Contrarian Investment Journal

[SirRumpole]

Looking at my term deposit interest rates vanishing I'm looking to enter the market.

I don't want to be a micro trader, I just want a reliable dividend yield, and if a stock has that then it would probably capital appreciate as well, as long as the yield is sustainable.

I could Google a lot of things and probably will . I've got a sub to 'The Motely Fool' , but any other advice would be welcome before I bother my broker.

You may have guessed I haven't been a big player in the market so far.

 

[nioka]

Hi all,

I'm relatively new to this forum but after having a bit of a read through robusta's and KnowThePast's documented investment journeys, I have decided to start one of my very own. I am using a fairly simple systematic deep value investing strategy to find stocks trading at a significant discount to tangible book value. This portfolio will be long positions only with an emphasis on contrarian strategy and a 3-5 year holding period, but I will hold longer if and when it is required. Position sizing in the portfolio will be equal value for each purchase. No leverage. The number of positions in this portfolio will eventually vary from between 10-30.

Businesses need to meet the following criteria to be considered as a buy for the portfolio:

- Minimum $30 million dollar market capitalization
- No to low debt
- Reasonable current ratio
- Trading at least 1/3 below tangible book value per share (TBVPS)

It is also a bonus if the business is:

- Trading at or near a 52 week low. A low over a longer period is even better

Sell strategy:

- When a position has reached its TBVPS
- When TBVPS is less than what I originally paid for the stock
- When the current ratio falls below my chosen threshold
- When the debt/equity ratio rises above my chosen threshold

Each position in this portfolio will be bought solely based on balance sheet valuations. I don't think I have forgotten anything but if I have don't hesitate to ask, throw out a comment or some constructive criticism.

I will be documenting all my trades but due to the simplistic nature of this strategy there won't be too much reasoning behind each purchase, but I will try to give some insight.

With a plan like that don't give up your day job. AND don't invest more than you can afford to lose.

 

[So_Cynical]

Looking at my term deposit interest rates vanishing I'm looking to enter the market.

I don't want to be a micro trader, I just want a reliable dividend yield, and if a stock has that then it would probably capital appreciate as well, as long as the yield is sustainable.

Was going to suggest yield ETF's like YMAX, ETF, DIV and IHD - there are others.

Single stocks is another story.

 

[SirRumpole]

Was going to suggest yield ETF's like YMAX, ETF, DIV and IHD - there are others.

Single stocks is another story.

Thanks for the pointer to ETF's . I'll do some research on these.

 

[Wysiwyg]

I don't want to be a micro trader, I just want a reliable dividend yield, and if a stock has that then it would probably capital appreciate as well, as long as the yield is sustainable.

Switzer ASX listed managed fund looks like an interesting longer term investment with quarterly income. Don't think much of Boubouras (well on telly he puts a lot of spin on things but they all do at times) but regard Paul Rickard highly as having substantial market knowledge and integrity.

https://www.switzerassetmanagement....owth-fund-2/?gclid=CNaH8Yvu79ECFQ9wvAodVWEFbg

 

[Cam019]

Sold MML today (black arrow) for a loss of $168.07 (-31.13%) and here is the reason why:



So, it turns out that I bought MML (green arrow) as a down trending stock trading below the 30 day EMA and 50 day SMA. 3 months prior, the 15 day EMA crossed below its 30 day EMA (death cross) indicating a bearish signal. On Wednesday, we can also see a change in polarity. The previous support line was broken and has now become resistance and no telling how much further the price will fall. I did not have a trailing stop for this stock which is why I have lost over 30% of the original positions value (a steep but important learning curve about stop loss orders and money management).

Yes, yes, yes... I know this is all technical analysis, BUT have been doing a fair chunk of reading and have come to the conclusion that basing all my future buy and sell orders off technical analysis is going to be more beneficial towards turning a profit and protecting my capital (and profits) than buying and holding down trending stocks HOPING that they will one day eventually turn around. Plus, it turns out that I prefer analysing charts than reading annual reports!

 

[Cam019]

My trailing sell was executed today selling MCE at 0.500 for a profit of $93.03 (+17.23%).



Making a profit off this stock was all luck. I managed to buy this stock right before the 15 day EMA crossed above the 30 day EMA (golden cross) indicating a bullish signal and what turned out to be a short term up trend. Two days ago I triggered a volatility based trailing sell order (black line) which was executed today (black arrow). The trailing sell was: 0.575 - (4*ATR). I did also notice the Dojis late last week and into this week and had considered selling at about 0.56-0.57 but went with the trailing sell hoping that the upward trend would continue. No such luck.

 

[Cam019]

Monthly update:

Portfolio value -10.63%

 

[Cam019]

Bought 6000 of MAH @ 0.155

 

[Cam019]

Sold MAH @ 0.155 today for a loss of $39.90 (-4.11%).

Sold MDL @ 0.430 today for a loss of $27.99 (-5.18%).

 

[peter2]

Keep it coming Cam019. You're gaining experience in the market while you sort out your preferred trading style. I see you closed the MAH trade. Hope you learned to look at the recent news, especially when you see a price chart like MAH. A gap up followed by the same price traded over many days generally indicates a take-over offer.

You can be profitable trading moving average crossovers, but you have to learn how to do it.

 

[Cam019]

Thanks peter2, will definitely keep it coming.

 

[jjbinks]

hey cam nicework.
Just wondering what % profit per winning stock are you aiming for and what
just asking because with your current position size of $500 you have to make at least 4% to beat commission. Your strategy may work with bigger accounts but you may find that in your case commissions will make it very hard.
anyway thanks for posting.

 

[Cam019]

hey cam nicework.
Just wondering what % profit per winning stock are you aiming for and what
just asking because with your current position size of $500 you have to make at least 4% to beat commission. Your strategy may work with bigger accounts but you may find that in your case commissions will make it very hard.
anyway thanks for posting.

Hey jjbinks,

Thank you and thanks for the question. I don't currently have a minimum profit percentage that I aim for. Actually, with a $500 position size I need to make a minimum of 7.98% in order to break even. $19.95 to purchase the position and $19.95 when it is sold. To be honest, I hadn't even considered this when I bought the first three positions with a value investing focus. Since making the transition to technical analysis the disadvantage I was placing myself in, has become apparent.

 

[jjbinks]

the two things which may help is
1)time frame - its obviously easier to make higher %profit if you hold a growing stock for longer

2)lower brokerage
-i know this sounds obvious but easy to forget
-it can be a pain to set up with a new broker. I also use comsec for shares so can't advise you about this but I think there are a few threads which may help you find a slightly cheaper broker. If not I'm sure other members can point you in the right direction. From what I'm aware Interactive broker tend to be the cheapest.

 

[Cam019]

Back at university now which is currently taking up a lot of my time. The only trade for March was MAH. On a break from uni for about 2 weeks as of now. Hopefully some opportunities present themselves over the coming weeks and I can partake in some trading!

Monthly update (end of March):

 

[Cam019]

Trading update: New trade

PRL: Bought 52,631 @ 0.037 (green line) today after a breakout on Friday. iSL 0.028 (red line). Up bar today on extreme volume with some supply entering. Nothing alarming, currently.

 

[Cam019]

Sell trigger update:

PRL: raised sell trigger to TS <= 0.038 (break even).

 

[Cam019]

Trading update:

Sold PRL @ 0.042 today for profit of $223.25 (+11.23%).
Yesterdays high was tested today and unable to be held. I sold out around lunchtime due to the increasing amount of supply entering that was unable to be absorbed by demand.

 

[Cam019]

Trading update:

Bought OIL @ 0.125 yesterday preempting the close above 0.12, iSL @ 0.115. It wasn't to be with a closing price yesterday of 0.115. I sold my position this morning @ 0.115.