A beginner's possible portfolio

[CanOz]

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.

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

 

[Wysiwyg]

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.

 

[chops_a_must]

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.

 

[honey85]

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.

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!

 

[mazzatelli1000]

Re: A beginners possible portfolio

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)

 

[Trembling Hand]

Re: A beginners possible portfolio

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".

 

[Gerkin]

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

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.

 

[prawn_86]

Re: a beginners possible portfolio

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.

 

[Cartman]

Re: A beginners possible portfolio

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

 

[skc]

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.

 

[kam75]

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.

 

[Cartman]

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.

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 !!

 

[theasxgorilla]

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.

 

[Julia]

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?

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.

 

[Cartman]

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?

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

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.

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

 

[Stormin_Norman]

rule one:

trend is your friend.

look at a graph of what youre being recommended.

 

[Julia]

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?

 

[Stormin_Norman]

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.

 

[Cartman]

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

 

[Stormin_Norman]

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.