.  Years ago now,  but she has had trouble regularly working ever since,  did the casual / part-time thing for some of that time in different companies, but not currently doing much (work-wise).  

Whilst I'm obviously disappointed not being able to invest,  it's my number 1 priority to support her as much as possible,  whether it's financially or emotionally.  Unfortunately there's only so much you can do,  depression is a bitch, and there's no magic bullet.


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## tech/a

craft said:


> Why?




Its a great read

Explodes a lot of Myths.

Maybe not for everyone and you maybe 
one of those.


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## Value Collector

Ves said:


> Unfortunately there's only so much you can do,  depression is a bitch, and there's no magic bullet.




I feel for you Bud, my partner suffers with depression also, keeping motivation can be difficult.


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## Ves

Value Collector said:


> I feel for you Bud, my partner suffers with depression also, keeping motivation can be difficult.



Thanks.  Also sorry to hear about your partner.  I know how hard it can sometimes be to see a loved one go through it.


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## galumay

Ves & Value Collector, kudos to both of you for discussing the issue of mental health - so often avoided in our culture.

I know what we went thru when my wife became critically ill in 2010, I really thought I was going to lose her at one stage, but after a month in Royal Melbourne Hospital and 2 more months recovering at home, she pulled thru and in fact has enjoyed much better health as a result of the surgical intervention.

My point though, is that as she had a physical condition, everyone gets it and provides support and understanding, the difference with mental health issues is that friends and family often practice avoidance, exacerbated by the fact that there is nothing visually wrong with the person suffering.

I think my redundancy and gap year gave me a different perspective too, a happy and stable family life is worth more than all the money in the world. I am thankful that we are in a healthy financial situation and have the opportunity to invest both directely and thru our SMSF, but I would never confuse financial success and wealth with the happiness that family and friends bring.


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## So_Cynical

Long Term Stock Ideas.

Bought a top 20 buy write fund this week, i figure that every mature portfolio needs something like this, yield, blue chips, indexing.

https://www.aussiestockforums.com/forums/showthread.php?t=31462&p


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## luutzu

Value Collector said:


> Basically yeah,
> 
> The symptom of inflation that people are worried about most is loss of purchasing power, eg it takes more dollars to buy the things we want and need now than it did 20 years ago, and in 20 years it will take more dollars than it does now.
> 
> But it only takes more dollars to buy things, because the prices have gone up, and companies that have been able to continue earning the same profit margin on their new higher level of revenue, can pass along bigger dividends.
> 
> By owning part of the system that produces the goods and services your share of the income and capital pie will stay the same, if not grow. Even if you just own an asx index through all the ups and downs, you are going to be far better off than holding cash
> 
> eg, In 20 years I probably still want to drink a scotch mist at the Cove Bar at the Disneyland resort, and it will probably cost twice as much as it does now, But on average Disney's profit margin is about 20% on every dollar collected by their parks and resorts division, So if inflation doubles the price of my scotch mist (and every other thing at the park), then Disney's profit would double, and dividends would be raised and my scotch mist will still be funded by my dividends, and I won't see a reduction in my standard of living.
> 
> But,
> 
> If Luutzu tries to fund his retirement by holding cash, he won't see a sustained growth in income of enough to offset the rising prices, and instead of a scotch mist at the cove bar, he may have to settle for a paper cup of tap water, dreamworld lol.




As if I would ever buy water at a shop. Would buy a Coke though. Want some effort and unnatural flavour in my overpriced drinks.

And oi, I didn't recommend holding cash. All my savings are in the stock market - so I believe in the system bro 

Yea, DreamWorld is pretty crappy. But the prices aren't cheap though - they seriously made my eyes watered and ruin the whole day. Never feel so ripped off... until I went to Disneyland. 

7 Euro for two toffy apples - pretty sure it's for one, but that'd be outrageous.. .I'm sure there's more than 20% margin on them sugar-dipped apple. That and them 75Euro Elsa dolls should cover a day's work for them underpaid cast members at the parks.

Dam Disney... But do let me know when they crash will you. Will load them up for sure


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## Ves

galumay said:


> Ves & Value Collector, kudos to both of you for discussing the issue of mental health - so often avoided in our culture.



Definitely agree with this.  Some times it is hard to talk,  but it does often help.


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## skc

luutzu said:


> 7 Euro for two toffy apples - pretty sure it's for one, but that'd be outrageous.. .I'm sure there's more than 20% margin on them sugar-dipped apple. That and them 75Euro Elsa dolls should cover a day's work for them underpaid cast members at the parks.




Let it go. Let it go.

Or:


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## Value Collector

luutzu said:


> And oi, I didn't recommend holding cash. All my savings are in the stock market - so I believe in the system bro
> 
> Yea, DreamWorld is pretty crappy. s




Lol, I wasn't trying to imply that was your strategy, I was just using your name as a random example, because I know you like it when I can work Disney into the conversation.

And hey Dream world isn't so bad, haha.

_________

20% is the net profit of the parks division, compared to total revenue, not 20% mark up in products, offcourse the mark up is much higher than 20%.

Eg woollies probably operates with a 30% markup, but net profit only ends up being 3% of revenue, well Disney parks and resorts division averages a net profit of about 20% of revenue, so a $1 spent at a Disney park, hotel or cruise ship is a lot more profitable than one spent at woollies.


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## luutzu

skc said:


> Let it go. Let it go.
> 
> Or:





Ah, uni days. 
11 weeks of doing nothing, 1 week of cramming... maybe that explains a lot of my career "options" 

My then 3 year old son was into Letting it Go, way too much... He's since been into the Cycle of Life, literally doing a one-man Lion King show. Which is great fun to watch, and to hear sometimes. But it does get a bit dangerous taking him out and the dude would run to the top of whatever high points like Simba reclaiming Pride rocks.


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## luutzu

Value Collector said:


> Lol, I wasn't trying to imply that was your strategy, I was just using your name as a random example, because I know you like it when I can work Disney into the conversation.
> 
> And hey Dream world isn't so bad, haha.
> 
> _________
> 
> 20% is the net profit of the parks division, compared to total revenue, not 20% mark up in products, offcourse the mark up is much higher than 20%.
> 
> Eg woollies probably operates with a 30% markup, but net profit only ends up being 3% of revenue, well Disney parks and resorts division averages a net profit of about 20% of revenue, so a $1 spent at a Disney park, hotel or cruise ship is a lot more profitable than one spent at woollies.





So Disney mug me with their Marvel, mug my kids with Pixar and live shows, and one of its shareholders trolls me?    Good to rant sometimes though... but can't complain too much since I guess it's not Disney's fault I'm cheap.

Dreamworld is slightly better than Wonderland. Still crappy though. Waited over 45mins for a 3 minutes Red Demon [superman?] ride. All the others were even more packed. Dam, I'm gonna one heck of a grumpy old man. haha

btw, the latest Alladin musical isn't too bad. Not the Lion King, but some funny moments for adults. Kids didn't like it much though.


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## PharmBBs

1. Invest in aged care and health care related to age care.
2. Watch as the dying baby boomers pour their metric f*ckton billions into your companies from trying to buy themselves extra time on earth as their bodies rot away with age.
3. ???
4. PROFIT!

As you can see I'm a big fan of demographics. Honestly I'm not sure what else to put my money on though. It's like the aged care thing is guaranteed to beat inflation because baby boomers comprise such a huge portion of the population. But for everything else; sure it (the market) will grow but that's cause GDP is correlated with population. Now if there was another surge in births ( a BabyBoom V2, if you will) then I could make money off that cause I can predict when that big surge of human beings are going to do typical things that humans do while growing up (eg ~10-16 years from that surge in births you know there's going to be a surge in tampon demand, tampon dividends anyone?). But everytime I look at a population pyramid, it's vertical from 40yo's down. No surge in births, just the wide flange of babyboomers about to retire. Oh well.


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## systematic

systematic said:


> As always; no story - just running numbers.
> 
> Caveat:  Completely ignoring price.  I'm going for 'quality' here.  I base that on your comment that the price does not have to be right.  Therefore I wouldn't (necessarily) be investing in these, as of course just like yourself - the price has to be right (amongst other things)
> 
> Anyway...on quality alone:
> 
> Vita Group
> Navitas
> Cochlear
> JB Hi-Fi
> Blackmores
> 
> 
> Saunders International
> Nick Scali
> Oz Forex
> DWS
> AMA Group





Just an update one year later, 'cos I remembered...

Top group did 18%, bottom group did 2% - all 10 as a group did 10% along with the market (and about 4.5% divs)


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## systematic

systematic said:


> Going back to the OP, I realised that I don't _have_ to look at quality (as I did in a previous comment) - the request is for prospects liked.
> 
> Okay, so if I had to pick some stocks that I *had *to hold for (say) 5 years...I'd stick to value / cheap stuff.  I wouldn't worry too much about quality.  I wouldn't look at momentum as I normally do.  I'd be going for a basket of cheap stuff based purely on the mean reversion of value.  This is usually the sort of list of stocks that normal people wouldn't want to own; too scary!
> 
> Top (bottom?) 25, I've got:
> 
> LCM	Logicamms
> MLD	MACA
> DOW	Downer EDI
> MND	Monadelphous Group
> EPW	ERM Power
> DCG	Decmil Group
> PRT	Prime Media Group
> LGD	Legend Corporation
> SGM	Sims Metal Management
> PTL	Pental
> KSC	K & S Corporation
> MCE	Matrix Composites & Engineering
> STS	SRG
> CSR	CSR
> CDA	Codan
> BYI	Beyond International
> UOS	United Overseas Australia
> CAB	Cabcharge Australia
> OZL	OZ Minerals
> RCR	RCR Tomlinson
> SPO	Spotless Group Holdings
> WPL	Woodside Petroleum
> GNG	GR Engineering Services
> DSH	Dick Smith Holdings
> FMG	Fortescue Metals Group
> 
> A variety of sectors covered (industrials appearing most frequently), and a variety of market caps (from Woodside to ~$40m)
> 
> 
> From the same group, but with an afterthought nod to quality and sticking to microcap territory, I'd be left with:
> 
> LCM	Logicamms
> LGD	Legend Corporation
> PTL	Pental
> MCE	Matrix Composites & Engineering
> STS	SRG









It's only one year, not 5 years...but anyway.

The small group did 10.5% with 3.5% divvies.  About the market.



The big group (25 stocks) of purely cheap stuff to, 'keep for 5 years' (if I had to)...had a very good year, returning 44.5% with 6% divs on top of that - total return 50%

18 winners, 7 losers - 1 stock delisted (good old DSH!)

The biggest win was Fortescue (FMG) doing 254%

The average winner did 77%, thanks to no less than 6 stocks that made at least 100%

The average loss of the 6 losers (excluding delisting) was 26%

Interestingly - as it was not considered - is that 22 out of 24 stocks paid a dividend (the 2 that didn't were both losers).

Any recording errors are obviously mine and I apologise if there are any.  Creating portfolios is fun for me, recording them is not my favourite pass time.


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## Value Hunter

I am curious Craft, how old where you when you first started investing in the stock market? How old were you when you first starting investing in the stock market using your current approach?


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## Cam019

Same as systematic; no story - just running some numbers.

COH
REH
MFG
ABC
JBH


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## Muschu

Sometimes I just feel amusement at this market volatility which is definitely not a way of saying I understand what is going on.... I don't.

I'm over 70 and have a SMSF.  Performance generally has been OK with dividends helping out.  I'm not averse to selling losers but try not to do too much trading.... 

Major holds are
- Several LICs - mainly ARG
- TLS [wondering whether it's time to reduce]
- CBA and WBC
- and a range of smaller holds including CCP, IFL, JBH, MOC, PMV, RHC, S32, WES

But I am very open to fresh ideas like YMAX above.

Anyone else out there in my situation and willing to share what you hope to hold into the future?


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## MrChow

Not at current valuations but IVC, BKL, HSO

All defensive and market leaders.

Even in a downside scenario earnings and dividends should be able to remain flat.

The biggest risk is valuation contraction which means ideally buying @ PE <20.


----------

