# A beginner's possible portfolio



## sofman2000 (2 January 2009)

Hi There- I have engaged a fin planner and these are the stocks they have recommended as a good start. 90% low risk and 10 % high risk.

Low risk 90%
ORG origin
WDC westfield
IPL Incitec Pivot
CBA Commbank
BHP
STO santos

High risk 10%
BBI BB infrastructure
BJT BB Japan
ABY Aditya birla
ESG eastern star gas

Is this decent advice for a long term hold. While I learn the ropes? OR would I be mad?


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## Trembling Hand (2 January 2009)

*Re: a beginners possible portfolio*



sofman2000 said:


> Hi There- I have engaged a fin planner.....
> 
> ....... 90% low risk.





Low risk!! How do they classify that?

I guess they mean that they are less likely to go broke? But that still doesn't mean you will not lose half of your money on them. Just pull up a chart of the "safest" of all stocks CBA. not so low risk.


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## CanOz (2 January 2009)

*Re: a beginners possible portfolio*

Westfield is low risk? Don't they own shopping centers or something? 

Cheers,


CanOz


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## prawn_86 (2 January 2009)

*Re: a beginners possible portfolio*

Sofman,

Its good to see you are thinking about your financial future. A few words of warning though if i may:

Fin planners are often caught in conflicts of interest. They receive commissions for products such as managed funds, so of course they will recommend them.

As some of the other (blunter  ) posters have put, what do you classify as risk?

Ask your planner why he has recommended them and why are they classified as that type of risk? If he says "its cause thats what the broker/research houses say" then be wary. Ask if he owns them personally.


Personally i would say keep your money in the bank until you know a bit more, and dont take out a margin loan if you dont know what your doing even if the FP advises it.

Also please note it is against ASIC policy for ASF members to give advice along the line of "buy this" or "sell that".

Hope that helps

Prawn


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## sofman2000 (2 January 2009)

*Re: A beginners possible portfolio*

interesting feedback- i suppose low risk means over the long term it will go up from where it is right now- there may be some down times though- do you guys think it will be that bad for so long? over 12 months?


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## Trembling Hand (2 January 2009)

*Re: A beginners possible portfolio*




sofman2000 said:


> i suppose low risk means over the long term it will go up from where it is right now-




LOL

So what does high risk mean? Over the long term it will go down :


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## prawn_86 (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> interesting feedback- i suppose low risk means over the long term it will go up from where it is right now- there may be some down times though- do you guys think it will be that bad for so long? over 12 months?




Anyone that tells you a stock 'WILL' go up, has no idea. No-one can predict the future.
Ask your FP why they classify them as diff risk?

Leave your money in the bank and educate yourself would be the best option IMO


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## sofman2000 (2 January 2009)

*Re: A beginners possible portfolio*

yes interesting feedback untill the last comment anyway.from trembling hand


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## mazzatelli1000 (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> yes interesting feedback untill the last comment anyway.from trembling hand




Its his way to hinting to you that you have no idea  IMO


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## theasxgorilla (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> yes interesting feedback untill the last comment anyway.from trembling hand




If I know TH I expect he's only challenging you to try and explain what you've been led to believe that low and high risk means.

In defence of your FPs advice, with PEs where they are, you could pick far, far worse times to start a dollar-cost-averaging strategy over a very long time frame.


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## cutz (2 January 2009)

*Re: A beginners possible portfolio*

Hi Sofman,

IMO if you want to go for low risk/long term, investing in the whole market via a low cost fund may be the way to go.

I can see what TH is getting at, recently i had some spare cash so i thought i throw some money into a high risk stock (no research involved), now the stock is worth ziltch and in receivership, i just need to work out how to claim the loss as i can't unload it.


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## marklar (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> Is this decent advice for a long term hold. While I learn the ropes? OR would I be mad?



Many people here have in their signature block "Do your own research" or variant thereof, it's actually really good advice.

Your FP has suggested some stocks for you to take a look at, that is all; it's up to you to further research these companies (eg. financial reports, stock price charts, directors' shareholdings & experience) as little or as much as you like.  ASF is a great forum for learning about what & how to research as well as drawing attention to some often overlooked companies.

The one and only time I went to see an FP, he asked "so what do you want to invest your money in?" so I got up and left his office, 'cos his job was done!

m.


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## theasxgorilla (2 January 2009)

*Re: A beginners possible portfolio*



mazzatelli1000 said:


> Its his way to hinting to you that you have no idea




Can we please be more constructive to our less experienced members?  You may or may not be right, but he/she has come here asking questions, which is better than blindly following advice with out *doing-your-own-research*...wouldn't you agree?


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## mazzatelli1000 (2 January 2009)

*Re: A beginners possible portfolio*



theasxgorilla said:


> Can we please be more constructive to our less experienced members?  You may or may not be right, but he/she has come here asking questions, which is better than blindly following advice with out *doing-your-own-research*...wouldn't you agree?




hmmm --- I usually jest alot, but on this medium it may not come out the right way.

Definitely agree with you.


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## Trembling Hand (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> yes interesting feedback untill the last comment anyway.from trembling hand




Seriously what is the difference then if low risk you expect to go up in the long term and collect some div. 

Very important question. Its looks like an each way bet from someone who has no friggin idea - Buy XYZ group they are "safe" but also throw in a few of theses duds with small bets, you may land a winner but if you don't I have only lost 10% of your money 

What classifies the high risk and why the attraction to them? 

Why ORG and STO they are both gas plays?

Why WDC, a retail/retail real estate play in what looks to be a coming recession?

Where is the position sizing model?

When/how will you acquire them? All in one hit or small purchases over the next year?

What does your FP advice as far as selling? If they go up? If they go down? Have you got an amount where you will sell out once you reach a certain amount of loss? 

*Where is your FP EVIDENCE that this is a good strategy??? WHERE?* When you go to a Doctor with a problem they give you a strategy to fix it based on *tests* that have proven to be beneficial? And if it doesn't fix the problem they stop it and try something else/test more.

When you go to a FP with a problem they give you a solution to make you feel like you are doing something. They don't give you evidence that it will work and even more importantly *what to do if it doesn't work.* If you Doc prescribed medicine that made you sick you would stop it and go back for another solution, in the case of a FP they tell you to keep taking your medicine although its not working because they have no other tricks.


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## CanOz (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> interesting feedback- i suppose low risk means over the long term it will go up from where it is right now- there may be some down times though- do you guys think it will be that bad for so long? over 12 months?




There is one thing that is almost a sure thing, that your money would be no worse off in the bank while you research and become more financially enlightened. The markets have a fair bit of basing left to do, IMHO, before we are into a situation that you do not want to miss out on. 

Take some time, and learn about fundemental analysis, technical analysis and some basics on economics so that when good times are being priced back into equities you can recognise it. 

During this period of a typical business cycle, equities are not always the best place to be. 

Take some time and use the forum to learn more about where to look for all of these resources.


Cheers and good luck,


CanOz


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## sofman2000 (2 January 2009)

*Re: A beginners possible portfolio*

i ve gotr to say- that if you use the beginners lounge you are boasting that you have no idea- in fact you are starting to research- I think there a too many enlarged egos in here for my liking- but thanks to the decent people who arent so full of themselves.


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## dj_420 (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> Hi There- I have engaged a fin planner and these are the stocks they have recommended as a good start. 90% low risk and 10 % high risk.
> 
> Low risk 90%
> ORG origin
> ...




Hi sofman2000

I would see low risk as a company that still has strong earnings and demand for product, has very little debt and has strong management. All despite recent global financial turmoil.

As far as what I have invested in it has only ever been resource companies and support services to the mining industry. The companies I have personally chosen to invest in are energy, ie coal/uranium, in my opinion there should still be strong demand for these commodities as they are used in part of everyday life, ie power.

I would see high risk in resources as a company in greenfields exploration in commodities with poor demand, very little on mgt track record and little cash in the bank to get through tough times.

I suppose the same can be thought of to other industries also.

With your list of stocks there ORG seem to fit the bill as a low risk BUT I think because the shareprice has been underpinned by the BG offer it leaves very little in terms of future growth of the company. I think they are fully priced and do not offer much upside.


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## Bushman (2 January 2009)

*Re: A beginners possible portfolio*

Here is my 2c

*Low risk 90%* - incorrect. All these equities have different risk profiles. 


ORG origin - retail gas utility. Brownfield infrastructure has lower risk to cashflow due to the demand elaticity of the product being sold, gov't regulation of gas prices, and the exponential growth of the replacement costs currently being witnessed.

WDC westfield - Dec Qrt 08 (to be dislcosed in Jan 09) will be a crunch time for retail cap rates. In Westfield's favour is that they own mostly regional shopping centres and they have relatively low gearing. On the downside is cap rate expansion is evident across all property classes (see CFS recent announcement) and even regionals are blowing out by 25 bp. This is despite the historical divergence between cap rates and treasuries which one day will return to their historical means. 

IPL Incitec Pivot - monopolistic supplier of fertiliser product. Good outlook for soft commodities given drough breaking in Aus and the outlook for inflation. 

CBA Commbank - loan book looking a tad sick. Farcical equity raising means instos might prefer other banks next time once tier 1 is further eroded by as yet undisclosed provisions for bad debts (we are heading into a recession and a big plunge in commercial property -  a 'no brainer'). Positive is a fully franked divvie in the region of 8%, a reasonably robust regulatory framework and an ever strengthening oligopoly. 

BHP - diversified miner. Look at commodity prices (oil, coal, iron ore, nickel etc) - it has been a historic 'up with the stairs, down by the elevator' as Lehmans has precipated a deleveraging event the likes of which has not been witnessed for many a moon. Plusses is a strong, strong balance sheet and many a struggling, tasty morsel to acquire. Also oil will not remain in the doldrums and base metals will recover over time (copper is the one to watch). 

STO santos - what is your forecast for the oil price? 


So my 2c. 

If you truely want 'low risk' then treasuries and cash are at the bottom of the risk spectrum. 

Next level is traditionally corporate bonds, though remember that sub-prime has spooked investors and thus default risk is being 'exaggerated' by the market. Where there is smoke, there is fire a la Ford, GM, GE and the like. 

PS: 'Risk', while a hydra-type measure, is primarily the risk to your capital in this market. What the market did wrong in 2006-2007 was misprice risk (eg yields on securitised subprime mortgages) and, in effect, leverage off an illusion re asset prices. Hence the nasty capital destruction we are witnessing.


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## sofman2000 (2 January 2009)

*Re: A beginners possible portfolio*

I can see that there is still alot of work to do- So I will scrutinise these suggestions and use some of this advice before donating my funds. Thanks a lot for offering your useful suggestions. Maybe invest in one stock at a time with al ot of home work before each one.


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## CanOz (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> I can see that there is still alot of work to do- So I will scrutinise these suggestions and use some of this advice before donating my funds. Thanks a lot for offering your useful suggestions. Maybe invest in one stock at a time with al ot of home work before each one.




Good plan Sofman. Don't worry too much about the big egos around here. This is a pretty good forum and its a got a nice community feel to it as well. Those big egos sometimes forget that they were once beginners too, and in fact in the markets, everyone is always learning. Lots of these guys have a sarcastic tone too, which sometimes is taken the wrong way.

Consider this period as an exciting time to be watching the markets, as events like we have seen over the last 12 months don't come too often, and the experience of this will serve you well. 

I hope you stick around and enjoy all there is to learn about trading and investing.

Cheers,


CanOZ


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## Wysiwyg (2 January 2009)

*Re: A beginners possible portfolio*

First impression of some posters are of arrogance  but they do make one think about where they are experience wise and if they are genuine in their pursuits.
Seeing through people comes with experience and a little gentle prodding.


p.s. I detest arrogance myself and endeavour not to be.


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## chops_a_must (2 January 2009)

You could do worse than reading the threads of those stocks advised.

Kind of silly the ratings on risk, as for instance, I would consider ESG lower risk than CBA for example, given the current market value and future direction of the assets they are tied to.


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## honey85 (2 January 2009)

*Re: A beginners possible portfolio*



sofman2000 said:


> i ve gotr to say- that if you use the beginners lounge you are boasting that you have no idea- in fact you are starting to research- I think there a too many enlarged egos in here for my liking- but thanks to the decent people who arent so full of themselves.




Exactly. If you expect beginners to have the same level of thinking and market knowledge, you should be ashamed. 

Anyway sofman, my low risk definition is the company is too big to fail which prices will EVENTUALLY rise next time (depends on the time horizon of investment). Hence, the companies you listed low risk somehow make sense to me: I jus started trading recently and have been reading as much as possible. Bought some CBA to have a feel and so far still making lil profit Good luck mate!


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## mazzatelli1000 (2 January 2009)

*Re: A beginners possible portfolio*



honey85 said:


> Exactly. If you expect beginners to have the same level of thinking and market knowledge, you should be ashamed.
> 
> Anyway sofman, my low risk definition is the company is too big to fail which prices will EVENTUALLY rise next time (depends on the time horizon of investment). Hence, the companies you listed low risk somehow make sense to me: I jus started trading recently and have been reading as much as possible. Bought some CBA to have a feel and so far still making lil profit Good luck mate!




Lehman Bros, Wamu --- these guys would have once upon a time been considered too large to fall. But you have seen what has happened.

Its a very risky definition to have - what fundamental factors are you considering here other than size and reputation? ( I am assuming you do not use technical analysis)


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## Trembling Hand (2 January 2009)

*Re: A beginners possible portfolio*



honey85 said:


> Exactly. If you expect beginners to have the same level of thinking and market knowledge, you should be ashamed.




Come on guys. It goes without saying that questions in here are going to be from those just starting to find there way in this game but if you are so fragile that a quick reply pointing out the error in your own thinking rubs you the wrong way you have a lot of pain coming your way. This game will continually prick your personality hot spots.

My point is still valid if low risk is what you think will go up in the long term what is high risk?? A big gamble?? A stock more likely to lose you money?? A stock that could be a 10 baggier but more likely a -100%?? 

There is not meant to be ego in my reply just the odd hopeful jolt in pointing out errors in thinking/approach from someone who has made more than enough errors to share a bit of "been there done that wisdom".


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## Gerkin (2 January 2009)

*Re: a beginners possible portfolio*



prawn_86 said:


> Sofman,
> 
> Its good to see you are thinking about your financial future. A few words of warning though if i may:
> 
> ...




And what sort of conflict of interest would happen on specific stocks?? Its not like its a managed fund paying 4% upfront, so i was just wondering your interpretation of conflict in this example?
I only ask because i use brokers not planners.


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## prawn_86 (2 January 2009)

*Re: a beginners possible portfolio*



Gerkin said:


> And what sort of conflict of interest would happen on specific stocks?? Its not like its a managed fund paying 4% upfront, so i was just wondering your interpretation of conflict in this example?
> I only ask because i use brokers not planners.




For specific stocks planners would not recieve a comission, but the planner might be tempted to say "well these stocks i have shown you are good, but this fund has essentially the same holdings so why not go for that?" or something along those lines. So be wary of a planner that does this

So no conflicts of interests with direct stocks, and im actually surprised they recommend it if you dont ask for it directly.


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## Cartman (2 January 2009)

*Re: A beginners possible portfolio*



Trembling Hand said:


> There is not meant to be ego in my reply just the odd hopeful jolt in pointing out errors in thinking/approach from someone who has made more than enough errors to share a bit of "been there done that wisdom".




Sof,  word of advice --- if there is ego in the post --- evaluate the validity of the ego ---

some egos are just full of 'egg'  --- TH is based on 'scotch fillet' 

discalimer;  i dont know TH  i just gauge his 'advice' based on my own 'limited' experience


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## skc (2 January 2009)

The textbook definition of low risk vs high risk relates to the standard deviation of return. That is, by what magnitude can the potential return stary away from the norm/average.

An investment that on average rises or fall within 15% each year is relatively low risk, compared to another that changes by plus/minus 200% which is clearly high risk. 

By saying a share is low risk, your FP isn't suggesting that the share would definitely go up, or that you will only lose a little money. It simply suggest that you have *a lower chance * of losing / winning a lot of money compared to the higher risk portfolio. 

Based on this definition, your FP has given you a pretty fair starting point IMO.


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## kam75 (2 January 2009)

sofman2000 said:


> Is this decent advice for a long term hold. While I learn the ropes? OR would I be mad?




Risk?  High risk?  Low risk?  Good lord.  The only thing that measures risk is what's written in your trading plan for each trade BEFORE you buy.  

Where's your stoploss for each of the stocks, what's the risk/reward ratio for each trade, how will you get in, how will you get out, how will you take your profits, how will you increase or decrese your position size as your equity varies.  Sorry to be harsh but let me say this: either learn the game and play once you're confident, or give the money to someone else to trade for you.


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## Cartman (2 January 2009)

skc said:


> The textbook definition of low risk vs high risk relates to the standard deviation of return. That is, by what magnitude can the potential return stary away from the norm/average.
> 
> An investment that on average rises or fall within 15% each year is relatively low risk, compared to another that changes by plus/minus 200% which is clearly high risk.
> 
> ...




SKC,  totally appreciate what yr saying but lets be frank --- FP's who are now promoting CBA and BHP as low risk 'investments' (which in all honesty they now probably are)  are more than likely the same FP's who were quoting CBA and BHP as LOW RISk investments 12 months ago ------ 

would u b happy TODAY with yr FP if he had told u to buy either CBA or BHP 12 months ago  ------  FP's tell their clients the same story day in day out --- happy clients are lucky cause they buy in at the 'right' time ---- unhappy clients buy in at the wrong time --------   
does the FP care   ------ 

reminds me of a horse racing system i bought into a long time ago -------- 

get a thousand punters --- charge them a squillion for your 'hot tip advice' ---- get a hundred of them to back each horse in the race ------ 100 happy punters make a motza  (the other 900 say yr service is crap) ----   but u dont care cause uv made a squillion anyway  cause the 100 who won have another crack with even more cash (which u/the promoter takes a  nice slice of) ----- 

ie FP's are nothing more than 'bookies in suits' ------------- would i use a FP ?? ------------- ha ha ---- no thanks !!


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## theasxgorilla (2 January 2009)

kam75 said:


> Risk?  High risk?  Low risk?  Good lord.  The only thing that measures risk is what's written in your trading plan for each trade BEFORE you buy.
> 
> Where's your stoploss for each of the stocks, what's the risk/reward ratio for each trade, how will you get in, how will you get out, how will you take your profits, how will you increase or decrese your position size as your equity varies.  Sorry to be harsh but let me say this: either learn the game and play once you're confident, *or give the money to someone else to trade for you.*




I think you're right on with this post kam75, although I want to add, even giving your money to someone else to trade can very easily end up in a situation where you're unable to quantify risk, you're not sufficiently diversified and you lose a lot of money.


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## Julia (2 January 2009)

sofman2000 said:


> Hi There- I have engaged a fin planner and these are the stocks they have recommended as a good start. 90% low risk and 10 % high risk.
> 
> Low risk 90%
> ORG origin
> ...



Hello Sofman,
May I ask on what basis you have engaged the financial planner?
Is it fee for service?
Per consultation?
Percentage of capital invested?
Is it intended if you pursue his suggestions you would place the buys yourself via an online broker, or is the FP suggesting he do this on your behalf?
If the latter, what brokerage charges are involved?

Looking over this list of stocks, and without wishing to do the FP a disservice, it strikes me as a list that could well have been (and would have been) offered about a year ago.  This always raises my antennae.  There is a tendency for FP's to have a "one size fits all" approach, and hence a basic list of stocks such as you've been given with the meaningless sub-headings of "high risk" or "low risk".  Others have already pointed out the uselessness of such a classification in the current market.

Personally, and this does not constitute advice, I wouldn't be putting money in any of the above right now.  

Any financial advice you are offered also needs to be considered in the context of your age and forward plans, i.e. if you are 20, then buying e.g. CBA at present may not be the best buy you could make, but in another 20 years time you would be very unlikely not to be well in front.
But if you're about to retire, it's a whole different story.

What are your objectives when considering investing in the market?

What are your expectations over, say, the next ten years?

What accountability do you expect your FP to have?
Considering recent experience from, e.g. Storm Financial, if I were to use a FP (which I wouldn't) then I'd be getting something in writing in terms of his level of accountability for the recommendations made.
He needs to be able to say to you:  "I am recommending Incitec Pivot at present because......." and be able to back it up with more than a vague suggestion that he thinks it will do well.

Have you read the Brisconnections thread?  This will give you an insight into what can go wrong if uneducated people rush into the market without first doing due preparation.  Do not necessarily consider that any FP will offer you correct, foolproof advice.  Take responsibility yourself for whatever investments you make and if you don't have the confidence to do this, then stay out until you do.


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## Cartman (2 January 2009)

Julia said:


> Hello Sofman,
> 
> Any financial advice you are offered also needs to be considered in the context of your age and forward plans,
> What are your objectives when considering investing in the market?
> ...




much more eloquently stated than i could Julia -- but saying similar things from a different tangent ----- (i love tangents !! ) ---- good advice.


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## Stormin_Norman (2 January 2009)

rule one:

*trend is your friend.*

look at a graph of what youre being recommended.


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## Julia (2 January 2009)

Stormin_Norman said:


> rule one:
> 
> *trend is your friend.*
> 
> look at a graph of what youre being recommended.



Yes, I agree.  But, with respect, if Sofman is completely new to investing (and consulting a financial planner would suggest this) such a recommendation is probably not going to mean a lot.   e.g. the FP could show a chart of a complete dog and say "hey, this is a terrific company but as you can see it has been really oversold, so must have amazing potential for gain".

Is Sofman going to be able to - without some education - know whether such a claim is realistic?


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## Stormin_Norman (2 January 2009)

Julia said:


> Yes, I agree.  But, with respect, if Sofman is completely new to investing (and consulting a financial planner would suggest this) such a recommendation is probably not going to mean a lot.   e.g. the FP could show a chart of a complete dog and say "hey, this is a terrific company but as you can see it has been really oversold, so must have amazing potential for gain".
> 
> Is Sofman going to be able to - *without some education* - know whether such a claim is realistic?




exactly why its rule #1.

is the price going up or down? if its going down. dont buy it.


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## Cartman (3 January 2009)

Stormin_Norman said:


> exactly why its rule #1.
> 
> is the price going up or down? if its going down. dont buy it.




unless of course its a spike low at the end of a cycle which has just flushed out the last of the sellers !!  ---- thats the *best* place to buy


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## Stormin_Norman (3 January 2009)

Cartman said:


> unless of course its a spike low at the end of a cycle which has just flushed out the last of the sellers !!  ---- thats the *best* place to buy




that's very nice in theory. but my personal belief is only one type of person can consistently buy at the low spike and sell at the high spike.

a liar.

the price is the only thing you can trust in the market. if the price isnt going up, why are you buying it?

   obviously im a trend follower, not a bottom predictor.


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## Cartman (3 January 2009)

Stormin_Norman said:


> that's very nice in theory. but my personal belief is only one type of person can consistently buy at the low spike and sell at the high spike.
> 
> a liar.




hope that liar bit isnt directed at me Norm ?? 

i dont profess to be able to pick *exact* tops and bottoms anymore than anyone else ---- but *u dont need to* 

yr system has a 5% stop/ buffer on the initial leg of yr entry and is looking for multiple entries to compound yes ?  ----   obviously u are looking for the trend to prove itself b4 entering  and ride the trend for a longer period ---- no probs with that sytem --

im happy to pick short term highs/lows --- if the ATR of the short term cycle of the said instrument is say 15 pips  im happy to get 5 pips of that in the middle ground ---- staking plan and money management comes into play with my system in so much as i WILL average up/down if the high/low has still to be proven (no doubling up!!)  



Stormin_Norman said:


> .
> 
> if the price isnt going up, why are you buying it?
> 
> obviously im a trend follower, not a bottom predictor.




1) no one knows if the price will continue up from your entry point anymore than i know it will from mine? --- in essence my entry is lower risk because i try to buy the last lowest price --

ps i dont just buy a low for the hell of it -- the momentum has to be slowing and usually an initial spike up off the low is followed by a retest of the initial low/(or high in the opposite scenario) ---

im sure u get my drift


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## Stormin_Norman (3 January 2009)

Cartman said:


> hope that liar bit isnt directed at me Norm ??
> 
> i dont profess to be able to pick *exact* tops and bottoms anymore than anyone else ---- but *u dont need to*
> 
> ...




i get your drift exactly. you do not need to buy at the bottom or sell at the top. you just need to buy a a lower price then you sell at/ sell at a high price then you buy at.

i buy on short term dips and sell on short term spikes too. in the direction of the longer term trend. ie trend is your friend.

true range = max *price *(high,closeprev) − min *price*(low,closeprev). ie price is the only true indicator.


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## Cartman (3 January 2009)

Stormin_Norman said:


> i get your drift exactly. you do not need to buy at the bottom or sell at the top. you just need to buy a a lower price then you sell at/ sell at a high price then you buy at.
> 
> i buy on short term dips and sell on short term spikes too. in the direction of the longer term trend. ie trend is your friend.
> 
> true range = max *price *(high,closeprev) − min *price*(low,closeprev). ie price is the only true indicator.





no arguments there --- 

i know nothing about coding and backtesting -- only forward testing which i do a lot of --

i work on a fairly short time frame and its common to get 4-5 mini cycles per hour --  interested with regard to true range when backtesting what time frame do you use to clarify maximum high/low  ----   and how much does it alter your results if you widen your time frame ---- just curious cause the spike highs/lows i look for are often the max high/low (or v close to it) of both the last minute and often hour --- which is why theyre easy to pick at times


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## Stormin_Norman (3 January 2009)

Cartman said:


> no arguments there ---
> 
> i know nothing about coding and backtesting -- only forward testing which i do a lot of --
> 
> i work on a fairly short time frame and its common to get 4-5 mini cycles per hour --  interested with regard to true range when backtesting what time frame do you use to clarify maximum high/low  ----   and how much does it alter your results if you widen your time frame ---- just curious cause the spike highs/lows i look for are often the max high/low (or v close to it) of both the last minute and often hour --- which is why theyre easy to pick at times




i dont backtest apart from very early on in the development cycle. i have found the backtesting results are near on useless when trying to figure a profitable system.

i dont use true ranger, although i am familiar with it. i have experimented with it, but found stochastic (13,3,5) to be a better indicator of the price movement (for me). that gives me my overbought/oversold price indicator.

i only take indications which are in agreeance with the 55 and 144 simple moving average (the trend).

sometimes, if the 55 MA is slightly against the signal of the stochastic and 144 MA i will still take the trade. 

the ATR and stochastic are very similar price indicators just calculated in different ways. we are both looking for similar set ups i believe.

_am i correct in thinking that? you look to go in the direction of a longer term trend after a short term move against that trend?_


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## So_Cynical (3 January 2009)

Stormin_Norman said:


> exactly why its rule #1.
> 
> is the price going up or down? if its going down. dont buy it.




That's trend following balony...the OP is not a trendy.


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## Stormin_Norman (3 January 2009)

So_Cynical said:


> That's trend following balony...the OP is not a trendy.




OP?


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## Cartman (3 January 2009)

Stormin_Norman said:


> i dont backtest apart from very early on in the development cycle. i have found the backtesting results are near on useless when trying to figure a profitable system.
> 
> [/I]




totally agree --- forward testing is much more useful -- mainly cause i know nothing about coding a backtest lol 



Stormin_Norman said:


> i only take indications which are in agreeance with the 55 and 144 simple moving average (the trend).
> 
> sometimes, if the 55 MA is slightly against the signal of the stochastic and 144 MA i will still take the trade.
> 
> ...




the eur/usd has been pretty fickle lately so a long term trend might only be an hour --  plus the range from high to low can be wide on a higher time frame  --- i actually prefer to trade the chop most of the time but as i say early days and still testing different systems/entries etc 

stochastics and MA's pretty much the same as yrself.


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## theasxgorilla (3 January 2009)

I dare say we've gone way beyond a beginners portfolio with these concepts!


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## theasxgorilla (3 January 2009)

So_Cynical said:


> That's trend following balony...the OP is not a trendy.




OP = Original Poster.

"trend following balony"??? Love it.

Has value investing been working for you in this market?  By all means please enlighten us.


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## prawn_86 (3 January 2009)

theasxgorilla said:


> Has value investing been working for you in this market?  By all means please enlighten us.




Some would argue that this type of market is perfect to start with the value investing (even yourself .

I think a lot of the TA people out there dont take yeild into account. If you are looking at solid strong companies (obviously you need your own criteria of this) and you can get say 5% pa yeild and hold for 10+ years you have the prospect of capital growth, plus an increasing yeild if the company is improving...


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## Stormin_Norman (3 January 2009)

theasxgorilla said:


> OP = Original Poster.
> 
> "trend following balony"??? Love it.
> 
> Has value investing been working for you in this market?  By all means please enlighten us.




ill wait for 'those' people to start to move the market back. when its obviously in a recovery ill join in.

if the market is going to come back, then there's a long long way for it to bounce back. i dont trust financials, projections or analysts' ratios. there's still a lot of rubbish floating around on balance sheets, a lot of creative accounting and a lot of losses yet to be announced.

the only number i trust is price. that tells you what the market thinks about something. and in the end, the market is who you want to be agreeing with.


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## MRC & Co (3 January 2009)

Stormin_Norman said:


> if the price isnt going up, why are you buying it?
> 
> obviously im a trend follower, not a bottom predictor.




You can be trading with the bias of the trend and buying dips in an uptrend and selling pullbacks in a downtrend..........


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## Stormin_Norman (3 January 2009)

Stormin_Norman said:


> that's very nice in theory. but my personal belief is only one type of person can consistently buy at the low spike and sell at the high spike.
> 
> a liar.
> 
> ...






MRC & Co said:


> You can be trading with the bias of the trend and buying dips in an uptrend and selling pullbacks in a downtrend..........




bingo.

if youre looking at a long enough time frame the current situation could be considered just that. a short term pull back over the course of 25 years.

even if that's the case, i personally would be waiting a little bit longer to see an uptrend again before jumping in.


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## MRC & Co (3 January 2009)

Stormin_Norman said:


> bingo.
> 
> if youre looking at a long enough time frame the current situation could be considered just that. a short term pull back over the course of 25 years.
> 
> even if that's the case, i personally would be waiting a little bit longer to see an uptrend again before jumping in.




lol, well I'm actually talking about intraday (so very short-term), where you can actually see order flow.

Long-term takes into account too many fundamental factors, which makes the analysis a lot harder IMO.


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## kam75 (3 January 2009)

Stormin_Norman said:


> my personal belief is only one type of person can consistently buy at the low spike and sell at the high spike.
> 
> a liar.




I know a lot of spruikers and seminar sellers that are very good at doing that


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## beerwm (3 January 2009)

Seems like the risk analysis is based on Market Caps;

high risk, 500M or lower

Although to me EasternStar Gas  [ESG] with $0 debt, [and other financials that i wont go into] seem to be of lower risk over the longterm.


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## Trevor_S (3 January 2009)

theasxgorilla said:


> Has value investing been working for you in this market?  By all means please enlighten us.




For me it has, I haven't purchased much in the last 2 years or so, was way too overpriced for my liking and have accumulated cash instead eg my $3 WBC shares and $9 BHP shares are still way up and paying a handsome % dividend for the initial capital outlay.... I have been buying since the early 1990's, off an on since then, only ever sold in a big way once to fund a business start up. I started purchasing again in Late November and early December 2008, mundane stuff like WOW, BHP, WBC, LEI, boring to most but I am a boring, staid conservative "investor". Had to sit on the side line for several years accumulating cash waiting for the inevitable downturn, took a lot longer then I thought and is much deeper then I thought.  Who knows, more downside yet probably but I am comfortable enough to start buying again, short term capital preservation is not a priority, long term accumulation is... why am I buying again ? this guy states it more eloquently then I

http://www.nytimes.com/2008/10/17/opinion/17buffett.html
_A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.
...
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts._

that aside in regards the OP.  Perhaps stick with a LIC (eg ARG), use value averaging to purcahse, read your heart out and ensure you can sleep at night.  I don't have the wherewithal to attempt a trading strategy, best of luck to those that do.


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## theasxgorilla (3 January 2009)

Trevor_S said:


> For me it has, *I haven't purchased much in the last 2 years or so*, was way too overpriced for my liking and have accumulated cash instead eg my $3 WBC shares and $9 BHP shares are still way up and paying a handsome % dividend for the initial capital outlay....




Yes, by "this market" I was referring to about the last two years.  What I probably meant was "these market conditions".


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## CanOz (3 January 2009)

Stormin_Norman said:


> that's very nice in theory. but my personal belief is only one type of person can consistently buy at the low spike and sell at the high spike.
> 
> a liar.
> 
> obviously im a trend follower, not a bottom predictor.




ROTFLMAO = This is a classic, well done mate, sums it up for me!


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## MS+Tradesim (4 January 2009)

Stormin_Norman said:


> that's very nice in theory. but my personal belief is only one type of person can *consistently* buy at the low spike and sell at the high spike.
> 
> a liar.




Consistently? No. But it's possible to get enough right to offer very tradeable opportunities.

If someone tries to *sell* a system that does it, I'd be very skeptical, but I have no doubt there are smarter people than me using more accurate systems than mine and keeping the details very private.


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## Cartman (4 January 2009)

MS+Tradesim said:


> Consistently? No. But it's possible to get enough right to offer very tradeable opportunities.
> 
> If someone tries to *sell* a system that does it, I'd be very skeptical, but I have no doubt there are smarter people than me using more accurate systems than mine and keeping the details very private.




if they are yr real trades MS  i like the way u operate


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## sofman2000 (5 January 2009)

once again - all of these replies have been informative - even confusing - but its good to feel the passion you all have- I am not paying any commission for the FP but have dealt with them over a few years and they have done well for me in the past including letting me know to get out of the market last year in January- so a year on I wanted to go the next step and invest in shares personally- The FP gets their recomendations from brokers and clients and I do trust them however after reading the thread - I now do not think they are the best qualified. So I will use their advice and also do some research in terms of financials and read news articles- Charts will I will try and get the hang of them next but there are so many !


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## chops_a_must (5 January 2009)

sofman2000 said:


> I am not paying any commission for the FP but have dealt with them over a few years and they have done well for me in the past *including letting me know to get out of the market last year in January*- so a year on I wanted to go the next step and invest in shares personally- The FP gets their recomendations from brokers and clients and I do trust them however after reading the thread - I now do not think they are the best qualified. So I will use their advice and also do some research in terms of financials and read news articles- Charts will I will try and get the hang of them next but there are so many !




Then they are more than worth hanging onto IMO.

Obviously better advice than 99% of FP's out there.


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## johenmo (7 January 2009)

sofman2000 said:


> once again - all of these replies have been informative - even confusing....
> 
> The FP gets their recomendations from brokers and clients and I do trust them however after reading the thread - I now do not think they are the best qualified.




sofman: I understand the first part!  If you wish to buy shares direct then you may be best dealing direct with a broker if you want recommendations.  If your investment capital is large enough then you should get reasonable service.  I don't use one so can't comment on how to select a "good" one.

There is still a lot of hidden surprises out there so I am not in a rush to buy back in - expecially with my limited experience/knowledge.  And this is what is holding me back.  I believe there are some stocks which will be good but that will be in a few months - which suits my personality  Good luck in sortig out the wheat from the chaff in all this.


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