My Investment Journey

[Sir Osisofliver]

Hi KTP,

Thought I would pop in and say G'day and have a chat about how things are going. I see from your last post that you are doing all right...good to know.

Ok so I also thought I would take this opportunity to talk about CAB. *Disclaimer* I currently hold CAB* I wrote the below on the 31st of July last year for you...

I'm not wanting to sound critical here, just trying to demonstrate the differences in how people (and therefore the market) think, using myself in the role as a commentator/analyser on the stocks you've selected as "good" companies. So far you've indicated that you have purchased CAB, SDL and LYL. Ok let's take a look at one of them and I'll choose CAB because it was the first you purchased and you mention it below. (I haven't looked at CAB for a while - so this should be interesting). This is the normal process I go through, (and for this example will be somewhat superficial - I just want to tell you what I'm thinking)... NOTE - I DO NOT HOLD CAB. THIS IS NOT ADVICE...DON"T MAKE ME GET THE DISCLAIMERS OUT. I MEAN IT. DYOR.

CAB - Mcap 523M 120 Million shares on issue Average of broker consensus - Sell recommendation price target $4.49 current price $4.43 (Ok so with that MCAP the stock is well outside the top end of the market. As such in terms of how I would categorize the stock it does not meet my criteria for a "Blue Chip" portfolio. (It does meet a couple of the requirements, but it fails for me to class it as blue chip {and therefore be prepared to hold the stock on a longer-term - across market cycles - basis}). It would therefore fit into one of the other categories I use to determine the appropriate time to invest in the this type of stock. Income, Growth, Cyclical or Defensive. These are dominant categories - frequently stocks possess attributes across categories. Looking at the stock it would appear to have income characteristics (nominally due to the high payout ratio), but have significant growth/cyclical characteristics. It's greatest optimal entry for a capital growth objective (as opposed to an income objective) would therefore tend to occur in a late cycle of the broader market cycle. Prior to late cycle it would be suitable as a trading position. Are you intending to hold this for yield or growth?

Earnings 0.48
Market 0.98
Sector 0.68

Actual NPAT fall in 2012 Forecast NPAT fall in 2013 2014 Ouch! errr that's not attractive, that's catching a falling sword. There would need to be a significant announcement on the 22nd of August when it releases it's Prelim Report. Taking a look at those numbers immediately turns me off the stock and makes me wonder if there is a short position to be had at the end of August depending upon the prelim report.... we'll see.

Top five shareholders hold 48.94% of issued capital Hey that's not half bad...hope none of them pull the pin. In fact I think I might see if any of them have been adjusting their holdings (Looking for either an overhang or predatory behaviour)... Hmm So UBS Australia has been been selling down but UBS London have been buying up as has Aberdeen (based in Singapore) in the last few months....in fact hold about 14% of issued capital... I see them doing this for yield in comparison to yields in their home countries - confirmation of the income characteristics I spoke above.

Hmmm ok so a purchase now would seem to be a contrary to popular opinion but overall Institutions seem keen under an income basis to acquire. On one hand you have an obvious headwind in the short term time-frame you are working against. On the other hand the Insto's tend to be sticky holders and 14% holding isn't insignificant). But I do want to ask.....how does the above match up with...

My bolds.

It would seem that the market, superficially at least, does not agree with your assessment. But, this is the art of stock selection, finding good companies that are sold well below their intrinsic value, and then allowing the market time to recognize the intrinsic value. I would have said that (without doing any TA) that you were early in your purchase if your objective is capital growth, as an upwards trend of sentiment does not yet exist, but that early signs are there for the possibility, but it may be six to 12 months away. I would start looking at the announcements from here on looking for fundamental stability and news flow. It is at this point I would normally go do TA to see if the tech and fund align or if I just got it wrong - but you aren't interested in that. (One quick look tells me that the stock has been neutrally trending since 2009 and in a negative trend since May 2012.....a period of time where the market went from 4088 to +5000... It's trending against the market). Given that you have said that you are benchmarking against the index....How do you feel about that? (given that expectation is fundamental to financial risk).

Cheers
Sir O

The bit I would like to focus on is in the last paragraph that I highlighted in bold. You're now up...about $0.90 or 23.82% on your original purchase, but take a look at the chart below...



Ok so I was two weeks out and it started it's capital growth in Mid July...

So as I usually do...it's question time!

I didn't hold for almost a year..a year in which I was able to find other stocks, for Eg I'm on record as holding JBH during that period of time and getting a ~20% price movement before exit in November. Does this help explain why previously I have said that I attempt to time my entries and exits?

At various points in the first quarter you were positive and negative on the stock. How did you feel about this?

You've also said....

I also think you misunderstand my approach - it is not buy and hold forever. I will sell things on a regular basis and I have clear price targets + trigger points when I will do so. I also do use position sizing and timed entries.

So what's the thinking with CAB at the present time? What do you think will happen to the share price in...the immediate term and the longer term?

What caused the price movement?

Here's a longer term look at the price chart...



Have you decided upon a profit target?

That's all for now, I'll come visit again and check out your responses.

Cheers

Sir O

 

[KnowThePast]

Sold all of my CAB, 500 @ $5.39, for a profit of 36% ($753).

Sir O posted the question at a very convenient time, I can explain my reason for selling and answer his post in one go.

Hi KTP,

Thought I would pop in and say G'day and have a chat about how things are going. I see from your last post that you are doing all right...good to know.

Ok so I also thought I would take this opportunity to talk about CAB. *Disclaimer* I currently hold CAB* I wrote the below on the 31st of July last year for you...



The bit I would like to focus on is in the last paragraph that I highlighted in bold. You're now up...about $0.90 or 23.82% on your original purchase, but take a look at the chart below...

View attachment 59111

Ok so I was two weeks out and it started it's capital growth in Mid July...

So as I usually do...it's question time!

I didn't hold for almost a year..a year in which I was able to find other stocks, for Eg I'm on record as holding JBH during that period of time and getting a ~20% price movement before exit in November. Does this help explain why previously I have said that I attempt to time my entries and exits?

At various points in the first quarter you were positive and negative on the stock. How did you feel about this?

You've also said....

So what's the thinking with CAB at the present time? What do you think will happen to the share price in...the immediate term and the longer term?

What caused the price movement?

Here's a longer term look at the price chart...

View attachment 59113

Have you decided upon a profit target?

That's all for now, I'll come visit again and check out your responses.

Cheers

Sir O

Looking back, your prediction of when the price may go up was spot on, incredibly so.

My previous attempts to time entries and exits have conclusively proven that I have absolutely no ability to do so. My current reluctance to venture into it is not because I think it is not possible, quite the contrary. Rather, it is because doing so will often, if not most of the time, be at exact contradition to my current strategy. There may be a perfectly good way of combining fundamental and technical, but I don't see how my strategy would fit. As my strategy is essentially to buy beaten down stocks that are mostly on the way down, it will not be often that technical analysts will agree with my decisions. I would say that lots of fundamentally oriented investors will not agree with me either.

I make zero effort in trying to predict what will happen with the price. I buy when the price is substantially below my valuation and leave it at that. Along the way, I usually collect better than average dividends (6.5% with CAB). I find this method to be more effective in protecting against losses. There's some studies that show this, looking at my current portfolio - I only have 2 stocks out of 22 that fell more than 3%. Both of these, incidently, were my early purchases when I didn't yet buy solely on statistical cheapness (LYL and CKL).

CAB has been a stranger in my portfolio. Together with my other early purchases, it didn't quite fit my statistical portfolio, although it wasn't far off. So, in a way, I was eager to get rid of it, if the opportunity presented itself.

While most of my buy decisions are now automated, I do usually need to make a choice between several opportunities. That is mainly a limitation of my once a month rule, I am not yet convinced this adds value. Neverthless, one of the things I consider is a catalyst that could either improve businesss performance, or change perception of the company. No matter how undervalued a company may be, the price usually does not increase until something happens. CAB has been strange in that respect, I cannot see any reason why the price started to move. The report was pretty much was expected, no other news of any significance. So, my opinion on it now is no different to what it was a year ago.

I have an automated price target for all my shares, but that is when I think the company is grossly overvalued. Usually, I will manually evaluate it and decide whether it makes sense to sell now. With CAB, I think it is still trading at a very reasonable valuation and is a good investment case even at the current prices. But, I think I see better opportunities elsewhere.

 

[galumay]

Sold all of my CAB, 500 @ $5.39, for a profit of 36% ($753).

.... With CAB, I think it is still trading at a very reasonable valuation and is a good investment case even at the current prices. But, I think I see better opportunities elsewhere.

Considered selling CAB myself, i am up about 40% on paper also. After consideration I decided to hold on, like you I think they are still reasonably priced. I dont need the capital for other opportunities so less incentive to sell for me!

I suspect the reason they have recovered so well is that the updated financials show the impact of the legislative changes have been less than expected - and certainly less that the repricing implied. Hence the price is realigning with our valuation.

I am happy to pick up the very handy yield and see where the SP goes over the medium term.

 

[Sir Osisofliver]

Sold all of my CAB, 500 @ $5.39, for a profit of 36% ($753).

Sir O posted the question at a very convenient time, I can explain my reason for selling and answer his post in one go.



Looking back, your prediction of when the price may go up was spot on, incredibly so.

My previous attempts to time entries and exits have conclusively proven that I have absolutely no ability to do so. My current reluctance to venture into it is not because I think it is not possible, quite the contrary. Rather, it is because doing so will often, if not most of the time, be at exact contradition to my current strategy. There may be a perfectly good way of combining fundamental and technical, but I don't see how my strategy would fit. As my strategy is essentially to buy beaten down stocks that are mostly on the way down, it will not be often that technical analysts will agree with my decisions. I would say that lots of fundamentally oriented investors will not agree with me either.

I make zero effort in trying to predict what will happen with the price. I buy when the price is substantially below my valuation and leave it at that. Along the way, I usually collect better than average dividends (6.5% with CAB). I find this method to be more effective in protecting against losses. There's some studies that show this, looking at my current portfolio - I only have 2 stocks out of 22 that fell more than 3%. Both of these, incidently, were my early purchases when I didn't yet buy solely on statistical cheapness (LYL and CKL).

CAB has been a stranger in my portfolio. Together with my other early purchases, it didn't quite fit my statistical portfolio, although it wasn't far off. So, in a way, I was eager to get rid of it, if the opportunity presented itself.

Interesting. You're essentially using a strong dividend yield to cushion potential downside risk until capital movement is in your favour.

Another question. What now for CAB? When will you look at it again?

While most of my buy decisions are now automated, I do usually need to make a choice between several opportunities. That is mainly a limitation of my once a month rule, I am not yet convinced this adds value. Neverthless, one of the things I consider is a catalyst that could either improve businesss performance, or change perception of the company. No matter how undervalued a company may be, the price usually does not increase until something happens. CAB has been strange in that respect, I cannot see any reason why the price started to move. The report was pretty much was expected, no other news of any significance. So, my opinion on it now is no different to what it was a year ago.

Everything has a reason. Sometimes we can only see that reason in hindsight, which is why evaluation is important after the fact. I encourage you to revisit CAB in six months time to see if you can figure that out.

I have an automated price target for all my shares, but that is when I think the company is grossly overvalued. Usually, I will manually evaluate it and decide whether it makes sense to sell now. With CAB, I think it is still trading at a very reasonable valuation and is a good investment case even at the current prices. But, I think I see better opportunities elsewhere.

Another question. How will you feel in six months time if CAB was trading at $8 ish dollars?

 

[KnowThePast]

Interesting. You're essentially using a strong dividend yield to cushion potential downside risk until capital movement is in your favour.

Actually, not really. It's just that the type of shares that I buy tend to produce better dividend yield historically. It is not intentional. The part that protects from the downside is buying companies that are at the bottom value-wise, compared to the rest of the market.

Another question. What now for CAB? When will you look at it again?

The two big questions are how the company will be affected by change in regulations and change in competitive landscape by Uber and the like. These, I think, will take years to play out and I don't have strong views on these. I think there's a better than 50% chance that CAB will remain the dominant player and its profitability will be not much different from what it is now. In addition to that, add the bus segment which is unaffected by these issues, and I get a valuation well above current market price. But I am fully aware that there's also fully aware of the risk that CAB may no longer remain a dominant player, and there's all the scenarios in between.

When will I look at again?
1. When price drops.
2. When there are changes that cause a change in my valuation.
3. Perhaps even at the current price, again, should there no longer be other opportunities.

Another question. How will you feel in six months time if CAB was trading at $8 ish dollars?

I'd feel perfectly fine. I think that one of the biggest benefits of running an automated strategy like mine is that buy and sell prices are not manual decision. Furthermore, my strategy is essentially buying beaten down companies and waiting for them to revert to mean. After that, it's someone else's journey.

It is impossible to ignore just how right you were with timing on CAB. And so, I would really appreciate if you could share your thoughts on it as well?

 

[KnowThePast]

Considered selling CAB myself, i am up about 40% on paper also. After consideration I decided to hold on, like you I think they are still reasonably priced. I dont need the capital for other opportunities so less incentive to sell for me!

I suspect the reason they have recovered so well is that the updated financials show the impact of the legislative changes have been less than expected - and certainly less that the repricing implied. Hence the price is realigning with our valuation.

I am happy to pick up the very handy yield and see where the SP goes over the medium term.

Hi galumay,

You will most likely be proven right, in my opinion.

For me, chance of further price appreciation in the future is well above 50%.

I am selling because (discount to valuation) X (chance of it happening) is not as attractive as some other opportunities I see. But it's mainly because the discount on other opportunities is a lot greater, the chances are a lot worse. So I am well aware of the fact that this decision will probably look stupid in the future.

I think it fits a lot better to your strategy than mine, I wish you well.

 

[Sir Osisofliver]

The two big questions are how the company will be affected by change in regulations and change in competitive landscape by Uber and the like. These, I think, will take years to play out and I don't have strong views on these. I think there's a better than 50% chance that CAB will remain the dominant player and its profitability will be not much different from what it is now. In addition to that, add the bus segment which is unaffected by these issues, and I get a valuation well above current market price. But I am fully aware that there's also fully aware of the risk that CAB may no longer remain a dominant player, and there's all the scenarios in between.

When will I look at again?
1. When price drops.
2. When there are changes that cause a change in my valuation.
3. Perhaps even at the current price, again, should there no longer be other opportunities.

How much of a drop is required?
What if doesn't drop the required amount?

I'd feel perfectly fine. I think that one of the biggest benefits of running an automated strategy like mine is that buy and sell prices are not manual decision. Furthermore, my strategy is essentially buying beaten down companies and waiting for them to revert to mean. After that, it's someone else's journey.

This is a great attitude to have (in my view). Many of the mistakes of new investors/traders is to agonize over the decision process of when to buy and sell, when is the right time to take profit.... But you did say this...

So I am well aware of the fact that this decision will probably look stupid in the future.

There is no stupid. You booked a nice profit on a stock that was in line with your chosen methodology. Congratulations, you made money...put it in the winning pile, put money aside to pay the tax man for your diligent effort....and at an appropriate time in the future evaluate the trade against against your expectations and methodology in the absence of emotive factors. Only by doing the right evaluation will you get better.

It is impossible to ignore just how right you were with timing on CAB. And so, I would really appreciate if you could share your thoughts on it as well?

*Disclaimer I hold CAB. The following is NOT advice, DYOR
At the time we were discussing it I did not hold CAB. Currently I do. Although I may not for too much longer. I also need to be careful because I am a Licencee Representative and I am not comfortable in giving an opinion that may be construed as advice. That said I am happy to give you my thoughts at this time. This will be technical in nature, you already have a good handle on the fundamental issues. Much of this will be beyond you if something interests you, please ask.

Background
I entered on the 4th of July at $4.1457 for 18,000 units, in accordance with a positional sizing model I use. At that time my target from a technical perspective was $4.50, the point of significant horizontal resistance. This is not a take profit level, merely where I anticipated that the stock would find some price resistance. (You'll notice that I'm being flexible here, waiting for an emergent pattern). When I say emergent I am talking about...this.



When the share price found support against what was resistance and continued its impulsive move up I placed a secondary target at $5.41 (Share reached $5.40 yesterday). Once again this is not a take profit level, but an area of potential price resistance. (Still flexible). However, the share price is exhibiting an unsustainable compounding curve. (This is a function of a chaotic growth model and hence the emergent pattern is revealed over a short-term time frame.) Why is the short-term important? Chaotic models show in micro what they exhibit in macro...IE there is now the potential for the stock to exhibit over the longer-term time frame an upwardly compounding price movement. I estimate at this time a three to four year horizon for this compound structure to play out. (If you would like to see what that might look like....there's one in the CAB chart already, the move from 2003 to 2007). If this is accurate..then the price target over that time frame would closer to ~$14.00 (lets look back at this in three-four years and see if I got close )

In the immediate term however I still have a short-term unsustainable compound curve...meaning that I anticipate a retracement or consolidation in the share price...but only in the short-term. I am therefore faced with a choice. I can take my profit now and then attempt to purchase once again at the bottom of the retracement level, or I can anticipate a retracement will occur, set an appropriate stop level and look to see whether the longer-term emergent pattern is revealed.

Question Which would you do?

Cheers

Sir O

 

[KnowThePast]

How much of a drop is required?
What if doesn't drop the required amount?

The latest report didn't change my valuation of CAB, so my buying point remains roughly the same. Whether I buy it or not again, if it drops, will mainly depend on other opportunities available that compete for a spot in my portfolio.

This is a great attitude to have (in my view). Many of the mistakes of new investors/traders is to agonize over the decision process of when to buy and sell, when is the right time to take profit.... But you did say this...


There is no stupid. You booked a nice profit on a stock that was in line with your chosen methodology. Congratulations, you made money...put it in the winning pile, put money aside to pay the tax man for your diligent effort....and at an appropriate time in the future evaluate the trade against against your expectations and methodology in the absence of emotive factors. Only by doing the right evaluation will you get better.

*Disclaimer I hold CAB. The following is NOT advice, DYOR
At the time we were discussing it I did not hold CAB. Currently I do. Although I may not for too much longer. I also need to be careful because I am a Licencee Representative and I am not comfortable in giving an opinion that may be construed as advice. That said I am happy to give you my thoughts at this time. This will be technical in nature, you already have a good handle on the fundamental issues. Much of this will be beyond you if something interests you, please ask.

Background
I entered on the 4th of July at $4.1457 for 18,000 units, in accordance with a positional sizing model I use. At that time my target from a technical perspective was $4.50, the point of significant horizontal resistance. This is not a take profit level, merely where I anticipated that the stock would find some price resistance. (You'll notice that I'm being flexible here, waiting for an emergent pattern). When I say emergent I am talking about...this.

View attachment 59189

When the share price found support against what was resistance and continued its impulsive move up I placed a secondary target at $5.41 (Share reached $5.40 yesterday). Once again this is not a take profit level, but an area of potential price resistance. (Still flexible). However, the share price is exhibiting an unsustainable compounding curve. (This is a function of a chaotic growth model and hence the emergent pattern is revealed over a short-term time frame.) Why is the short-term important? Chaotic models show in micro what they exhibit in macro...IE there is now the potential for the stock to exhibit over the longer-term time frame an upwardly compounding price movement. I estimate at this time a three to four year horizon for this compound structure to play out. (If you would like to see what that might look like....there's one in the CAB chart already, the move from 2003 to 2007). If this is accurate..then the price target over that time frame would closer to ~$14.00 (lets look back at this in three-four years and see if I got close )

In the immediate term however I still have a short-term unsustainable compound curve...meaning that I anticipate a retracement or consolidation in the share price...but only in the short-term. I am therefore faced with a choice. I can take my profit now and then attempt to purchase once again at the bottom of the retracement level, or I can anticipate a retracement will occur, set an appropriate stop level and look to see whether the longer-term emergent pattern is revealed.

Question Which would you do?

Cheers

Sir O

Thanks Sir O, for the kind words, and a detailed explanation of your trade.

Fundamentally, I do not see how CAB could be worth anywhere near $14 in the next few years. But it certainly could get halfway there.

What I would do would depend on position sizing. If it's a small position, I would leave it until it fully plays out. For a larger position size, I would sell half, or keep a tight stop loss on that half.

 

[KnowThePast]

A monthly update:



It's been a very good reporting season for me, with most of my companies announcing a better than expected result. My portfolio has increase in value by $1,264 (4.3%) for the month of August. For the first 2 months of the year, profit was almost 19%. Based on latest dividends announced, my portfolio now yields over 5.5% in dividends based on my purchase price.

Despite the good result, I think the improvement in fundamentals has been greater than the rise in share price. I've sold CAB, but for most others, I still consider them to be significantly underpriced.

This has been a very pleasant first year's reporting period for me, but with my average holding period expected to be around 3 years, these are still early days.

 

[KnowThePast]

New purchase - TCN, 15302 @ $0.083

A small group that owns three software companies. I like the fact that all of them are in small niches. There's no expectation that they will make it big, but they all have potential to achieve excellent returns in their markets.

These niche markets, while small, still have potential for products achieving 10's of millions in sales, rather than current millions.

Similar to my purchase in ICS, this is a punt on future growth. It does, however, fit into the statistical filters in my software, so this one is an automated trade for me.

 

[KnowThePast]

Monthly update.

My portfolio fell $1,692 (5.8%) this month, about the same as XAO. No major news in any of my holdings.

 

[KnowThePast]

Bought ARI, 3600 @ $0.355.

I then looked at financials and outlook, it looks pretty horrible.

 

[galumay]

Bought ARI, 3600 @ $0.355.

I then looked at financials and outlook, it looks pretty horrible.

LOL! Very candid ARI. I am sure we have all done it at some point! I rushed in and filled my bags about a week early with a range of companies on my watch list - the only consolation i have is that i had looked at the financials first!!

EDIT - Sheesh! Just had a look at ARI, thats scary! I never touch resource companies for a start, but not much is pretty in there! Lets hope its a successful contrarian play for you KTP!

To add some further thoughts, it is a good illustration of why mining companies are so dangerous for investors, reading their annual report everything looks pretty rosy, they have had a good year with record profit, but the drop in iron ore prices has now basically wiped out everything, looks like there will be no dividend next year EPS slashed, cash flow will take a massive hit, and then the nexus of cyclic commodity prices and high debt will combine to wreak havoc.

 

[skc]

Bought ARI, 3600 @ $0.355.

I then looked at financials and outlook, it looks pretty horrible.

I am assuming that you are looking at the financials post the mega capital raising?

The outlook is horrible, but the balance sheet is somewhat repaired.

 

[KnowThePast]

I should of put of smiley at the end of my last post, my attempts at humor are sometimes too subtle, in addition to not being very funny.

I did actually spend some time researching the company, even though the purchase was primarily motivated by a statistical filter. More and more, I come to the conclusion that I should invest with eyes closed, when it comes to individual picks. My brain power needs to mainly come in at portfolio level, keeping an eye on diversification, cycles, etc. But as far as individual picks now, I just buy what comes up in my scan. At roughly 4% per stock, bought gradually over a long period of time, a bad stock here and there is not going to hurt me much.

The research that I do on the stocks I buy are mainly for my own curiosity.

LOL! Very candid ARI. I am sure we have all done it at some point! I rushed in and filled my bags about a week early with a range of companies on my watch list - the only consolation i have is that i had looked at the financials first!!

EDIT - Sheesh! Just had a look at ARI, thats scary! I never touch resource companies for a start, but not much is pretty in there! Lets hope its a successful contrarian play for you KTP!

To add some further thoughts, it is a good illustration of why mining companies are so dangerous for investors, reading their annual report everything looks pretty rosy, they have had a good year with record profit, but the drop in iron ore prices has now basically wiped out everything, looks like there will be no dividend next year EPS slashed, cash flow will take a massive hit, and then the nexus of cyclic commodity prices and high debt will combine to wreak havoc.

Generally agreed. But timing is important. When in the cycle you buy and most importantly, at what price, plays a larger role.

I am assuming that you are looking at the financials post the mega capital raising?

The outlook is horrible, but the balance sheet is somewhat repaired.

Yes, of course. Makes things slightly more complicated.

One of the few good things about share dilutions in these situations is that they dilute with cash

 

[galumay]

I should of put of smiley at the end of my last post, my attempts at humor are sometimes too subtle, in addition to not being very funny.

Too harsh! It was funny.

I did actually spend some time researching the company, even though the purchase was primarily motivated by a statistical filter. More and more, I come to the conclusion that I should invest with eyes closed, when it comes to individual picks. My brain power needs to mainly come in at portfolio level, keeping an eye on diversification, cycles, etc. But as far as individual picks now, I just buy what comes up in my scan. At roughly 4% per stock, bought gradually over a long period of time, a bad stock here and there is not going to hurt me much.

The research that I do on the stocks I buy are mainly for my own curiosity.

Interesting, i have gone more the other way! I am doing even more research on individual companies that make it into my watchlist (based on my filters). I also have much bigger position sizes - both in my investment and SMSF portfolios, so more exposed to a bad choice!

Generally agreed. But timing is important. When in the cycle you buy and most importantly, at what price, plays a larger role.

Its also a point of difference, of course I would like to pay as little as possible, but with my strategy it doesnt matter so much where we are in any given cycle, i am in for the long haul and as long as my research is up to scratch and the companies i buy into are good enough I will ride out the cycles of the market in the long run.

Its so valuable to see your documentation of your investment strategy and your reasoning, its very helpful and makes me - and I am sure others, question their own strategies and think about why we do what we do. I dont update my thread much now because I am fully invested and wont be selling anything anytime soon so its a bit boring!

 

[KnowThePast]

Too harsh! It was funny.



Interesting, i have gone more the other way! I am doing even more research on individual companies that make it into my watchlist (based on my filters). I also have much bigger position sizes - both in my investment and SMSF portfolios, so more exposed to a bad choice!



Its also a point of difference, of course I would like to pay as little as possible, but with my strategy it doesnt matter so much where we are in any given cycle, i am in for the long haul and as long as my research is up to scratch and the companies i buy into are good enough I will ride out the cycles of the market in the long run.

Its so valuable to see your documentation of your investment strategy and your reasoning, its very helpful and makes me - and I am sure others, question their own strategies and think about why we do what we do. I dont update my thread much now because I am fully invested and wont be selling anything anytime soon so its a bit boring!

Thanks galumay,

Something everyone says too often is that one needs to find an approach that works for you. But despite being overused, it is an important concept. While there may be a perfect strategy, the one that will work best is one that you are happy following. Without enjoyment of either the process or results, there will be no success.

I do not see myself becoming rich due to my share investments, although I hope it will help. At some point I realized that enjoying the process should be my number one priority. Everything else will fall into place at some point.

Documenting my progress in this thread has been invaluable. My brain does not seem to work to full capacity until I either write things down or discuss them with someone. Feedback on this forum has been of great value, but just writing things down activates some brain cells that would not have otherwise.

Looking back at what I've written a year ago, my approach has significantly changed. But having it written down refreshes my mind on reasoning that prompted me to change, which has been very important as well.

 

[galumay]

Looking back at what I've written a year ago, my approach has significantly changed. But having it written down refreshes my mind on reasoning that prompted me to change, which has been very important as well.

Very good point, I find the same thing with my notes on my own strategy, i keep a document that is a record of my reasons for purchasing shares in each company, with regular updates about the performance of the company. I also keep a running commentary on my overall strategy, no doubt I also find that writing stuff down really helps with clarity and reassessment.

I also use it to go back and apply new learning, so the stuff I am learning about cash flow in another thread, I am taking back into my journal of strategy and checking against each company.

ASF is such a valuable resource for learning and sharing, we are very lucky!

 

[KnowThePast]

Another 2 purchases today. With some spare money from CAB purchase, the market in a decline, and very few opportunities remaining in my filters, I decided to abandon my once a month rule and fill up.

Once I'm full, I would imagine a reduced activity on my portfolio, unless the market is "kind" enough to continue going down. While it is not pleasant seeing my portfolio reduce in value, having almost 50% of funds in cash makes it as much of an opportunity as a cost. Once I buy the remaining few, I will still have 30-40% in cash waiting for furher opportunities.

NWH went ex-div today, giving me a very nice, 5 cent dividend, but the price dropped even further. So, I've topped up by 1650 share @ $0.755. My average purchase price for the lot is now $0.88.


I've also bought CLT, 6720 @ $0.19.

Looking past the illiquid horror that it currently is, there is actually a business model that could result in a fantastic economy of scale if it ever grows to that point. Mind you, this is not my reason for investment here, merely an observation.

 

[skc]

I've also bought CLT, 6720 @ $0.19.

Looking past the illiquid horror that it currently is, there is actually a business model that could result in a fantastic economy of scale if it ever grows to that point. Mind you, this is not my reason for investment here, merely an observation.

Can you elaborate on this purchase a bit more? How does it meet your criteria?