Might I ask why?
FGE IMO is a excellent company with bright prospects that is undervalued. The decision to sell FGE was based on the macro economic factors of the European Debt Chrisis and my belief that the "miracle" Chinese economy can not continue to grow indefinately. Hopefully the funds invested in FGE can be reinvested back into FGE or a similar company at a much more attractive price sometime in the future.
Thankyou but very early days yet... Lucky for me investing is a marathon not a sprint.
This portfolio will deliver a positive return in the future I am 100% confident of that.
Robusta... so you are now trading? You think FGE will fall further and want to buy back in lower... What happened to long term investing? What's your average holding period on closed positions? 2 months?
You need better planning and discipline in both entries and exits. Write down your investment plan with actionable, measurable, quantitative steps and look at it before you buy and sell. Do that until it becomes "intrinsic" to you. Get the process right first and worry about the methodology and returns later.
With regards to FGE... NWH released a bumper profit last week, and ABS released some very good figures on mining construction and capital investments. They point to business as usual and continued growth for the mining services sector... at least for another 3-6 months. I was actually going to do a swing trade lol...
Robusta... so you are now trading? You think FGE will fall further and want to buy back in lower... What happened to long term investing? What's your average holding period on closed positions? 2 months?
You need better planning and discipline in both entries and exits. Write down your investment plan with actionable, measurable, quantitative steps and look at it before you buy and sell. Do that until it becomes "intrinsic" to you. Get the process right first and worry about the methodology and returns later.
With regards to FGE... NWH released a bumper profit last week, and ABS released some very good figures on mining construction and capital investments. They point to business as usual and continued growth for the mining services sector... at least for another 3-6 months. I was actually going to do a swing trade lol...
Yep seems I have been trading and here is news flash, I AM BLOODY TERRIBLE AT IT.
The intention was to re position the portfolio with more cash.
SKC, do you have an example of an investment plan with actionable, measurable, quantitative steps? Or perhaps just part of a plan? I think the investment plan would help me (as well as Robusta), I'm just wondering how to construct it?
Robusta... so you are now trading? You think FGE will fall further and want to buy back in lower... What happened to long term investing? What's your average holding period on closed positions? 2 months?
You need better planning and discipline in both entries and exits. Write down your investment plan with actionable, measurable, quantitative steps and look at it before you buy and sell. Do that until it becomes "intrinsic" to you. Get the process right first and worry about the methodology and returns later.
With regards to FGE... NWH released a bumper profit last week, and ABS released some very good figures on mining construction and capital investments. They point to business as usual and continued growth for the mining services sector... at least for another 3-6 months. I was actually going to do a swing trade lol...
Robusta,
trading or investing, please keep the thread going. It has certainly helped me think about some of my investment decisions.
On the www.gurufocus.com website there is a poster called Geoff Gannon who also happens to have his own website. On his website he points outs that there are four questions that need to be answered before you buy a stock. I found these four questions have helped me greatly. The four questions are below:
1.Is it safe?
2.Is it a great business?
3.Am I getting a great price?
4.Can I hold this stock for as long as it takes? .
The importance you put on questions #1 to #3 really depends on your style. My importance ranking over the last couple of years has gone from 1,2,3 to 3,1,2. I am starting to obsess about 3 more and more, the stock just has to be cheap. No need for DCF, complex spreadsheets, and so on, the stock should be dirt cheap.
Question 4 is very important and I really should have thought about it some more when I first started buying into DWS. I had a 2 year holding period in mind, I have held for well over a year now and am coming conclusion that I am not willing to hold onto the stock for much longer, other opportunities are presenting themselves. IT companies like DWS (and others listed in this thread) I thought would be trading round 12-15 P/E ratio yet they do not and my feel is they will never be priced with growth taking into account in the current market. The dividends have been well received though .
In the future for my investment decisions I will be using the following:--
3.Am I getting a great price?
1.Is it safe?
2.Is it a great business?
4.Can I hold this stock for as long as it takes? I will start using a 1 year holding period maximum or bad results announcement.
The majority of my focus will be on 3 and 1..
I am keen to start my own thread about a strategy I want to implement and hopefully will get round to it one day as I think it would greatly help my investment decision making. The strategy will be based screening for companies with low price to sales, decent revenue growth and a reasonable net profit margin. Max 10% of capital per company with a holding period of 1 year. The due diligence limited to forum searches, back issues of AFR Smart Investor and a cursory glance at the latest annual report. The plan being to keep the investment decision down to 1 hour rather than the numerous hours that it is at the moment.
Cheers
Oddson.
In answering question two "is it a great business?" do you consider sustainable competitive advantages (ie. barriers to entry)? If so, how do you assess Forge in this area?
In my opinion it doesn't have any, it's a cyclical business at the peak of its cycle hence the growing share price up until recently. The mining / engineering services industry had an excess demand for work and contracts consequently had large margins because of this. But as with any industry when demand shrinks, and other entrants come in to try and gain market share, margins start to close. There are no shortage of firms fighting for the same contracts. How is Forge more likely to gain business and maintain it's margins in this environment? Does it have a competitive advantage in this respect? Again, I would say no. I'd be curious to see if you think differently.
In answering question two "is it a great business?" do you consider sustainable competitive advantages (ie. barriers to entry)? If so, how do you assess Forge in this area?
In my opinion it doesn't have any, it's a cyclical business at the peak of its cycle hence the growing share price up until recently. The mining / engineering services industry had an excess demand for work and contracts consequently had large margins because of this. But as with any industry when demand shrinks, and other entrants come in to try and gain market share, margins start to close. There are no shortage of firms fighting for the same contracts. How is Forge more likely to gain business and maintain it's margins in this environment? Does it have a competitive advantage in this respect? Again, I would say no. I'd be curious to see if you think differently.
In answering question two "is it a great business?" do you consider sustainable competitive advantages (ie. barriers to entry)? If so, how do you assess Forge in this area?
In my opinion it doesn't have any, it's a cyclical business at the peak of its cycle hence the growing share price up until recently. The mining / engineering services industry had an excess demand for work and contracts consequently had large margins because of this. But as with any industry when demand shrinks, and other entrants come in to try and gain market share, margins start to close. There are no shortage of firms fighting for the same contracts. How is Forge more likely to gain business and maintain it's margins in this environment? Does it have a competitive advantage in this respect? Again, I would say no. I'd be curious to see if you think differently.
Great post.
In the future for my investment decisions I will be using the following:--
3.Am I getting a great price?
1.Is it safe?
2.Is it a great business?
4.Can I hold this stock for as long as it takes? I will start using a 1 year holding period maximum or bad results announcement.
The majority of my focus will be on 3 and 1.
.
Also, it may be my lack of knowledge, but I don't see how these businesses are scalable. They do not seem to have a high-degree of fixed costs, therefore economies of scale seem to be out of the question? It's not the be-end all of everything, but it can be very important source of competitive advantages.+1.
The large industrial construction cycle might still have some legs though, there's plenty in the pipe line if it materialises. But cyclical it is.
Honestly I think question two and three are the only ones worth answering. I don't think that you need to answer question three at all if the company isn't what you consider a "great business." The most important question of all is "is this a great business?" A "safe bet" or in other words a two-inch putt is a necessary conclusion of this, so it's much in the same line of questioning and does not need to be answered on its own merits. Although some investors / traders may say that this is more in "reading the sentiment of the market" but I think that this is irrevelant given the timeframe required. You don't need to buy anything if nothing is being offered that fits your criteria.
The valuation and / or future assumptions are a secondary tool for deciding a possible entry point after you are satisfied that a business has sustainable competitive advantages. If it does not it will achieve long-term growth that is never in excess of the cost of capital. Buying a great business at a great price (or even fair value) mitigates the need to ask "Can I hold for as long as it takes?" provided that you are not buying for speculative growth to vindicate the success of the investment decision.
I simply do not see the need for this question in my approach. A better question is "For what purpose am I holding the stocks in my portfolio"? Psychologically if you have conceded that you will only hold great companies at a great (or fair) price then you should see no need to sell them unless you are going against your initial conditions or your analysis was wrong about them being a "great company." The market is a weighing machine in the long run, the cream always rises to the top. Consistently improving metrics over a number of years (be it cash flow, profit, income stream etc) cannot be ignored forever.What about question 4? “Can I hold this stock for as long as it takes”
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?