Australian (ASX) Stock Market Forum

Beginning an Investment Journey...

I'm sorry TH/SKC, but that is without doubt the worst piece of advice possible... not only would it be higher cost (mingling investment with mortgage would mean money going into that account would reduce the investment balance first reducing the tax claimable amount and therefore costing me more), but it would also be SIGNIFICANTLY higher risk.

If I did just use that 30k and didn't setup the line of credit - what happens if I were to both lose that 30k and also lose my job? If that were to happen then my house would most certainly be at risk. That 30k liquidity is the essential part of this strategy, it's the safety net, it allows for a good six months breathing space if the absolute worst was to happen... I would be completely insane to put that at risk.

Let me get this straight... I said risk $30k and it's the WORST piece of advice ever. You said risk $100K and it's a f-king plan?!

When I said "ditch the LOC" I meant do not use the total of $100k. I meant play with only the amount you've managed to save up.

Losing $30k under your LOC has basically the same financial consequence as losing $30k that is currently sitting in your offset / prepayment account. Your LOC is secured against your house, if you lose that money and your job and can't pay that back, you are just as screwed. The only difference is, if you are using the buffer $30k (as you call it) without the LOC, you will need to go to your bank and refinance and/or make your mortgage interest-only for a period when you are out of work.

Since you've already got the LOC set up, you've effectively pre refinanced and negotiated the interest-only deal. So by all means draw on the LOC for $30k play money... but not $70k+$30k.

As to interest being tax deductible... you just need to move any money from offset to pay off the mortgage, then redraw it out. The interest portion on the redraw is tax deductible AFAIK provided that you are using it for investment.
 
I'm sorry TH/SKC, but that is without doubt the worst piece of advice possible... not only would it be higher cost (mingling investment with mortgage would mean money going into that account would reduce the investment balance first reducing the tax claimable amount and therefore costing me more), but it would also be SIGNIFICANTLY higher risk.

If I did just use that 30k and didn't setup the line of credit - what happens if I were to both lose that 30k and also lose my job? If that were to happen then my house would most certainly be at risk. That 30k liquidity is the essential part of this strategy, it's the safety net, it allows for a good six months breathing space if the absolute worst was to happen... I would be completely insane to put that at risk.

Crazy! All you can see is tax deductions and potential gains. To me thats shows NO business sense.

Cannot wait till we see some of your FA.
 
surely there is merit in the idea of not staying invested in a share when sp dips significantly (even if the fundamentals are the same)? Assuming you're good enough of course, couldn't you sell out and then buy back in lower? Why wait till a purely fundamental change in the company if the share price is tanking anyway?

Yes simple just buy back in at a lower price..and if the price falls again take another 5% loss and buy again, and if the price falls again take another 5% loss and buy back in again, and if the price falls again take another 5% loss and buy back in again, and if the price falls again take another 5% loss and buy back in again. and if the price falls again take another 5% loss and buy back in again.


Your now down 25% (locked in losses) in the one stock and its fallen maybe 50% and your gona buy again? lol this has the makings of a brilliant plan. :D generally i wait for the stock to fall 20 or 30% before my first buy and then simply buy more at appropriate time/s on the way down...works 4 times outa 5 for me.

Taking a loss is losing money (locked in, gone, sayonara) now when trying to make money, losing money should be avoided at all costs.
 
All he need do is use a credit card.Just think of the interest deduction!

LOL - good call tech!

Honestly though, why would you invest money with an untested approach/skill set? You're essentially saying that you can beat an 8% (assumed interest rate) return without any experience - that's fairly strong statement to make. It's not impossible, just difficult.

If the opinions of some of the most credible people on this forum (tech/a, SKC, SC and TH) doesn't convince you, take Buffett's very simple view - "Leverage is the only way a smart guy can go broke"
 
Vader, it came to me in the dark of night (the big picture, that is).

STAY OUT OF THE MARKET!

What's the best case scenario for 12 months from now?

The most optimistic would say 10% higher. So you perform at your peak and get this 10%, but the 10% or so interest rate on your line of credit would account for most of that, plus another 2-3% dividend if you're lucky.

Best case scenario, you stand still. Compare. Put your case in most bank accounts and you're 5% ahead.

The most pessimistic scenario? There are those that say we will be below the March 2009 lows. Total crash and burn.

So the risk/reward ratio is just not there on the big picture. Can you find anyone predicting a 15-20% better market than today? That's the minimum you will need to make more money than just dumping your money in a high interest bearing account.

If the market takes out a low, then you will find more people saying it will be 15% better in 12 months. That's the time to dip in. But if it takes out a low, another low will be waiting, and another low.

The real nerve involved here is not to do with making decisions while in the market, it's sitting on the sidelines and witing for the whole world to say "The end is nigh" before putting your money in the market.

GOOD LUCK! Tell us how you go.
 
What an enlightening seven days you must have had.

You must be a journo.

I get what you do. It's logical to everyone that trades fundamentally.
I don't get why you or anyone else would trade that way.

Oh and a note to our friend on tax deductions.
Unless your making a profit you won't be able to claim a cent.
Profit first then claims for deductions.
You make a loss you wear it --- all of it.
 
You must be a journo.

I get what you do. It's logical to everyone that trades fundamentally.
I don't get why you or anyone else would trade that way.
.

I rarely trade. Doing so as a value investor is tough, very tough.
 
Yes simple just buy back in at a lower price..and if the price falls again take another 5% loss and buy again, and if the price falls again take another 5% loss and buy back in again, and if the price falls again take another 5% loss and buy back in again, and if the price falls again take another 5% loss and buy back in again. and if the price falls again take another 5% loss and buy back in again.


Your now down 25% (locked in losses) in the one stock and its fallen maybe 50% and your gona buy again? lol this has the makings of a brilliant plan. :D generally i wait for the stock to fall 20 or 30% before my first buy and then simply buy more at appropriate time/s on the way down...works 4 times outa 5 for me.

Taking a loss is losing money (locked in, gone, sayonara) now when trying to make money, losing money should be avoided at all costs.

That's the logical answer that was failing me :p Thanks!
 
Your now down 25% (locked in losses) in the one stock and its fallen maybe 50% and your gona buy again? lol this has the makings of a brilliant plan. generally i wait for the stock to fall 20 or 30% before my first buy and then simply buy more at appropriate time/s on the way down...works 4 times outa 5 for me.

So thats a better plan than the one above it.
Youll still buy as its falling but only after its fallen 20-30% from your initial decision to buy it???

So its $10
You wait patiently for it to be $7
Then you buy at "appropriate times" at $6 and $5
So now you have a stock which has dropped 50% and you have 3 positions averaged down to X depending on your position sizing.

Now let me guess.
Brilliantly you buy a small parcel for the first buy then bigger ones as you buy at lower and lower prices!!
A version of a Martingale betting system.
 
A version of a Martingale betting system.

That's exactly what it is. As well as:

-Limited risk of ruin because he uses position sizing, or divides his capital up.
-Probability of the price increases because of the perceived value from the FA
-If he makes a mistake and buys too high he just buys lower...chances are after 'three drives down', he's hit the bottom and his price realizes a profit on the way back up.
-this is speculation, pure and simple.:2twocents

It works until it doesn't:eek: Can't argue with that.

CanOz
 
I believe portfolio managers should weight the buy decision about 80% fundamental and only about 20% technical. But the sell decision should reverse the weights of the two inputs, 80% technical and only 20% fundamental.

The proven ability of stocks to discount changing fundamentals suggests that stocks will experience a downturn in price before the bad news “comes out”. Very small negative divergences from consensus expectations can often have a devastating effect of the stock price.


http://www.clayallen.com/TALTI.pdf


Motorway
 
I'm another newbie with delusions of granduer...


...Anyway, that's long enough for my first post I think - will add some more detail over the coming days.

Hi Vader,

The last 6 months or so will (no doubt) have provided a tumultuous introduction to trading the market/s. Would you care to share your experiences?

Did market trading and behaviour prove to be just like you thought it would be?

If not, what aspects were different from expected?
 
So thats a better plan than the one above it.
Youll still buy as its falling but only after its fallen 20-30% from your initial decision to buy it???

So its $10
You wait patiently for it to be $7
Then you buy at "appropriate times" at $6 and $5
So now you have a stock which has dropped 50% and you have 3 positions averaged down to X depending on your position sizing.

Now let me guess.
Brilliantly you buy a small parcel for the first buy then bigger ones as you buy at lower and lower prices!!
A version of a Martingale betting system.

I somehow missed this piece of tech brilliance months ago :rolleyes: funny cos if i did have a start out small and average bigger plan (Martingale) it would of worked brilliantly, of the top of my head i reckon with keeping the same exit points my profits would of maybe doubled with my losses being only a little larger.....tech's a genius.
 
Hi Vader,

The last 6 months or so will (no doubt) have provided a tumultuous introduction to trading the market/s. Would you care to share your experiences?

Did market trading and behaviour prove to be just like you thought it would be?

If not, what aspects were different from expected?

I haven't been on the forums that much lately, so missed this thread popping back up, but you're right - it's been about 6 months now, so well past time for a little update.

Cutting right to the chase - as of today I'm down a little under 2% (taking into account all dividends received and all interest charged)... not exactly fantastic, I've certainly made some mistakes, but it's been an interesting period. I've learnt a lot and managed to have a few good wins in amongst it all, so am by no means disillusioned about anything and from all warnings the initial 'learing period' hasn't been too costly (at least not yet).

Have I stuck to what I thought would be my initial plan during this six months? Absolutely not. My approach has changed a couple of times as events unfolded and I've taken notice of what's happened, I acknowledge that I'm still not completely there.

So let's start with the mistakes shall we?

One of the first companies I bought was CSR. After lots of reading, I formed a conclusion that they had plenty of cash and were ready to take advantage of the housing market when it eventually starts to track upwards (I felt that the building industry couldn't get much lower, so just about anything is up from here)... I bought in at $1.52 and almost immediately saw it drop into the $1.30's... some panic started to creep in and I sold out after about a month at $1.38. In hind sight... I'd purchased them for a long term reason and sold back after some (further) short term drop - I was spooked by the continuation of the downward trend and wasn't confident enough in my initial appraisal to back myself.

Today, CSR are at $1.89 and while anything can still obviously happen, they've been performing really well over the past couple of months... I'll probably have another look at them in the near future, they still may be worth buying, but I'll need to get past a psychological hurdle of them being my first realised loss.

Another mistake I made was with CCC, a small coal company in South Africa that were expanding their operations with a new mine due to start production in September... I bought in at 10c, kept watching the train wreck for far too long and eventually sold out at 6c (they are currently 4.2c). Not only did I hold them too long, but the more experience I got watching their share price educated me that I really shouldn't have bought them in the first place. A dropping share price is one thing, but CCC seem to have a history of continually sliding on what on the face of it seems to be relatively good news and expectation. They keep failing to deliver despite promising much - this also isn't helped by having nearly 500m shares on issue that trade extremely fast... maybe there is money to be made there one day, but it's definitely not a 'beginner friendly' stock and has now got big red lines through it for me never to invest in again.

...this now brings me to SDM - it's too early to tell if they are a mistake or not, although the fact that I have ridden them down so far doesn't exactly look good. SDM are a top quality mining contractor IMO - yes, they are under pressure with the issues suffering the mining industry, but they seem to have take a way bigger hit than they should have. Their main saving points IMO is that they've got a management team who have hit a number of home runs in the past several years and they have no net debt and $69m in additional funds to see them through.

I bought them at an average price of $1.375, sold off a third of my holdings at $1.07 as I wasn't comfortable with the weighting they had in my overall portfolio (about 15% of my funds at the time). The share price currently sits at $0.88. From a total portfolio perspective they represent a loss of approx. 6% at their current price, so have had a major bearing on my overall results. I'm not prepared to admit defeat on them yet though - I do believe they are a quality company and will be a good long term investment. The sliding share price is softened a little by the good dividend yield they pay (and their strong cash position should help maintain that too), but I'm going to be faced with a decision soon as to whether I average down again, now they've really dropped off in the last couple of weeks or just sit back and ride it out (I'm pretty sure somewhere early on in this thread I said I definitely wouldn't average down, lol... having a high opinion of the company, offset by no net debt and a good dividend seems to have changed my mind though... whether for better or worse I guess we'll find out in the next 12 months or so)

So what have been the wins then?

Well, the first ever shares I bought were in CSE. To cut a long story short, they own 11m shares in SYR who found a lot of graphite and have had a nice run over the last 6 months or so... I didn't get on the early big multi-bagger action, but the CSE share price is obviously tied very closely to SYR who have been bouncing around between $2.30 and $2.90 pretty consistently every couple of months. After watching the cycle through a couple of these bounces, I finally figured out that these are a good candidate for some short-term trading. I've bought and sold them a couple of times now (current round bought at 17.5c and sold off half last week at 20.5c - holding the other half to see what SYR does, hasn't crashed back to $2.30 yet, but hasn't closed above $3 either - which will be a telling factor I reckon... see, getting some technical analysis in there, lol)... end result, up over $3,000 ($1,000 unrealised) on CSE so far... having lots of fun ;)

Next up is OKN. As mentioned on their company thread, I work for these guys, bought in at an average price of $1.10 and was targeting $1.30-$1.50 over the next 12 months. They ended up jumping pretty quickly to high $1.40's and I sold off the majority of my shares at $1.37 before offloading the remaining ones at $1.22 last week on the announcement that the ACT office is struggling with a slowdown of federal spending and earnings are likely to be impacted. I don't think it'll be that long before positive news starts to flow again (probably not before at least February though as the Christmas period is typically really slow), so am planning on buying these back once the price drops back down below $1.10 again (shouldn't be too long, and will represent a good dividend yield there too).

A few others that have done really well...

GXL - Purchased at $2.36, sold half at $2.88, have watched them continue to climb to $3.20

CZZ - Purchased at $2.03, current price $2.20

YTC - (small holding) Purchased at $0.24, sold most at $0.305, bought some back at $0.23, currently at $0.28 (another fun little one)

...and finally, one that I'm hoping will be a star in the making:

HDG - Coal explorer in Botswana... sitting on a huge resource on what I think is pretty high quality, near surface coal. Recently completed a measured JORC resource, doing a feasibility study and looking to bring on a partner to help setup a little power station that will help fund future expansion. Currently taking up a fairly high weighting in my portfolio, and I bought in at an average of 13c (currently at 12c), but they just released a research report they commissioned (so take with several large grains of salt, but I agree with most of it - available from their website), that rates them as a speculative buy and gives a 12 month target price of 58c... let's just say if it gets anywhere near that I'll be laughing :)

Anyway - so what is the #1 thing I've learned over the last six months?

Don't rush out and buy because you think you'll get left behind when the price rockets up (usually on the back of some good news coming out)... it's possible that you might, but more likely that you'll get another chance fairly soon anyway... unless it was realy, really good news in which case you're probably already too late to benefit from it anyway.

...I've fallen for that trap a couple of times (CCC was one example, but there have been a couple of other less disasterous ones).

Thanks for reading... I'll probably do another update in another six months (hopefully SDM and HDG are in really nice positions by then, lol), but given the prior speed this thread took off at I doubt I'll stoke the fires much more than that as it was just starting to derail and wasn't helping anyone :)
 
Thanks for the update Vader. I'm delightfully surprised by how much you've achieved and how well you've fared thus far.

As for the less than 2%, If it's any consolation to you, I made some "courageous" decisions during my first year of trading. I managed to burn approximately 75% of my trading capital before recognising my misconceptions. Subsequent revisions of my approach enabled me to recover much (but not quite all) of the lost capital during the following years. The rally started to spook me during the latter part of 2004 so I decided that it was time to unwind my share positions and shift my focus to derivatives instead. As it turned out I exited much sooner than necessary only to observe the continuation of a bull market that would almost certainly have rewarded my strategy.(Aahhh the wonders of hindsight!).

I look forward to your updates and hope that whatever learning experiences you may encounter as you continue with your endeavours, that none are as financially and emotionally taxing as my own have been.
 
I haven't been on the forums that much lately, so missed this thread popping back up, but you're right - it's been about 6 months now, so well past time for a little update.


So let's start with the mistakes shall we?

One of the first companies I bought was CSR. After lots of reading, I formed a conclusion that they had plenty of cash and were ready to take advantage of the housing market when it eventually starts to track upwards (I felt that the building industry couldn't get much lower, so just about anything is up from here)... I bought in at $1.52 and almost immediately saw it drop into the $1.30's... some panic started to creep in and I sold out after about a month at $1.38. In hind sight... I'd purchased them for a long term reason and sold back after some (further) short term drop - I was spooked by the continuation of the downward trend and wasn't confident enough in my initial appraisal to back myself.

Today, CSR are at $1.89 and while anything can still obviously happen, they've been performing really well over the past couple of months.

And that's why i average down at the appropriate intervals...stocks with good financials and sound businesses will carry on, the SP will inevitably go up and down and that has to be planned for...selling for a short term loss when investing for the long term is so so often the wrong decision.
 
And that's why i average down at the appropriate intervals...stocks with good financials and sound businesses will carry on, the SP will inevitably go up and down and that has to be planned for...selling for a short term loss when investing for the long term is so so often the wrong decision.

You are having a lend surely ?

From here...
https://www.aussiestockforums.com/forums/showthread.php?t=13513&p=688246&viewfull=1#post688246
I entered HHL late last week @ 3.99 ~ my second entry, this time at a price significantly lower than last time....no big deal as the shares im holding from my first entry are 60% free carried anyway and the yield is still ok even with the reduced dividend.
 

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You should know better Boggo...having a lend no..the post you quoted is from 3rd-March-2012 come back and see me in march 2013 and march 2014 and we will have a discussion about my stock picking and timing ability's. :)

---

Why not quote my posts from the BLD thread..how about this post from June 2012 https://www.aussiestockforums.com/forums/showthread.php?t=1918&page=3&p=711748&viewfull=1#post711748

Or this from the BPT thread also from June 2012
https://www.aussiestockforums.com/forums/showthread.php?t=299&page=33&p=709337&viewfull=1#post709337

Or this from the KSC Thread in May 2012
https://www.aussiestockforums.com/f...t=16132&page=2&p=701637&viewfull=1#post701637

Or this from the SND thread on the 12th of May this year
https://www.aussiestockforums.com/forums/showthread.php?t=17700&p=703417&viewfull=1#post703417

All winners.

HHL is one of the 7 stocks that has gone against me this financial year...not one of the 18 that has gone my way. :)
 


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