# What is your buying process? From research to actual purchase



## oowl (17 October 2012)

What process do you go through, from researching, to the actual purchase?

Do you watch stocks first? How long, what makes you watch them? How do you decide on the point that it gets to when it's 'go time'?

How do you research? What resources do you look at?

What do you weigh up? What signifies a 'buy' opportunity for you?

Are these different for short or long term investment decisions? How so?


----------



## burglar (17 October 2012)

There is a great thread started by SirO:

https://www.aussiestockforums.com/forums/showthread.php?t=14370

It should see most of your query answered!


----------



## Steve C (17 October 2012)

I am also keen to hear peoples inputs - great questions to be asking oowl.

Steve


----------



## Out Too Soon (17 October 2012)

Thanks Burglar, that's an interesting thread. You can learn a lot just by reading the threads on ASF, after a while you learn as much about the different characters too   We all trade differently as you are probably aware by now. I have a very casual approach compared to some here but I do spend many hours studying the ASX. At some point early on you have to decide what you will specialize in & only change if you can't make it work.(shares/CFDs/FX/options) The following scan is out of "Trading Tactics" by Guppy  
	

		
			
		

		
	



	

		
			
		

		
	
 These triangles refer to the type of candle charts you see a lot of here & the top left hand corner is of cause the holy grail. Alone though it can mis-lead, also it is easy to imagine patterns where there are none.
	

		
			
		

		
	



This is an example of a magic triangle forming after the sp has broken out from a long down trend, I bought on this after much further study on MGO, eventually you can over do the analysis because you either talk yourself out of the trade or you say to yourself "I'll back myself & take a punt".  
  Read "Trading Tactics" by Guppy, read other books & the internet, eventually you look at so many charts & other analysis it becomes second nature as it is with me & it gets difficult to self analyse exactly how I go about a trade.
  PS - you sell when there's a nice profit to be made (6 weeks 10-20%) if you're lucky 
  PPS - their are many people here who will roast me for mentioning the word "luck" (they are full of ****)


----------



## Tysonboss1 (17 October 2012)

A great investor once said, " Investing is most intelligent when it is most business like"

Consider your self as a business man looking to buy a business to invest your families fortune.

Here is a few points it's worth taking some time to understand.


----------



## Gringotts Bank (17 October 2012)

I like to analyze a few hundred key economic indicators in my first hour of preparatory work, then I like to run a few quantitative calculations to come up with an in depth risk analysis, then I like to perform some neural network back tests, forward tests, sideways and upside down tests, then I divide the whole thing by Pi and then...

...I realize that none of this matters.


----------



## Out Too Soon (17 October 2012)

There are probably 4 ways I find initial suspects,
 1)scan using Incredible charts free scanner, 
 2)see what the latest is on ASF especially the "breakout"etc threads, 
 3) check some of the companies I've traded on in the past  & 
 4) check the suggestions of pay for mobs like Motley Fool, Fat Prophets etc. --* I never pay for their analysis but they're always trying to get you in by giving you a peek or a limited free subscription. 
 ** You could always put all the ASX co.s in a hat & blindly pick one out at a time & test it, using the pay for & talked about methods (2&4) are slightly better because the spotlight will cause extra buying (or selling) of that particular stock.


----------



## oowl (17 October 2012)

Thanks for the information so far 

The recommendations for specific websites are quite useful too. Besides Fat Prophets and  Motley Fool, what are some other subscription advisory services which might be beneficial to look into, or read the free reports on? I've seen Scott Pape's Barefoot Blueprint, but I haven't heard any feedback at all about that.

Are there any other books besides Guppy's Trading Tactics that you'd recommend?

Oh, and I have had a look in the 'resources' section of ASF, but It seems a bit overwhelming, and since I'm a beginner, I thought it might be better here.

I'm also making my way through SirO's thread. It certainly is a good read.


----------



## Tysonboss1 (17 October 2012)

oowl said:


> Are there any other books besides < Deleted because it's rubbish> that you'd recommend?
> .




Yes, Benjamin Grahams " The intelligent Investor"


----------



## So_Cynical (17 October 2012)

oowl said:


> What process do you go through, from researching, to the actual purchase?
> 
> Do you watch stocks first? How long, what makes you watch them? How do you decide on the point that it gets to when it's 'go time'?
> 
> ...




My first post in the Boral thread was on 5th-March-2009 here is a link to it.

https://www.aussiestockforums.com/forums/showthread.php?t=1918&page=2&p=405347&viewfull=1#post405347

I added Boral (BLD) to a watchlist only a week or so before that post, i entered BLD for the first time just 4 or 5 months ago and completed the trade just a week or 2 ago...that answers all your questions from my perspective.

Well one good example anyway.


----------



## Klogg (17 October 2012)

Tysonboss1 said:


> Yes, Benjamin Grahams " The intelligent Investor"




Get down to the good stuff and just read "Security Analysis". 

Although it should be said that the Intelligent Investor is good for the psychological aspect, whereas Security Analysis focuses on exactly that, the analysis.


----------



## Tysonboss1 (17 October 2012)

Klogg said:


> Get down to the good stuff and just read "Security Analysis".
> 
> Although it should be said that the Intelligent Investor is good for the psychological aspect, whereas Security Analysis focuses on exactly that, the analysis.




offcourse, But slap security analysis down infront of a begineer and before the table has stopped vibrating under it's weight they have probably already started saying " I'm not reading that" 

The intelligent investor is a good introduction to security analysis, I do recommend people read both though.


----------



## Julia (17 October 2012)

Or, oowl, you could save yourself all that tedious reading and crunching of figures and learn something about trend following.


----------



## Tysonboss1 (17 October 2012)

Julia said:


> Or, oowl, you could save yourself all that tedious reading and crunching of figures and learn something about trend following.




Yes, why give yourself the self confidence to make wise business decisions when you can just follow the pack.

The reason, everybody these days is trying to second guess the pack. But relying on sound business principles will lead you to better results, without the need to watch the market every day clicking the refresh button.

At the end of the day, If you find learning about different companies tedious and cruching the figures to much work perhaps your in the wrong business or perhaps just lazy.

p.s
Love you Jewels,

We can disagree. :


----------



## oowl (17 October 2012)

Julia said:


> Or, oowl, you could save yourself all that tedious reading and crunching of figures and learn something about trend following.




How would you suggest I get started?


----------



## Tysonboss1 (17 October 2012)

oowl said:


> How would you suggest I get started?




there we go 

and the kid takes the path the promises returns without the work.

He wants to have businessman profits with out becoming a business man, Good luck kid  

See you in 10 years after all else has failed and you relise that,

Investing is most intelligent when it is most business like.

Cheers
TB


----------



## Tysonboss1 (17 October 2012)

just incase you change your mind here is a link to 24 videos you might want to listen to.


----------



## Julia (17 October 2012)

Tysonboss1 said:


> p.s
> Love you Jewels,
> 
> We can disagree. :



Of course we can.  
PS I knew I'd spur a response from you if I raised any alternative to the fundamental approach.
Blame Ves.  It was he who pointed out that my approach differs when applied to real estate or to shares.



oowl said:


> How would you suggest I get started?



Buy a now quite old but still very good book by Stan Weinstein "How to Profit in Bull and Bear Markets".


----------



## Out Too Soon (18 October 2012)

Sorry to have mis-led you oowl, we should know by now that the only true religion is Fundamentalism, bible= The Intelligent Investor & Messiah Warren Buffet. Now that has been cleared up go make some solid investments in some solid co's & wait 50 years. You'll be superior to everyone else because you'll be safe in the knowledge that you'll be one of the richest men in the world (in 50 years time) & you can spend all your spare time (over the next 50 years) pestering Traders about how they're all totally wrong & you're Investment strategy is sooo brilliant. You'll especially have fun starting pointless arguments on newbie threads because we know the more newbies you convert to your religion the more likely you are to go to Billionaire heaven & sit on Warrens lap. :


----------



## Out Too Soon (18 October 2012)

oowl said:


> How would you suggest I get started?




Psst! download "Ãncredible Charts" as I already mentioned, top left hand corner is a magnifying glass, click on it- DYOR (do your own research) on what to put in the screener/scanner as everyones angle is different. (don't tell the fundy I told you, I'll be burnt at the stake) :


----------



## craft (18 October 2012)

Out Too Soon said:


> Sorry to have mis-led you oowl, we should know by now that the only true religion is Fundamentalism, bible= The Intelligent Investor & Messiah Warren Buffet. Now that has been cleared up go make some solid investments in some solid co's & wait 50 years. You'll be superior to everyone else because you'll be safe in the knowledge that you'll be one of the richest men in the world (in 50 years time) & you can spend all your spare time (over the next 50 years) pestering Traders about how they're all totally wrong & you're Investment strategy is sooo brilliant. You'll especially have fun starting pointless arguments on newbie threads because we know the more newbies you convert to your religion the more likely you are to go to Billionaire heaven & sit on Warrens lap. :


----------



## Trembling Hand (18 October 2012)

Tysonboss1 said:


> there we go
> 
> and the kid takes the path the promises returns without the work.
> 
> ...




What a magnificently uninformed post. Ironic from someone who is advocating research.

:bad:


----------



## Boggo (18 October 2012)

Out Too Soon said:


> Sorry to have mis-led you oowl, we should know by now that the only true religion is Fundamentalism, bible= The Intelligent Investor & Messiah Warren Buffet. Now that has been cleared up go make some solid investments in some solid co's & wait 50 years. You'll be superior to everyone else because you'll be safe in the knowledge that you'll be one of the richest men in the world (in 50 years time) & you can spend all your spare time (over the next 50 years) pestering Traders about how they're all totally wrong & you're Investment strategy is sooo brilliant. You'll especially have fun starting pointless arguments on newbie threads because we know the more newbies you convert to your religion the more likely you are to go to Billionaire heaven & sit on Warrens lap. :




Spot on Out Too Soon.

Unless you are Buffet or Munger or you are going to buy a company and restructure it with your own management or you are going to buy enough of a company that you are going to get a place on the board then all of the material relating to them is just nice touchy feely bedtime reading.
Here is a Buffet business quote from 1987_ "I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive. And there's fantastic brand loyalty."_

The reality of making money consistently in a calculated and controlled manner is a whole different situation for any individual such as you or me.
You need to be able to think for yourself and not be dependant on company reports (based on what happened in the previous 6 or 12 months) and be able to see through all of that for yourself.

A chart of any market, index or stock is the reality at any point in time, it is either going up, down or sideways.
It is a constant barometer of any company and their performance.

I am not saying that a fundamental approach does not work, it is just a very long winded and dependant on others way of doing things.
Look at the TGA thread, Pioupiou has done a great job there based on fundamentals but any average technical trader can be just as successful without ever having to get bogged down in all the reports and figures but more importantly is the technical advantage of recognising at a much earlier stage when it is time to get out and stand aside.

The real advantage of the technical approach is that it tells you when things are not well, way ahead of the company report dependant being told that there is an issue pending.
If I had time I could probably list a dozen stocks where the charts were issuing a warning way before the reality statements hit the great unwashed. Yes, I have been there and been a victim (believer) on more than one occasion over the last 17 years of being in the markets.

TRADE WITH YOUR EYES - NOT WITH YOUR HEART !

I am not going to enter into further discussion on this subject as the arguments just go round in circles, I have been where you are now oowl, I have been dependant on others at my expense and I work harder at making money now that I did years ago but the harder I work the luckier I get.

If you are not willing to work hard initially at learning a technique that works for you then just hand your money over to some financial institution and let them read the reports and quote the figures for you.

An example of this fundamental approach is in the table below that relates to BBG, have a quick look at the chart of BBG !
There has not been less than six fundamental based "HOLD" recommendations on this stock during its continued decline over the last 12 months, great approach to "investing", different story if you want to actually make money.


----------



## Julia (18 October 2012)

Trembling Hand said:


> What a magnificently uninformed post. Ironic from someone who is advocating research.
> 
> :bad:



To be fair, that post was completely out of character for Tysonboss.


----------



## artist (18 October 2012)

Boggo said:


> Spot on Out Too Soon.
> 
> Unless you are Buffet or Munger . .




29.9.2012 article from The Economist: "The secrets of Buffett’s success"

http://www.economist.com/node/21563735?fsrc=scn/tw/te/pe/secretofbuffettssuccess 

"These two factors”” . . . ””pretty much explain all of Mr Buffett’s superior returns, the authors find. Of course, that is quite a different thing from saying that such a long-term performance could be easily replicated."


----------



## Out Too Soon (18 October 2012)

There's nothing wrong with Fundamentals except the blinkered Fundamentalists.: 
   I just got ticked off when Guppys Trading Tactics was called rubbish ---"Are there any other books besides < Deleted because it's rubbish> that you'd recommend?"--- 
 We're trying to help with a broad view here & I have found Trading Tactics in particular to be a little gem. 
 There are 100 different approaches to the sharemarket if we find the perfect one we'll probably be too busy spending all the cash to mention it here


----------



## oowl (19 October 2012)

Thank you to those who have already contributed. I've learned a lot, so far 

So perhaps another direction for this thread to go in, in the hopes of it remaining an education resource for other people like myself... this is the beginner's lounge, after all.


Is there any 'percentage' of a stock increasing in value that is your measure of when to 'sell', or when you would deem it as a 'successful' buy? Or do you judge it on a case by case basis? What percentage of return do you hope for, that makes you choose shares as your investment platform?


----------



## robusta (19 October 2012)

C'mon, I know I have been guilty of being sucked into this argument in the past but do we really have to go into this again. No matter what camp you are in why don't you concentrate on your own process and just maybe take some superior returns for yourself.


----------



## oowl (19 October 2012)

Just because I enquire how to do something, that doesn't mean I'm going for it. I'm all about getting the most information I can, about everything, and forming my own opinion/direction from there.

I'm also female. Just to clear that up.




Tysonboss1 said:


> there we go
> 
> and the kid takes the path the promises returns without the work.
> 
> ...


----------



## Trembling Hand (19 October 2012)

oowl said:


> Is there any 'percentage' of a stock increasing in value that is your measure of when to 'sell', or when you would deem it as a 'successful' buy? Or do you judge it on a case by case basis? What percentage of return do you hope for, that makes you choose shares as your investment platform?




Thats a guess along the lines of how long is a piece of string. We all have vastly different methods. No one size fits all or is the "right way". There is no one theory or method that "works" all the time. I'm afraid the best way is just more education.

That way as you gain a broad based knowledge you will be drawn to what method suits you and be able to come back here and rubbish all the other methods because you cannot see how they work or why anyone would waste their time on them.


----------



## burglar (19 October 2012)

oowl said:


> ...
> Is there any 'percentage' of a stock increasing in value that is your measure of when to 'sell', or when you would deem it as a 'successful' buy? Or do you judge it on a case by case basis? What percentage of return do you hope for, that makes you choose shares as your investment platform?




There is so much info already here. 
Because there are two diametrically opposed camps 
(carnivores and herbivores) 
much is lost in contradictory views.

But I'll have a go!
I wrote this 12 years ago.
Ten most important things about owning shares!
Then I placed it where I could revisit it.
You can do this too!


> 1. Never borrow money to trade.
> Did it once.
> The broker made money.
> The taxman made money.
> ...


----------



## gav (20 October 2012)

Julia said:


> Or, oowl, you could save yourself all that tedious reading and crunching of figures and learn something about trend following.




Completely agree.



oowl said:


> How would you suggest I get started?




To learn the basics, I'd suggest reading "Trade Your Way To Financial Freedom" or "Trading For A Living", then read everything you can by Nick Radge and Michael Covel (his website has HEAPS of stuff).

There are many different approaches to trading/investing (as you can see by opinions in this thread), you just have to find a method that suits you.  For me, that's trend following.

Best of luck.


----------



## cynic (21 October 2012)

After having examined a broad (though not exhaustive) cross section of existing trading/investment philosophies and analytical techniques, I was able to identify the areas that I believed to be best suited to my objectives. Coupling this knowledge base with my own creativity I have tailored  a number of personal trading systems/techniques that enable me to navigate most market conditions within my comfort zone. Having said all that , I must confess that the proliferation of black swans during the past five years still gives rise to headaches.

In my earlier trading days I did experience modest successes trading a simple strategy where I entered and exited trades based upon technical analysis. The stocks included in my target list were chosen on the basis of their perception as being fundamentally sound. I've long since moved on from these early days and only mention them to highlight that fundamental and technical analysis needn't necessarily be treated as mutually exclusive approaches to trading. 



> Just remember, there's a right way and a wrong way to do everything and the wrong way is to keep trying to make everybody else do it the right way. ~M*A*S*H, Colonel Potter




One thing that threads on this forum often highlight is the propensity for humans to:

(i) subscribe to a particular belief system (i.e.  a religion), 
(ii) attempt to indoctrinate others into said religion (investment/trading philosophy)
(iii) dismiss all other religions as false (eg. rubbish their books/sacred doctrine).

Those whom are most passionate about professing their "religion" as being the one true faith (i.e. "though shalt worship no other god but <insert your personal investment guru/deity here>") are usually saying more about themselves and their personal insecurities (i.e. the more people whom embrace their religion the more confident they will feel about having chosen the right faith, but any proferred alternative is a threat to their convictions and must be condemned in order for the acolyte to maintain their personal illusion of security and self worth).  

One need only look to the most recent event approximating current market conditions (approximately 8 decades ago) to recognise the current risk level in trading fundamentals. Certain wizards/gurus did enjoy some success during the 7 decades between the end of the great depression and the onset of the GFC. The reason for this seems obvious - these years were amenable to the funda-"mental"-ist approach, however,  I personally believe that the associated risks with this style of investing greatly outweigh the potential rewards given the current economic climate. 

When considering the merits of any trading/investment style I prefer to have an understanding of how and why it works! The fiscal support that markets have been receiving via regular Government/central bank interventions may enable the funda-"mental"-ists to "get away with" their approach to trading for a time. Whilst these successes might be a comfort to the bank balance, they could hardly be considered to constitute validation for this trading style (eg. would the price of the stock have risen sans stimuls?).


----------



## burglar (21 October 2012)

cynic said:


> ...
> One thing that threads on this forum often highlight is the propensity for humans to:
> 
> (i) subscribe to a particular belief system (i.e.  a religion),
> ...



Hi cynic,

I loved your post. 
So true!


----------



## ROE (21 October 2012)

I found mostly it not really about the methods it about consistency.

Find your area of expertise, stick to it and broaden it...every method has its way of making money.


----------



## Ves (21 October 2012)

ROE said:


> I found mostly it not really about the methods it about consistency.
> 
> Find your area of expertise, stick to it and broaden it...every method has its way of making money.



+1


----------



## craft (22 October 2012)

Interesting post there cynic. Especially those last two paragraphs in light of the other points made





[for some reason I can't reply with quote to that post]


----------



## burglar (22 October 2012)

> Just remember, there's a right way and a wrong way to do everything and the wrong way is to keep trying to make everybody else do it the right way. ~M*A*S*H, Colonel Potter




Just love Col. Potter's witticisms!


----------



## Out Too Soon (22 October 2012)

Something else I consider & give a lot of weight to before buying or selling -  Buying & Selling depth, both no. of buyers vs sellers & no. of units on either side 

Yes love Cynics post, you asked for individuals processes not proof or arguments. We are all different using different techniques angles beliefs emotions etc.
  I'd love to see some more people open up more about their processes, it's all interesting & can be useful. 

PS: when to take a profit- hahahahaha, just before the price goes down... lol :
PPS:  both charting & buy sell depth can help with when to sell


----------



## cynic (22 October 2012)

craft said:


> Interesting post there cynic. Especially those last two paragraphs in light of the other points made
> 
> 
> 
> ...




Craft,

Yes! There is a glaring hypocrisy in my previous post! 

I simply couldn't resist the urge to give the pendulum a decent swing in the opposite direction after an earlier poster got up my nostrils by condemning the works of a popular author. 

I grant that I may have undermined my main point in doing so, but felt that it would be remiss for me not to highlight to newcomers that many of the successes claimed by the fundamental investors of yesteryear probably won't be replicable given the current economic climate. Having said that, I must also concede that many from the technical analysis camp are similarly challenged.

I'll probably make myself unpopular by saying this, but, I believe that technical analysis is, in truth, just another style of fundamental analysis! Like fundamental analysis, technical analysis also seeks to gauge the strength of a trading prospect via examination of data. The datasets employed may be different but the goal is still very much the same (i.e. to invest in more winners and weed out more of the losers.)


----------



## Ves (22 October 2012)

cynic said:


> I grant that I may have undermined my main point in doing so, but felt that it would be remiss for me not to highlight to newcomers *that many of the successes claimed by the fundamental investors of yesteryear probably won't be replicable given the current economic climate*. Having said that, I must also concede that many from the technical analysis camp are similarly challenged.



I would say for those with a longer time horizon, who have the patience and foresight to wait out any price volatility, and possess the knowledge to identify quality business assets, it has been very achievable in the last few years and will continue to be!.  High equity risk premiums effectively give investors more purchasing power for each dollar invested.  You may not see much movement in price multiples in the short (or even medium term) but in the longer term I think the results will speak for themselves. 

I would argue that the economy does not have to grow at a rapid pace for a quality business to increase its earnings (they can increase market share etc).


----------



## craft (22 October 2012)

cynic said:


> Craft,
> 
> Yes! There is a glaring hypocrisy in my previous post!
> 
> ...




Cynic

I’ll jump into the **** with you in saying there is absolutely no difference in what it takes to make fundamental or technical successful.

You have to be able to take on risk exposure when it’s priced in your favour.  TA does it by setting boundaries around how they will react to price action. FA does it by setting boundaries around how they will react to business performance. 

Once you have a sound basis for positive expectancy - the rest is process.  Both methods need the process to be business like or they will fail. 

I am probably thought of as against TA because I _now_ use FA and have countered some arguments against FA.  - But that’s not the case. 



> many of the successes claimed by the fundamental investors of yesteryear probably won't be replicable given the current economic climate




Since 2007 has been the best market for stock selection that I have encountered so far.


----------

