Novice ask of TAs/FAs re growth [non-resource] stocks

[Muschu]

In such a volatile market it seems very hard to locate non-resource stocks that can "hang on", let alone grow. I don't need to even mention those that have done the opposite and plunged to extremely low levels.

Putting aside, for the moment, the arguments for holding cash:

I've had a layman's look at recommends [which don't seem to offer much value], target prices [which are often contradictory to one another or to SP performance], P/Es, dividends and basic charts in relation to a number of stocks.

On those grounds I can find little to consistently support companies such as COH, BXB, SHL, TSE, NWS, LLC, CTX - and a number of others.

I "think" I can find better evidence to support TLS, CSL, LEI, WOR and CPU.

Also I am wondering is there is any consistency of view between TAs and FAs [being aware that some of you may place strong emphasis on both] concerning the abysmal recent performance of TOL. The charts would seem to suggest it's down the tube. Does a fundamental analysis support this view?

Just posting my idle Saturday morning thoughts.

Thanks for any response and comments on these or other stocks.

Rick

 

[motorway]

Also I am wondering is there is any consistency of view between TAs and FAs [being aware that some of you may place strong emphasis on both] concerning the abysmal recent performance of TOL. The charts would seem to suggest it's down the tube. Does a fundamental analysis support this view?

Hi rick Following on from that e-book

here is a TOL chart

Can you see where the behavior changed ? ( important )

Also while I have marked some important aspects
I have left the chart fairly clear.

motorway

This chart would be just a starting point.

(I have had to reduce the size to fit enough history in)

 

[motorway]

I "think" I can find better evidence to support TLS

TLS

 

[motorway]

CSL

So Three good examples

motorway

 

[motorway]

COH

is this a growth stock ?

you would want the very interesting sideways congestion
to be re-accumulation

but is it ?

motorway

 

[Muschu]

Ouch - I really need you to sit down by my side to have any idea of these charts MW... I have almost done the Etrade tutorials, have read the first 20 pages of Weinstein's book and will have to go looking for the link you gave me before. [sorry].
Without going to too much trouble, and if you have time, are you able to tell me what each of these charts means to you?
I can't pick the timeframe/s and am not sure what the numbers on the vertical axis mean - although I assume they relate to price [and volume?]...
Boy... am I showing my ignorance but who cares?
[Trying to remember what a histogram is...]
The continuous blue line I gather is not a moving average in the 'normal' sense but an average of some other type?
The drawn in blue lines are support or resistance?
The red ones are not conventional trend lines are they, but trends of some other kind?
Obviously I don't know...
[Please don't think I'm asking you to send a huge reply because I'm not. Obviously there is a lot of learning that needs to take place at my end.
I guess my question comes down to whether these or any of the other stocks I mentioned could suit a retired guy who doesn't want to change his portfolio every day.....

 

[motorway]

They are really very simple charts

But that does not mean they are not profound or deep..

Here is a tutorial exactly on this methodology


http://www.clayallen.com/e-book.htm

give you some nuts and bolts

a quote from one of the PDFs

The most significant advantage of the P&F approach is the fact that the charts do not track price vs time.

They record price movement up and down
on the y-axis relative to alternations of trend across the x-axis. It requires a
movement in the direction opposite to the recently recorded trend
to create a reversal along the x-axis on the chart.

These reversals are a function of volatility (i.e. more volatility produces more reversals – less volatility fewer reversals). Since volatility is usually a proxy for risk these charts can be characterized as tracking price versus risk. Volatility changes as trends ebb and flow and the movements of price versus risk are critical to trend evaluation.

Here is a link to the other e-book ( this is not the same as the link above )

best to download them

http://www.clayallen.com/Winning The Performance Game 12-16-2006.pdf

motorway

 

[Timmy]

Hi Rick

I think motorway may have chucked you in at the deep end ... sometimes thats not a bad thing as you can learn to swim real quick... but if you prefer to get your feet wet first here is a link with an introduction to the style of chart motorway has posted.

Motorway's charts are Point and Figure but have some added elements on them that may be unclear at first to a learner on these charts.

The numbers on the vertical axis are price.
The continuous blue line is a moving average - a moving average on a chart such as these responds a lot more quickly than one on a bar chart.

The histograms at the side are a representation of volume.

There is plenty to learn about these charts. The link is only an introduction. The best place (bar none) to learn more than the introduction can provide is right here at ASF ... just look-up the posts by a chap goes by the name of ... motorway.

EDIT: Since posting this I see motorway has already posted links to some intro material.

 

[Muschu]

Just checked your profile Timmy -- I think we share similar traits!
Also printed your link out [MW's were far longer so I saved them].
I also printed one of MW's charts.
Now I will attempt tp relate the two.
Maybe I should have just asked if the shares I mentioned were, in poeple's opinions, crap stocks or not ....
Seems I've just created work for myself -- in retirement.... No justice anywhere I find.
And, importantly, I'm trying to watch the footy over here in the wild west...
Thanks
R
PS - Does MW [do you MW?] like to answer a question with a question? [No that's not another invitation to do so. I'm drowning.]

 

[Muschu]

.....The numbers on the vertical axis are price.
...........

OK - printed and read and needs to be re-read. May I ask:
- Do the vertical numbers really represent price? On some there seems some compression of numbers and the May 23 figure doesn't match the SP does it?
- How do I gauge the timeline? On the CSL and COH charts I think I can read, in fine print, reference to 2004. On the others it loks more like 2006. Hard to read.

However - assuming they're all current and over appropriate time periods: Is it only CSL of these that shows a reasonably consistent up-ward trend?

Another question if you can handle it.... Are these charts generated through purchased software by putting in the appropriate data? (I read [thanks to you] that they can be hand-drawn.) If so do you mind telling me what software please? I'd be very interested in similar charts for LEI, WOR and CPU.

Many thanks - you are both a terrific help.

Rick

 

[motorway]

Hi Rick

These charts are very revealing and pertinent to your question

esp as I take it you are a longer term holder of good investments..

( good = performance ,investment relates to trusting of funds )

These charts are relative performance charts

They are charts of eg CSL Vs the all ords

This means that if XAO goes up and CSL goes sideways this chart will go down...

Because it is going down relative to the XAO

If CSL goes down and the XAO goes down even more

Than this chart will continue to go up

Because CSL is going up relative to the XAO..

The TLS chart is revealing that who has been holding this ,
Has been going backward at a great rate of knots compared to the index ,the XAO...

Nothing compared to "how much backwards" compared to CSL
which as been outperforming the XAO ! That means light years of performance compared to TLS..

I posted these relative charts because that is where analysis should start from... Before moving on to looking at the charts everyone else is looking at

eg TLS itself goes up and down but in relation to the XAO it really has just gone down and down and down..

Guess what a BHP relative chart would look like ?

On these charts each X & O = a 2% move ( you want to make a 1000% not a 1000 cents )

So they are all comparable

Now between UP and Down
are sideways areas where price has adjusted somewhat to , well everything

fundamentals , sentiment , etc ( remember they are relative charts...)


Guess what ? research shows that outperformance and underperformance

tend to sustain in and persevere in the form of trends ( BHP ? CSL ? )

and even on the downside (TLS ? )

fundamentals unfold business cycles etc

SO CSL has been a tremendous performer
price has outperformed the XAO for a sustained period and still looks good

TLS has underperformed the XAO for as long as it has been nearly listed

( it does pay a dividend ) And only Now is showing signs of stopping that underperformance....

But does that mean it will outperform ? .


The numbers on the side are how much percent the stock has out outperformed the index

eg Holding TLS ( from listing ) means that you only have 31% of what you would have had if you were in an index fund

holding CSL means that you have 1800% compared to an index fund

( in terms of capital gain )

The difference between TLS AND CSL is enormous

This is what the ebook refers to as "Hidden Order"

Time to hit the e-books Rick



motorway

 

[MRC & Co]

Hi Rick,

What a world you have entered! Such a daunting, but exciting time, learning all the methods and putting together your own plan in your own niche.

Not sure the exact reason for the thread, but I will give it a crack.

Yes, it is hard to find non-resource stocks thriving at the moment. And for a very good fundamental reason.

On the TOL example, I would not say it is down the gurgler and headed for $6.00 as of yet. It is still around a support level. Has not steamed through there yet. It has now broken short-term support, but there is still long-term support around this level.

On the F/A side, it is very vague. You can really only get a basic range of your value of the stock. Furthermore, many stocks oscillate around their "fair value", sometimes far below (JST is an example of this currently for me, bound by the worry of credit globally). Some companies are WAY overvalued, I find, that a company can trade anywhere upto about 2 times it's fair value, before it will retrace. That is, if the public loves the stock! ASX, JBH and WOW were examples of this to me, darling companies of the public, and as such, overvalued.

Consistency of view? T/A is short-term, F/A long-term. Other than that, they are generally used in isolation.

One set-up I use, is wait for a company to become substantially undervalued (based on my quick valuation), consolidate, and then look for a breakout back to fair value. I have seen excellent results with this method.

Cheers and keep up the good work!

One question, are you looking to invest, or to trade? I.e. Are you looking to manage your portfolio on a daily basis, or from what I gather, looking to buy and hold for long-term?

 

[Muschu]

"......esp as I take it you are a longer term holder of good investments.."

This is my "hope MW.. I have left managed funds, even indexed ones, behind me. I want to set up a portfolio of, as you say, good investments - that don't need constant monitoring.

"They are charts of eg CSL Vs the all ords"

I picked up on this but am not sure yet how to read it properly. Will return and look again.

"Nothing compared to "how much backwards" compared to CSL
which as been outperforming the XAO ! That means light years of performance compared to TLS.."

This comparative analysis is what I am trying to get to.

"Guess what ? research shows that outperformance and underperformance

tend to sustain in and persevere in the form of trends ( BHP ? CSL ? )

and even on the downside (TLS ? )"

That fits with me thanks MW.

" Time to hit the e-books"

Have you got a Chairman Mao size book please MW?

"Not sure the exact reason for the thread, but I will give it a crack."

For a crack you got it spot-on.


"Consistency of view? T/A is short-term, F/A long-term. Other than that, they are generally used in isolation."

Hmmm.. even with a BHP?

"Cheers and keep up the good work!"

I will - especially as I didn't realise I'd done any....

OK - dare I ask if you'll please do a chart for LEI and WOR?

Oh - and my question as to what software is used to generate the charts?

Time to watch the mighty Eagles "underperform"....

Grateful Rick

 

[Muschu]

Cripes - just checked what you mean MW in terms of % performance against the XAO -- how revealing....

 

[MRC & Co]

You are generating discussion on quiet a few topics, hence the good work! I also find it refreshing to see someone wanting to learn.

How do you mean, in relation to BHP?

T/A can be long-term also, for example some EW analysis, but most T/A is purely used to create entry and exit signals for the current crowd behaviour. F/A looks beyond this, and assumes crowd behaviour will eventually correlate with the intrinsic value. You are basically, trying to use this crowd behaviour to your advantage. Waiting for the crowd to turn on a stock, then pick it up on the cheap.

T/A also requires a lot more money management and risk mitigation. With F/A, you still need both of these, but not to the same extent.

I'll take a look at WOR and LEI later and let you know my thoughts, FWIW (for what it's worth).

Cheers buddy.

 

[Gurgler]

Rick, a big thank you for asking the questions that many of us are too shy/embarrassed to pose ourselves.

MW and MRC (amongst others), thanks for the time you are giving us; your input is much appreciated.

As has been said, there is much to learn.

 

[motorway]

How do I gauge the timeline? On the CSL and COH charts I think I can read, in fine print, reference to 2004. On the others it loks more like 2006. Hard to read.

rick , make sure you left click on the charts.. They will open in another window, sometimes you have to click them again as well..

They should be easy to read .

motorway

 

[Muschu]

... How do you mean, in relation to BHP? T/A can be long-term also, for example some EW analysis,...Cheers buddy.

First, thanks again MW. And thanks Gurgler for the comment. I guess I'm old enough to not care if I ask a question that others might find simplistic. So here I go again....

In relation to BHP: What I was getting at was whether a long-term holder would normally [unless the heavens fell in] allow TA to over-ride FA. Or at least amalgamate the two.

EW = ?

As far as I know I can't access P&F charts at this time. I did, however, play with Etrade charts.
Hmm.. I just tried to copy and paste a chart from Etrade but couldn't.. Can someone please tell me how to do this?
Anyway as an example:
I looked at a 3 year LEI chart with SMAs of 100 and 200, and compared it to the ASX over that period. Looked fine to me. WOR looked "OK". CSL was distorted due, I think, to a share split.
A few others that looked OK [imo] [and remembering I'm thinking long term] were BHP, WPL, RIO, AAX, SGM, OXR, NCM, IPL, RIO, WOW, NXS, ORI...

BTW maybe, in starting this thread, I shouldn't have excluded resource stocks. My reasoning was that I'm OK with the resource stocks I already hold. [Such as the first 3 in the list above]. If anyone wants to add comments about resource, or related stocks, then please do.

Still wondering why I can't copy and paste that chart....

Something else to learn!!

Rick

 

[motorway]

In relation to BHP: What I was getting at was whether a long-term holder would normally [unless the heavens fell in] allow TA to over-ride FA. Or at least amalgamate the two.

Read at least the first chapter or two of the

Winning the Performance Game..

It is a good intro (imo) for what you seek
even if you do not want to use P&F



for some info


There are only 71 stocks in the XAO

on a simple buy signal on their relative strength P&F charts
(2%x3)

And also above a bullish Support Line..

motorway

 

[motorway]

In relation to BHP: What I was getting at was whether a long-term holder would normally [unless the heavens fell in] allow TA to over-ride FA. Or at least amalgamate the two.

Read at least the first chapter or two of

Winning the Performance Game..

It is a good intro (imo) for what you seek
even if you do not want to use P&F



for some info


There are only 71 stocks in the XAO

on a simple buy signal on their relative strength P&F charts
(2%x3)

And also above a bullish Support Line.. EOD Friday.


motorway