Australian (ASX) Stock Market Forum

NAB - National Australia Bank

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Re: NAB?

Jet,
Welcome to the game... ;-)
If only we all knew when a stock reaches its bottom. Now consider this:

- Do you plan to buy this stock for a quick profit or do you actually buy it because you belive that it is good value and will return to higher levels within the amount of time that you are planning to hold it?

If you are clear about what you want from a stock, then you don't have to know if it's going further down or up on Monday. You can make your decision based on your principles.

EG: You are looking for a good investment to hold for a long term. Maybe you are looking for a stock to add to your permanent portfolio? In this case NAB is a buy. If it goes down another 50 cents on Monday is not really of your concern. You know that you bought it at a good price, below the market value. It will reward you with a nice gain. Not next week but on the long run.

Looking for a quick money riser? NAB is not going to do it for you. It may bounce back next week, maybe even $1 but that would hardly provide you with enough profit to make it worth while.

Think about what you want from your investment before you try to buy something.

Not trying to teach you. Just thought I'd give you an idea.

Cheers

Stefan
 
Re: NAB?

Replied in blue
rd=1;num=1089844635;start=15#23 date=07/23/04 at 20:06:05]Jet,
Welcome to the game... ;-)
Thank you for your welcome
If only we all knew when a stock reaches its bottom.
I agreed that no one will know when a stock reach it bottom and I am not trying to buy a stock at it bottom either.
Now consider this:

- Do you plan to buy this stock for a quick profit or do you actually buy it because you belive that it is good value and will return to higher levels within the amount of time that you are planning to hold it?
If I buy the stock then I will try to hold it for 2 to 3 months or maybe even shorter time frame depending how the stock react to the market. If the stock react badly in the market why would you want to hold it. If I buy the stock I will definately have my exit strategy in place.

If you are clear about what you want from a stock, then you don't have to know if it's going further down or up on Monday. You can make your decision based on your principles.
At the moment the stock does not provide any indication whether it's going up or down, therefore I rather wait to see the indication from technical analysis point of view.

EG: You are looking for a good investment to hold for a long term. Maybe you are looking for a stock to add to your permanent portfolio? In this case NAB is a buy. If it goes down another 50 cents on Monday is not really of your concern.
I believe it is my concern because if it does go down an other $0.50 which I am buying the stock $0.50 cheaper. isn't it what you want? to buy the stock cheaper.

You know that you bought it at a good price, below the market value. It will reward you with a nice gain. Not next week but on the long run.
Yes you can say that I buy it at a good price, but if you buy it cheaper than you should you buy it at a much better price.

Looking for a quick money riser? NAB is not going to do it for you. It may bounce back next week,  maybe even $1 but that would hardly provide you with enough profit to make it worth while.
If it bounce back $1 then it is a pure provide, eventhough it is not enough profit, but it's still a profit. The point is the entry signal is important to me, may be it's not important to you.

Think about what you want from your investment before you try to buy something.
I know exactly what I want from my investment and that is to have a strategy in place in which to generate profit. Without provide there is no point of investing.

Not trying to teach you. Just thought I'd give you an idea.
I thank you very much for your help and much appreciated. It's good to see other point of view. I don't know how much experience you got in share investing/trading, but your points has been taking into consideration.
Cheers

Stefan
Click to expand...
 
Re: NAB?

If I buy the stock then I will try to hold it for 2 to 3 months or maybe even shorter time frame depending how the stock react to the market. If the stock react badly in the market why would you want to hold it. If I buy the stock I will definately have my exit strategy in place.

That's what I said. It depends on what your trading strategy is. If you plan to hold NAB for a year, there is no point in trying to gain another 50cents. The profit will be big enough in 12 months, regardless if you buy it at 26.80 or 26.30.

At the moment the stock does not provide any indication whether it's going up or down, therefore I rather wait to see the indication from technical analysis point of view.

If a stock is not following a normal trading pattern due to bad news, then there is no chart in the world that will tell you when it will go up or down. By the time your chart is telling you that it is going up, it has already done so and even a 10 year old can tell you then that it's now moving up.

I believe it is my concern because if it does go down an other $0.50 which I am buying the stock $0.50 cheaper. isn't it what you want? to buy the stock cheaper.

Not really. See my statement above. It all depends on what you want from your stock.

Yes you can say that I buy it at a good price, but if you buy it cheaper than you should you buy it at a much better price.

No. Again, see my statement further up.

If it bounce back $1 then it is a pure provide, eventhough it is not enough profit, but it's still a profit. The point is the entry signal is important to me, may be it's not important to you. I know exactly what I want from my investment and that is to have a strategy in place in which to generate profit. Without provide there is no point of investing.

I don't think you know what I'm talking about when I say trading strategy. It's not a strategy to generate a profit. That's actually more of a goal than a strategy.

Lets look at what you just said. If it bounces back $1, then it is a profit. How can say that?

Assuming you buy 100 NAB at 26.30, right at its bottom, before it starts going up $1. This will set you back $2630 + $20 broker fee. (Maybe your fee is higher or slightly lower, but that's not going to change my point.)

Now you sell 100 NAB at 27.30. This will return you $2730 - $20 broker fee. Your initial profit BEFORE Tax is a staggering $60. Depending on your other income, your tax rate would most likely be at leat 30%. Your profit is now $42 after tax or 1.6% of your initial investment.

If you spent more than 30 minutes on analysing and research for NAB, then your profit isn't worth it.

There is a fine line between a real profit that will take you somewhere at the end of the year, or having done 100s of trades all returning small gains that finally don't add up.

Let's do one more thing:

I buy 100 NAB at 26:90. You wait because you think it goes down further. It just so happens that you're right. So you finally buy 100 NAB at 26.30.

Now NAB starts going down further and because of your exit strategy, you sell at $26. You just made a loss:
you paid $2630, sold for 2600 plus fees = $70 loss.

I have done nothing with my shares because I believe it is undervalued and will be worth more in 12 months.

Now NAB starts going up again and you quickly enter it again to profit from its rise. So you buy 100 NAB at 26.05. After 3 months you decide to sell because you made a profit. You sell at 27.05, making $100 minus fees = $60.

NAB goes down again and you decide to buy it once more. You buy 100 NAB at $26.50. It goes up and after 3 months you sell with another win of $1/share making $60 again.

This time NAB is finally moving higher and you decide to buy it anyway, because it could go much higher now that bad news are long gone.

You buy 100 NAB at $28 and hold it until it reaches $30. You sell, happy to have made a nice profit.

Now lets look at the figures:

Over all you have made:
1 loss of $70
2 profits of $60
1 profit of $160
= profit of $210.

I have sold my 100 NAB at the same time as you for $30.
My figures are a bit different:

1 profit of $320 - $40 fees = $280.

In other words, you have worked 4 times harder than me, watching the market, getting nervous every time NAB goes up or down while I have done nothing at all. I simply invested into a stock that I believed was undervalued and a good investment for the future.

You have invested in NAB for a quick profit which you managed to do 3 out of 4 times (pretty damn good) but nevertheless you still end up with less than what I have.

Would NAB have gone down the drain, then I would sit on a paper loss waiting for better times, but if I have done my homework, knowing the banking sector, checked the figures, evaluating if NAB is worth $30 or not, then my investment can't really go that wrong. Otherwise I would have made a terrible mistake somewhere down the line.

I hope this gives you a bit of an idea. I'm off for the weekend and I promise I won't ever bother you again with a posting that big... ;)

Happy trading

Stefan
 
Re: NAB?

Stefan,

I think it's very easy to pick figures and scenarios that "prove" any point. I could just as easily show Jet making hundreds of dollars and you a loss.

In the end, no amount of research can ensure you "can't really go that wrong". Individual companies within a sector can perform badly, or even collapse, irrespective of the health of the sector as a whole and without warning. Companies will naturally hide as much bad news as they can for as long as they can. Once it is made public it's often too late.

So your research may lead you to believe that NAB is undervalued and a good investment, but that is not necessarily the case. For all anyone really knows, this could be the start of the end for NAB and their share price might never be the same again. NAB has been trending downwards for the last two years, and while this might be a somewhat bigger hiccup than usual, there's no saying a rally from it is going to reverse that trend.

And even if NAB prices do climb over the long term, unless the gain is better than say 5% pa compounded, you'd be better off just leaving your money in cash deposits.

So I think there's no guarantees with anything, but personally I wouldn't be buying NAB shares for the long term any time soon unless it was obvious that a major trend reversal was underway.

GP
 
Re: NAB?

Stefan,
Thank you for your details analysis...
I hope what we are discussing not lead into argument...

The problem with you scenario is that if NAB stay below $26.90 then you are holding your capital without any return from investment. Where as me I did make some profits and learn my lessons through trading....that's the different.

What happen when you buy NAB at $26.90 and it keep going down? and never recover? and for the next 2 to 3 years NAB trading between $20 and 26.90, what will you do, just holding to your NAB stock? Where as me I trade through those time and make profit, so what is the outcome?

Let continue with your example:
Recap:
You
Buy 100NAB at $26.90 = $2690

Me
Buy 100NAB at $26.30 = $2630, Sell $100NAB at $27.30 = $2730, Profit = $100
Buy 100NAB at $26.30 = $2630, Sell $100NAB at $26.00 = $2600, Loss = -$30
Buy 100NAB at $26.05 = $2605, Sell $100NAB at $27.05 = $2705, Profit = $100
Buy 100NAB at $26.50 = $2630, Sell $100NAB at $27.50 = $2750, Profit = $100
.
.
.
NOW NAB going down again.
Buy 100NAB at $26.00 = $2600, Sell $100NAB at $25.50 = $2550, Loss = -$50
Buy 100NAB at $25.00 = $2600, Sell $100NAB at $24.50 = $2450, Loss = -$50
Buy 100NAB at $24.00 = $2400, Sell $100NAB at $23.50 = $2350, Loss = -$50
Buy 100NAB at $22.00 = $2200, Sell $100NAB at $21.80 = $23500, Loss = -$20
.
.
.
NAB now trading at around $22.00 after 1 year.
After 1 year trading I make $100 - brokerage fees ($20x16=$320) = Loss -$220.

You bought the stock at $26.50 which meant you are lossing 100 x $4.50 = $450 + $20 = -$470 and if you sell then your total loss = -$490.

There are thousand of scenario out there and this is only two of them.....

Making money does not sound as easy as your analysis, if it is that easy then I will just get my 10 years old neighbour to buy the stock for me.

I am looking forward to your comments and new scenarios....

GreatPig,
Thank you for your input and support....

If you don't hear from me for the next two days then I must be at Steve McKnight Seminar at Melbourne....looking forward to it....take care.
 
Re: NAB?

Jet,
Don't worry. We're not having an argument.

You don't understand my point and neither does GreatPig. It's not about proving something. It's about showing some principles on how it all works.

Of course I can come up with a scenario where NAB is a loss and I'll make no money at all. I mentioned that in my posting as well.

This is about knowing what you're buying. You obviously don't know anything about NAB other than it's share price and how it's been trading over the last few months. Fair enough. For your style of investment that may be all the information you need.

My approach is different. If you understand the banking sector (I'm not saying that I do), then you have a background history of NAB that goes far deeper than just looking at charts. You will understand the true value of this company and you can come up with a decision as to wether you want to buy it at this level or not.

If you base your decision on a chart, then chances are that you are plain wrong. Charts do not take anything else into consideration than historic data. Times change and if NAB happens to be in trouble, then the price will continue to go down.

GreatPig is saying that this could be the start of the end of NAB. Yes it could. But if you've done your research then you know why the price is coming down and you know it's true value based on its financials. So his statement is just supporting my initial point. Do a proper research before you buy. If you don't feel comfortable, then by all means, don't buy. I'm not buying either. All I'm saying is invest more time in knowing your stock rather than looking at some charts.

Don't forget. This is not about buying or not buying NAB. It could as well be any other stock.

My example was not to proof anything. It was only to show what can happen if you trade a lot of small gains.

Yes, if you don't get a decent return, then there is no point in buying. That's exactly what my example tried to show.

What happen when you buy NAB at $26.90 and it keep going down? and never recover? and for the next 2 to 3 years NAB trading between $20 and 26.90, what will you do, just holding to your NAB stock? Where as me I trade through those time and make profit, so what is the outcome?

If I do what I'm trying to explain, then this won't happen. If NAB goes down over the long term, then my analysis based on solid financial figures, dividends and profit would have been wrong. Therefore my understanding of this company wasn't good enough. It can happen, but the risk is far smaller than when you base your decisions on charts.

Anyway, for the sake of it let's assume it happens:
If NAB goes down, then your stop loss will kick in. You are then free to invest your money into another stock. I for my part would hold on to NAB and invest my other money into other shares just as you do. (Don't tell me you put 100% of your money into NAB... ) You still sold with a loss while I'm still holding a stock that according to my analysis has a long term value which is much higher than its current level. I might therefore even buy more.

See, you are having a different approach and that's fine. All I'm doing here is trying to show you another way. Nothing is gospel. After trading for 10 years, I've come to some conclusions. I've traded your way many years and I can't see anything wrong with that, other than that it will keep you very busy and nervous for many years to come. :). The other way may not sound attractive to you but time is your friend when it comes to the stockmarket.
And as you will find out, it is actually the only friend you will ever find.

I wish you happy trading, lots of good gains, profits and a lot of experience. It's well worth it.
 
Re: NAB?

Stefan,

I thank you for your help, especially with your experienced in the market. I look forward to hear from you again.

Thank you.
 
Re: NAB?

Jet,

Don't forget to invite me to your party when you make your first million! :)

Now I better get going and start that BBQ. I'm feeling hungry. Have a nice weekend! May the new week bring us many good opportunities to trade!
 
Re: NAB?

I am very surprised that nab has dropped this far. I thought NAB was already trading at a discount compared to its peers due to its incompetent managment. Now that it has a new CEO, revamped board and got rid of one of its chief currency traders who dosen't believe 'self' exists, I think nab has got to be a good buy. But I have been wrong before, it could turn into another AMP.
 
Re: NAB?

Stefan,

A lot of millions flying through my way, now all I have to do is learn how to catch it and catch it fast.

Before you start the BBQ don't forget to buy the meats first.

My first million is edging closer everyday.
 
Re: NAB?

JetDollars,

Why are you posting at 3:45am ???

Haven't you heard of sleep? :eek:

GP
 
Re: NAB?

JetDollars,

Why are you posting at 3:45am ???

Haven't you heard of sleep? :eek:

GP
Click to expand...

I have to wake up at 3:30AM that morning to go to Steve McKnight property investing seminar at Melbourne.

While waiting for Still_In_School to pick me up I logon to check email and lead to forum....LOL.

ProfitHunter,
Why do you find it disturbing if you don't know the reason?

Try to search for solution first because jump straight to conclusion...
 
Re: NAB?

ProfitHunter,
Why do you find it disturbing if you don't know the reason?

Try to search for solution first because jump straight to conclusion...
Click to expand...

Chill out Jet...I was joking, don't take things so seriously ;)
 
Re: NAB?

ProfitHunter,

I finally got you back. I was just joking as well and I hope you feel that I was angry.....LOL

Got you!

Take care...mate
 
Re: NAB?

NAB dropping like a brick again this morning. Down to $26.60 at the moment and looking to go lower.

Looks to me like it might sink below $26.50 today.

Time will tell.
 
Re: NAB?

Look like NAB will be heading below $26.00 in the near future.

I am keeping a close watch on this share.
 
Re: NAB?

Just my 2cents worth to you prevous rather lengthy discussions here.

I would say that it comes down to what type of trader each of us here is.

If somebody looks into fundamentals, knows the sector, company earnings etc. and sees in these something providing him/her with the right signal to buy/sell then he/she will probably do so regardless of the daily charting results.
On the other hand a chartist will perhaps base his/her decision based on whatever the graph/price history is showing and goes from there.

I personally would not buy NAB based on my charts (which I love:)) unless it shows me some strong reverse signal. I do see the big picture showing price being lowest since 2001 or so BUT I am not going to go against my own trading strategy. I just would not feel comfortable with my decision then.

Just a thought.
 

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