Stuck in a rut

[makybe04]

Hi everyone,

I've spent the last 18 months or so paper trading and dabbling in a few shares (I class myself as beginner). I've read a number of different books on the art of mastering the sharemarket and check in on the forum quite a bit! I use a mixture of TA and FA to select stocks although a lot of the time money prevents me from actually buying them since I'm a poor uni strudent

I guess the last couple of months, I feel like I know the basics of investing but want to take my knowledge to the next level. I was wondering if anyone could offer some advice on how to take it to the next level? and if they've found themselves in a similar position and what they did. At times I wish I had someone to mentor me and bounce ideas off.

Thanks in advance for any help.

 

[burglar]

... I was wondering if anyone could offer some advice on how to take it to the next level? ...

Hi makybe04,

Your previous posts suggest you are trading, yet here you're asking how to go to the next level? Which levels are you talking about?

 

[makybe04]

Hi makybe04,

Your previous posts suggest you are trading, yet here you're asking how to go to the next level? Which levels are you talking about?

Thanks for the reply burglar. I'm focusing on investing now. I guess what I'm seeking is how to develop from a beginner to intermediate. People continually say it's all about finding your own way, but I guess I'm just after a greater understanding and improving my profits. My results over the last 12 months have just out done the market and I have learnt a few valuable lessons.

At this stage, I practice Weinsteins charting method with some common sense FA.

Should I just continue to read as many books as I can about the sharemarket?

I'm sorry about this late night rant. I think it just boils down to me being a bit frustrated that I'm jogging on the spot at the moment.

 

[burglar]

... from a beginner to intermediate. ...

Late night rants are my speciality!

Warren Buffett says he don't know anyone who got rich on his seventh good idea

What he means by that, learn about six good companies. Learn a lot about six good companies.

I was so surprised cause I wasted ten years researching hundreds of companies.

there is 53 billion good reasons to:
Go to Youtube and search for Warren Buffett.
Be surprised how down-to-earth he is.

 

[suhm]

I just run my own thread to get some ideas about my trades. You could try that. Helps to articulate your reasoning for a trade.

 

[burglar]

... Should I just continue to read as many books as I can about the sharemarket? ...

If you feel they're doing you good and/or you enjoy reading (and not just filling your head) then go frit!

My last post did not mention which part of your dilemma I was addressing.
Obviously about learning and about (light) entertainment.
And an alternative to reading.

But mostly about effectiveness and efficiency.

Remember: effective is doing the right thing and
efficient means doing it right.

http://www.differencebetween.net/business/difference-between-efficiency-and-effectiveness/

 

[youngone]

Late night rants are my speciality!

Warren Buffett says he don't know anyone who got rich on his seventh good idea

What he means by that, learn about six good companies. Learn a lot about six good companies.

Hi Burglar

What things should i be looking at when researching the company. My main problem right now is that, I read up on the company, everything is good and the timing seems good. and then market goes on a roller coaster. Obviously, I am doing something wrong?

 

[kingcarmleo]

There is no secret mate, all you can do is get experience and have patience, despite what a lot of people say, those are probably the most important aspects of investment.

 

[ENP]

What things should i be looking at when researching the company. My main problem right now is that, I read up on the company, everything is good and the timing seems good. and then market goes on a roller coaster. Obviously, I am doing something wrong?

- Does it have a durable competitive advantage?
- Are it's earnings, sales, profits, showing a consistent improving trend?
- Has it paid dividends which are increasing each year over the past 10 years?
- Is it increasing it's return on equity or maintaining a high return on equity?
- Does it have comparatively low cost of sales, debt and advertising/R&D expenses compared to it's competitors?
- Does it have high gross margins and net profit margins?
- Will this company (in your opinion) be around in 10/20+ years time and (in your opinion) will it be a stronger company in 10/20 years?

- Is it at a suitable price?

Basically, you should be looking at its income statement, its equity statement and cashflow statement in the annual report.

There is no secret mate, all you can do is get experience and have patience, despite what a lot of people say, those are probably the most important aspects of investment.

Experience = trial and error with buying stocks then learning from your mistakes?

 

[makybe04]

Thanks for the help. Some really valuable points have been raised. At times I was trawling through the top 300 or so companies on the ASX looking for Weinstein signals to buy and then cross checking with solid fundamentals. I think my frustrations are much the same as youngone where everything looks great and then the market goes on rollercoaster ride denting my confidence a bit.

What I can take out from the replies, is to really focus on some sectors that interest me and I see doing well in the future. Research a handful of good companies instead of going through hundreds and then select stocks based more on fundamentals then I have in the past.

 

[mr. jeff]

Thanks for the help. Some really valuable points have been raised. At times I was trawling through the top 300 or so companies on the ASX looking for Weinstein signals to buy and then cross checking with solid fundamentals. I think my frustrations are much the same as youngone where everything looks great and then the market goes on rollercoaster ride denting my confidence a bit.

What I can take out from the replies, is to really focus on some sectors that interest me and I see doing well in the future. Research a handful of good companies instead of going through hundreds and then select stocks based more on fundamentals then I have in the past.

then buy that stock and watch it go through the floor. it will happen.
- make some rules and stick to them like sell points and places where you cash out.
- read the averaging down thread for an insight into emotions of trying not to sell losers too. be a good loser. (I am not being snide.)

 

[burglar]

... Obviously, I am doing something wrong?

I think you are misjudging the volatility of the market.

After a recommendation from Sir O, I am reading "THE (MIS)BEHAVIOR OF MARKETS" by Benoit B. Mandelbrot.
He proves financial markets are far riskier than has commonly been believed.

Just my opinion!

 

[tothemax6]

I would recommend you also learn some macroeconomics. Not only will it help protect you from investing at the wrong time, but it is arguably much more interesting than TA and FA if you have no money on the table.
Macroeconomics helps you decide not which stock to buy, but things like 'should I buy any stocks at the moment'. It includes understanding politics, the nature of different nations and states, the effects of different economic policies etc.

I think it also helps if you pick one stock, and watch it in particular for a while. Understand everything about the company, what its inputs and outputs are, what its financial position is, what currencies it is exposed to, what commodities it is sensitive to etc etc. Then watch how the stock price reacts to different news, different events, different market trends etc. This will help you understand stocks better overall.

 

[burglar]

So many here say, "You are wrong!"
"You are wrong!"

You are not wrong!

You have no control over the outcomes.

You could improve your picks.
You could improve your timing.

Or you could lower your expectation!!

 

[Julia]

You have no control over the outcomes.

Or you could lower your expectation!!

Well, if you really believe it's not possible to have control over outcomes, you will indeed need to lower your expectation.

 

[burglar]

Well, if you really believe it's not possible to have control over outcomes, you will indeed need to lower your expectation.

Hi Julia,

Why do I sense that you can control outcomes?!

 

[burglar]

Obviously, I am doing something wrong?

Julia,
Can you see that youngone has ended his statement with a question mark.

To me it suggests, he does not believe he is doing something wrong.
If youngone is trying to make large profits in a short time, I would suggest the market is a riskier place than we are led to believe. Hence I say his expectations may be too high.

Is that clearer than my previous poorly-worded post?

 

[Julia]

Julia,
Can you see that youngone has ended his statement with a question mark.

To me it suggests, he does not believe he is doing something wrong.

Perhaps youngone will clarify what he meant. I didn't take that sentence as an assertion that he thought he was doing nothing wrong at all.

If youngone is trying to make large profits in a short time, I would suggest the market is a riskier place than we are led to believe. Hence I say his expectations may be too high.

I understand what you were saying here. I was just taken aback by your suggestion that it's not possible to have control over outcomes.

 

[youngone]

Perhaps youngone will clarify what he meant. I didn't take that sentence as an assertion that he thought he was doing nothing wrong at all.

In response to my early post. It was a question of, "What am i doing wrong?"
on behalf of most newbie traders here, what are we doing wrong as a beginner in the share market.

 

[ENP]

"The market goes on a roller coaster"

and

"What am I doing wrong"

If you think you can control the ups and downs of the market then that is what you are doing wrong. Profit from volatility and folly rather than participate in it.