My 1st day trading on the ASX!

[matty77]

Its just so easy?

 

[5oclock]

Investors in once market darling ABC Learning and a few others, now defunct, who followed this advice didn't do too well.

+1 Very good advice JULIA ,surprising how quickly we forget about the ABCs

 

[CanOz]

Sort of gets back to that low beta point in the article that Joules posted.

If you're going to be a value investor....and you've got the stomach for it.

CanOz

 

[nulla nulla]

Hi Wilto, welcome to ASF. i was having a good read so thought i would put my 2cents worth in.
If your shares drop 10-20% thats the time to be buying more not selling. I like dollar cost averaging with my shares as long as he company has good figures and potential to perform in the future.
Its very hard to be buying more shares when your portfolio is crumbling but should pay off long term.
cheers

I tried that in the first half of 2008. Stopped when the shares kept going down. The bounce never came and I wrote off 50% of my holdings accumulated over the previous 5 years. Stop losses are essential.

 

[Klogg]

I tried that in the first half of 2008. Stopped when the shares kept going down. The bounce never came and I wrote off 50% of my holdings accumulated over the previous 5 years. Stop losses are essential.

True - depending on your approach to making money from the market.

If you're trend trading or something similar (of which I know next to nothing about), then you definitely want a stop-loss. If you're value-investing, the theory is you buy more when it drops.

To be honest though, I'm not sure what the original poster's approach is.

 

[CanOz]

If you're value-investing, the theory is you buy more when it drops.

Is that the definition of value investing?

 

[McLovin]

Is that the definition of value investing?

The definition isn't to buy when something falls just because it has fallen but if you have invested in it on a value basis, then yes, you should buy more when the price drops. I don't think the OP is doing that though.

 

[burglar]

I've always thought that if the price drops you review your position.
If the fundamentals are unchanged you MIGHT wish to add.

Don't know about others but I never seem to have enough cash to add to my positions.
Especially since 2010 when I toasted my portfolio by averaging down on three bad boys.

Averaging down works until it doesn't work.

 

[So_Cynical]

+1 Very good advice JULIA ,surprising how quickly we forget about the ABCs

That's probably because they are out numbered by stocks that don't fall over...ratio what 50 to 1? or more given a 5 year time frame. :dunno:

Averaging down works until it doesn't work.

True but in my experience it works more often than it doesn't and the profits from the times it works are greater than the losses from when it doesn't...so i keep doing it with limits and rules, its part of my overall strategy.

I achieved 101 closed trades today...so feeling cocky.
~

 

[ROE]

+1 Very good advice JULIA ,surprising how quickly we forget about the ABCs

if you follow the same principles for other 20 stocks you probably come out ahead

same deal with TLS people bitch how bad the investment is, and again if you follow the same principle
buy every single government asset sale you make your money many times over and cover for dozen of TLS stuffed up.

hell CBA alone covers 10 times TLS stuffed up

 

[Julia]

True but in my experience it works more often than it doesn't and the profits from the times it works are greater than the losses from when it doesn't

That sounds like your own anecdotal experience rather than a substantiated strategy.

...so i keep doing it with limits and rules, its part of my overall strategy.

Fine. You have been doing what you do for a pretty long time now and no doubt have developed limitations that work for you.
That's very different from anyone recommending such a blanket strategy to people who are very clearly inexperienced.

Still hoping for an answer to McLovin's query to either the OP or Mr Wilson (sorry, forget which now) re why they bought the shares they did.

 

[So_Cynical]

That sounds like your own anecdotal experience rather than a substantiated strategy.

Substantiated in this forum, 4000 posts with at least 3000 of them in stock threads where my entry's and exits are there for all to see.

 

[Julia]

Substantiated in this forum, 4000 posts with at least 3000 of them in stock threads where my entry's and exits are there for all to see.

Perhaps I expressed myself badly. I was trying to suggest that your use of what you have found works for you is quite different from a similar principle used by someone without your experience.

 

[So_Cynical]

Perhaps I expressed myself badly. I was trying to suggest that your use of what you have found works for you is quite different from a similar principle used by someone without your experience.

Yes for sure....like everything one does in the share market or even life in general, its best to go forward with a plan that works, rules and some discipline....wilto is clearly winging it.

 

[yshima]

market was up 40+ points yesterday and hit a 14 month high today so a few hundred up on a $55k portfolio is rather disappointing?

 

[wilto]

market was up 40+ points yesterday and hit a 14 month high today so a few hundred up on a $55k portfolio is rather disappointing?

 

[CanOz]

Lol, my kinda platform....where can I get one of those lol!

 

[wilto]

Sounds reasonable for a long term investor. The hardest thing for most investors/traders is to take a loss when things aren't working, and to hold onto your winners. Most people will bank their winning trades too early (desperate to grab hold of the cash as soon as it appears) and hold the losers/laggards too long (hoping for a recovery that rarely happens).

As I said, I use some stats and system design myself (because I find it fun more than anything else), but I am continually struck by people I meet who have a very simple approach and who do well out of the market. It is possible for example, to read the Fin Review once a week, get some ideas, place your trades with a full service broker for $70(!) and come out way ahead of the curve over the long term.

There's only one meaningful stat: Are you consistently making money? Day one, you're up, day two you're probably up also. So far so good.

There are some guys who know their "stochastic alpha, beta, rho's" and also make money... like say skc for example. But that's not the only way. My main reason for posting is to say - you're winning now, so don't get distracted or start changing things because someone thinks you're not doing it right.

Thanks, Gringotts Bank, Constructive comments I will take on board

 

[tinhat]

Hi Wilto

I'm not sure what your strategy is other than "have a go" and I commend you for taking an active interest in your super. I "inherited" the task of managing a SMSF about three years ago and didn't have a clue what I was doing (still don't to a large degree). Had never owned a share directly before then. I did something similar to you in that I had a share portfolio in the SMSF that was just bleeding capital (AMP, MQG, PPT, SIP to name a few). I knew what I needed to sell but had no idea what to buy. I did something similar to you. I did some fundamental research on a list of companies both large and small cap and came up with what I thought was a balanced portfolio between income stocks and capital growth stocks (some alpha, some beta). Similar to you, once I worked out what I wanted to buy and worked out which companies represented value at their current prices, I went ahead and deployed my capital over a very brief period and thought I would just watch.

Since then, I have learnt a lot about buying with momentum. Even an active investor like myself can learn an enormous amount about how the market moves from reading the technical analysis of the much more frequent traders who post here. I've learnt that even if you believe wholeheartedly in the fundamentals of a stock and that it's current price represents good value, it will only do your head in to see that stock price fall lower and lower once you bought in. A lot of the time the price moves well before the news hits the analysts and the company updates the market on its outlook changing the fundamentals. Other times the fundamentals remain good but sentiment is against the stock. You hit a stop loss and walk away looking for opportunities elsewhere only to later on see that stock rise (classic examples for me are IIN, FLT, WEB, CSL - all hit stop losses and you subsequently doubt your judgement on the companies only to see them rally hard twelve or eighteen months later). Buying a stock against the momentum does your head in.

Never fall in love with a stock. Try and leave all emotion out of your decisions (very hard for me). Don't ride your losers down. It's very easy to take profit early and exit from losers too late.

Don't be in a rush to buy. You are going to miss most opportunities in the market because you already have your capital deployed, you don't notice them or you ignore them. There will always be opportunities to buy at some point in the future the market will be panicking and the news will be all doom and there will be days you can pick up a bargain.

Don't underestimate the value of dividends plus franking credits. I believe that a lot of the tech traders here have forgotten or never understood the power of compound interest. Franking credits supercharge dividends as an income stream, especially inside a low tax vehicle such as superannuation. Income in your fund will be charged 15% income tax, so for any company which pays a 100% (fully franked) dividend, you divide that amount by 0.85 to gross up the dividend to include the franking credit. Because you are forced to reinvest your dividend income inside the super the dividends only compound over time. Some examples of good dividend payers (yields as at today's close) assuming 100% franking ad a 15% tax rate:

NAB net 6.9%, gross 8.1%
TLS net 7.1%, gross 8.4%
TTS net 8.19%, gross 9.6%
SND net 7.4%, gross 8.7%
FWD net 7.2%, gross 8.4%

Note - I am not saying anything about the strength of those companies - beware the dividend trap.

Let's assume you are 35 years old and don't intend to retire and draw super until you are 65 years old. Let's assume that the cost of living is going to rise by 4% per annum over that time. If your portfolio achieves a yield of 8% per annum over that period, the real purchasing value of your capital will have tripled over that period. In nominal terms the value of your capital will have risen nine-fold. Those figures only capitalise the dividend stream and don't include any actual appreciation in the share price over the at period.

I really use to think that technical analysis was just voodoo, but I'm starting to understand a lot about it and about trading rules and attitudes from what I have read in these forums. I still pick stocks based on fundamentals but am continuing to learn about momentum and timing.

Good luck.

 

[burglar]

... True but in my experience it works more often than it doesn't and the profits from the times it works are greater than the losses from when it doesn't...so i keep doing it with limits and rules, its part of my overall strategy.

Agree, but accidently slipped on a banana peel, not yet fully recovered.
And it's not so much the loss of seed capital that hurts, it's the time lost.

I achieved 101 closed trades today...so feeling cocky.
~

Congrats on reaching your milestone!