Australian (ASX) Stock Market Forum

Tip Sheets - Experiences

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Re: Tip Sheets- Experiences

RichKid said:
ie a point where we know we are wrong, as Nick likes to say, so what's the criteria? With EW or TA we know when a stock has failed to follow a pattern but with fundamentals it'll probably have to be an arbitary percentage. 8%? 10% stops? Do past winners of this magnitude guarantee future results of similar winners? How many of those 3 baggers actually went below such an arbitary stop point? Ie how do we capture enough of the big ones while cutting out the 'poor' ones? I'm thinking in the context of this particular tipsheet. The more stats the better to work with, one year's report isn't much to go on. I'd say using Martin Roths' Top Stocks would be better as we have a long history (so more data/samples to test).
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Veeery interesting thread; thanks people.

Like Realist, I'm attempting to apply a value investing strategy and my guides for that are Benjamin Graham and his descendants, notably Buffet and Munger and some of their various interpreters, imitators, and name droppers. So I took a trial subscription to Intelligent Investor, largely on the strength of its name, and I didn't take a real subscription because it didn't seem to me to be applying the substance of a value approach, which meant that for me it's in the same group as Smart Investor only a whole lot more expensive. I don't have the copies any more, but from memory my main argument with them was too much emphasis on share prices and not enough detailed analysis of the businesses. Nick Radge's description of their history with MRL suggests that too.

The way I understand it, value investors sell:

* If something about the business changes in a way that negatively changes the value of the business, or

* If they learn something about the business that changes their initial valuation of the business, or

* They need some cash.

The first two are "the point where we know we're wrong" that you're looking for Rich. Share price isn't an essential part of finding that point, because the underlying assumption is that share price will at times match the value of a business but there's no predicting when. So you buy only well below your valuation because the gap between price and value is your margin of safety, and you don't set a stop loss because a falling share price is an improving opportunity to buy.

Simple really. All you have to do is get the business valuation right :D

Realist, I think I'm agreeing with your comments about the tipsheet yes? Do you agree with my elevator description of value investing? I've been following a lot of your comments but I'm slow to respond to a lot of these threads because I'm feeling my way and I need to stop and think a lot. Also to read. I've just bought (from the ASF Bookshop, of course) "A Wonderful Company at a Fair Price" by Brian McNiven, who I think you could call a purist Buffetologist. One chapter that specially interests me talks about how Buffet differs from Graham, largely because the times have changed so much. I'd love to talk that through with anyone who's read the book, maybe on a different thread.

Tech, I really like your comment about tip sheets being a way to build a watchlist. I'm finding that it's really hard to get to a manageable universe (that's a very peculiar concept if you think about it too closely) of stocks that might meet my buy criteria, and tip sheets / forums / etc. can help a bit.

Ghoti
 
For Value Investing tipsheets I find that Fat Prophets Mining have a better idea of co values and the industry, heaps of free reports in the media for you to check em out. Still, all part of the same stable, they don't use stops and they have heaps of rec's and quite a few big losers (and winners). All long term holdings they say but many are sold sooner than that according to the performance reports. You can narrow down which ones to buy by only (for eg) buying ASX200 stocks or only gold stocks or only highly liquid stocks or whatever. They do tell you how much to buy (eg $2k a stock or something like that) and have a hypothetical portfolio. That's the best I can say about a value investing tipsheets atm. As you can see I like commodities!
 
Re: Tip Sheets- Experiences

ghotib said:
Veeery interesting thread; thanks people.

Like Realist, I'm attempting to apply a value investing strategy and my guides for that are Benjamin Graham and his descendants, notably Buffet and Munger and some of their various interpreters, imitators, and name droppers. So I took a trial subscription to Intelligent Investor, largely on the strength of its name, and I didn't take a real subscription because it didn't seem to me to be applying the substance of a value approach,
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It would be suicide for a newsletter to do true Buffet/Graham type investing. People want lots of buy and sell suggestions, while I would be surprised that there would be more than one or two new "value" stocks coming up every year according to Graham's value rules.

MIT
 
Re: Tip Sheets- Experiences

mit said:
It would be suicide for a newsletter to do true Buffet/Graham type investing. People want lots of buy and sell suggestions, while I would be surprised that there would be more than one or two new "value" stocks coming up every year according to Graham's value rules.

MIT
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True.

Value investors are also not very lucrative clients for stockbrokers. Or stock exchanges. Guess that's why so many drop the Buffet name and a couple of pithy quotations and skip lightly over the details.

Ghoti
 
tech/a said:
Ghotib

This is similar to the way Duc trades he is posting his results here and in Reefcap.
We are having great discussion at Reef here

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=8;t=000433;p=12

by reading youll see my biggest problem with the method,which Duc is happy with and I would be squirming.
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Thanks for the lead. I'll follow this up later - some time. My immediate reaction is that I don't think of intrinsic valuation as a trading tool. I do secretly read about technical trading and drool over the pictures, and when I grow up I wanna have a go at it. But in my mind trading is very strongly separated from value investing, at least at this stage.

I signed up to ReefCap to read all about TechTrader and I haven't managed to do that yet either. Like value investing, it's a long-term project

Ghoti
 
RichKid said:
For Value Investing tipsheets I find that Fat Prophets Mining have a better idea of co values and the industry, heaps of free reports in the media for you to check em out. Still, all part of the same stable, they don't use stops and they have heaps of rec's and quite a few big losers (and winners). All long term holdings they say but many are sold sooner than that according to the performance reports. You can narrow down which ones to buy by only (for eg) buying ASX200 stocks or only gold stocks or only highly liquid stocks or whatever. They do tell you how much to buy (eg $2k a stock or something like that) and have a hypothetical portfolio. That's the best I can say about a value investing tipsheets atm. As you can see I like commodities!
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To put it bluntly RK, mining companies are not value investments, so Fat Prophets Mining is not in the value investment stable, even if it doesn't use stops. The point of value investing is the valuation; the more variables in business, greater the business risk, the trickier the valuation, and the higher the required rate of return (that's required, not wished for). Too many variables in mining.

However, please be aware that I do know I don't know as much as it sounds like I think that I know.

Happy commodifications

Ghoti
 
ghotib said:
To put it bluntly RK, mining companies are not value investments, so Fat Prophets Mining is not in the value investment stable, even if it doesn't use stops. The point of value investing is the valuation; the more variables in business, greater the business risk, the trickier the valuation, and the higher the required rate of return (that's required, not wished for). Too many variables in mining.

However, please be aware that I do know I don't know as much as it sounds like I think that I know.

Happy commodifications

Ghoti
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Ghoti,
Check out the FPM site and their detailed reports; detailed figures and assumptions are all stated- remember to distinguish between pure speccies and the stars of tomorrow. They classify reviews according to risk level too so you can choose. I bet there are many in there that are less risky than industrial stocks.
I don't subscribe to them or follow their value method but I respect their opinions and detailed analysis and use their tips to find prospects. Just because a stock is a micro cap and deals in resources it doesn't mean it can't be valued like any other stock either (but I note how it can be tougher, it depends on your skill and experience, I think FPM has a great track record so far).

BHP, RIO, WPL ('mining companies') are regarded as bluechips and are often bought every year as value propositions by thousands of people.
 
Most valuation models contain 5 inputs. One is factual whereas the other 4 are assumptions.

Facts:
Earnings from previous 12 months

Assumptions:
Annual growth rate
Length of growth rate period
Long-term levelling off rate
Benchmark discount rate

I did several presentations here and in N.Z on my findings of my FA research. If anyone would like a copy of the PowerPoint presentation then feel free to email me at nick_radge@reefcap.com


Here are some snippets:

A 2002 study of Institutional Investor ranking’s in the US found that analysts considered reputation and recognition were much more important than their performance.
Li, Xi, Career Concerns of Analysts: Compensation, Termination, and Performance (April 8, 2002), University of Miami Scholl of Business Administration

In a subsequent study in 2003 it was empirically demonstrated that sell-side analysts faced a conflict between telling the truth to build their reputation, and misleading investors via optimistic forecasts to generate short-term increases in commission.
Jackson, Andrew, Trade Generation, Reputation and Sell-Side Analysts (June 6, 2003), London Business School

In 2002 the Australian Securities and Investments Commission reviewed analysts conduct and found systemic weaknesses in the ability of some firms to adequately identify, manage and disclose conflicts of interest. It discovered an unacceptable level of reliance on staff integrity in some firms.

The US Securities and Exchange Commission recently settled with ten Wall Street firms and two individual analysts arising from research conflicts of interest. The civil penalties amounted to US$875 million and major structural reforms and enhanced disclosure were enacted.
 
Great article below, heard about it from DocJ, worth a read, looks like a lot of smoke and daggers, lots of punters being caught up in it in this crazy bullmarket.

Caught in the net: Online tipster gives the blue-chips a shock

The trader rings change like Rivkin in his prime, says Michael West

February 10, 2007 The Australian www.theaustralian.news.com.au/story/0,20867,21200419-643,00.html

AT 2.02pm yesterday, 2000 mobile phones around the country bleeped: "Sell BNB now. See your email for important info. Invest4Profit."
In the next couple of minutes a rash of private client sellers hit the market, smacking Babcock & Brown shares down from $26.22 to $25.72, wiping $200 million from the company's market value. Babcock closed at $25.87, down 49c.

There are few people whose recommendation can shove a share price about like that, especially in an $8 billion company. Perhaps the only one in the market right now is Paul Nojin, a cocky 41-year-old former trader from the halcyon days of Bankers Trust. Nojin, who runs the online tipsheet Invest4Profit from Coffs Harbour on the NSW Mid-North Coast, has a devoted bunch of subscribers. Targeting undervalued growth situations - especially in internet and resources - Nojin has made them good money over the past two years, albeit in a raging bull market: 46.5 per cent last year for a 46.4 per cent return since inception in May 2004. The Australian verified these numbers with an external auditor hired by Nojin to ratify his results.

A self-confessed rebel who "doesn't like air-conditioned spaces" Nojin grew up in Sydney's southern middle-class suburb of Kogarah and joined the BT graduate program after university. Three years later he was out on his own, trading everything from wool futures to interest rates. Nojin says he doesn't trade shares any more because of the potential conflict and, while he owns some property at Coffs, most of his wealth is tied up in online property.

He's been copping flack from his critics of late. In the internet chatrooms - hotbeds of anonymous market manipulation - they charge him with ramping stocks, putting a squeeze on small company shares in particular and wielding too much power at the micro-cap end of the market.

And, for this article, ETrade chairman Kerry Roxborough responded to criticisms of the online broker, saying Nojin was out to seek notoriety to get more subscribers to his newsletter.

Nojin agreed to put The Australian on his subscriber list to check out the operation, as long as we did not reveal his current recommendations, save Babcock & Brown. Sure enough, his subscribers had put a rocket under the stock mid-last month. Not since the days of Rene Rivkin's late-night TV ads, had a stock-tipper pushed the market around to this point. And the Rivkin Report, at its peak six years ago, had 50,000 subscribers.

Since then, thanks to the bull market, the explosion of day traders and new technology - chiefly the proliferation of broadband and online broking - the online newsletter business has flourished.

Nojin might be riding high as the stock market's guru of the moment, but he's not happy - not happy, that is, with the state of his own industry. The online tipsheets, he reckons, are beset by conflicts of interest, lack of accountability, and myriad transparency and disclosure issues. They variously deliver poor advice, calculate their performance with selective data, use aggressive sales tactics and may flout the Australian Securities & Investments Commission's guidelines in their advertising.

Mind you, these are the "blue chip" players Nojin is talking about, not the scoundrels who tout surefire triple-digit returns from a month of program-trading options and so forth.

"It's truly remarkable," says Nojin. "Consumers are really treated badly by those in my industry. It's disgusting.

"I firmly believe the likes of Fat Prophets and Huntleys are entrepreneurs, not advisers ... mediocrity is what you get. It's ridiculous to even think they would beat the market in the first place".

Fat Prophets founder Angus Geddes is irritated by Nojin's claims over mediocre performance and potential conflicts of interest. "We are about trying to maximise performance. We are stock pickers, not traders, and I think our record bears that out," Geddes says.

Of Nojin, Geddes says he's only been around with Invest4Profit for a couple of years and "he pushes the edge".
>"It's only until recently that he's come out and said his numbers have been independently verified. Anyone who knows anything about the stock market knows it's very hard to get returns of more than 20 per cent (for an extended time). We all know you're going to get them wrong."

Nojin agrees. His returns, indeed everyone's returns, would be lower come the bear market, or even in a less bullish trading climate. But he still believes he will outperform his rivals.

While most of the big names in this burgeoning online advisory sector provide decent, if not spectacular research, his claims merit attention.

ASIC itself concedes there's a problem and has been stepping up its monitoring, according to executive director of compliance Jennifer O'Donnell. "It's been an area of increasing concern to us. The two big ones have been past performance and promised returns. We've been taking a fair bit of action behind the scenes but I'd suggest that now would be a good time for people to revisit the guidelines because our tolerance is starting to diminish," she says, citing aggressive advertising.

Even a cursory perusal of tipsheet advertising shows most of the top players sail close to the wind on the ASIC guidelines on Using Past Performance in Promotional Material.

"3.7 Million Reasons to take my FREE Offer," boasts the banner headline in a recent Huntleys' newspaper ad. "Our income portfolio made 190 per cent in just over five years," blares another. These headlines, from the most established player in the business, would appear to invite scrutiny. The ASIC guidelines, which warn against large-font headlines of selective past performance figures.

Aspect Huntley managing director Andrew Bird counters that the appropriate information is provided: "We are confident we are doing the right thing".

Then there's performance methodology; an area where there is plenty of wriggle room for the tipsheets to put a shine on their results for marketing purposes. ASIC discourages the industry from annualising results for trades of less than a year (10 per cent profit in a month becomes 120 per cent when annualised), and for not annualising trades of more than a year.

While Intelligent Investor eschews the practice, other mainstream players such as Fat Prophets do annualise. As expected, Nojin is in a piping-hot rage about this: "I'm really pissed off. It states clearly in the rules you are not supposed to annualise. My results would be over 80 per cent!"

Like Nojin, the Rivkin Report's chief stock-picker Nigel Littlewood recommends fewer stocks to his clients and does not annualise results of less than a year. The advice is designed for investors to follow every recommendation. They get in and get out when they are told, rather than use the analysis to select their preferred investment.

The four largest players - Huntleys, Fat Prophets, Intelligent Investor and Australian Stock Report - make hundreds of recommendations a year which renders it unlikely, says Nojin, for the investor to follow them all and make a meaningful return. Returns tend to erode in a portfolio with too many stocks.

"We cover 250 stocks and we cover them at least four times a year," says Huntleys' Bird. "We don't publish on a completed trades basis."

Huntleys' is the country's oldest retail stock tipper, established by Ian Huntley in 1973. Huntley sold the business to Morningstar for $30 million. Clearly, top dollar was paid for Huntley's reputation even though Bird acknowledges the performance results have never been audited.

There is no questioning Huntley's reputation for decades of conservative, thoughtful advice, though there would be no way to monitor actual performance. Which leaves Nojin on solid ground when he says, "It's big business now."

Nojin's claims are cased in hardline language but he's not the only critic. The Rivkin Report's chief stockpicker, Nigel Littlewood, says extrapolating returns from a theoretical portfolio is pointless. "You can't buy every stock so you can't allocate capital," says Littlewood who has called for industry-wide standards for reporting and performance in the past. "It might sound arrogant but I consider us to be the leader in our sector."

Ironically, one of Nojin's best recommendations has also been one of his greatest bugbears - the online broker ETrade. "Even though I hated ETrade, it was my top recommendation."

"Simple things like BHP's market cap are wrong. It's a joke. People rely on that information. They need it to be accurate. They (ETrade) don't include the UK listing (for BHP - it is dual-listed). The market cap is actually $162 billion. ETrade puts it at $96 billion. Research by AspectHuntley."

ETrade chairman Kerry Roxborough says the broker delivers the same feed to its clients as the institutional market and debunked Nojin's criticism as a bid for notoriety.

"(Look at) the practice of ETrade giving free brokerage to parties like Fat Prophets in return for their endorsement. Fat Prophets then use it to entice customers to join. It's disgraceful," Nojin says.

contd....
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....contd
Kerry Roxborough rejected all of Nojin's claims saying investors had benefited by the emergence of independent research players and dismissed Nojin's conflict of interest arguments. "There is no link between recommendations and remuneration arrangements with any of them," he says. "We are aware of Nojin's newsletter and we are aware that he is critical of the research which ETrade offers to its customers and that Nojin would like us to offer his research."

"I will never, ever have a commercial arrangement with any broker," says Nojin.

Intelligent Investor also has a tie up with ETrade. The quid pro quo says Greg Hoffman is advertising for content, as is the case for Fat Prophets.

"I feel like we are a restaurateur who gets compared to MacDonalds and Pizza Hut," says Hoffman. "We take our compliance very seriously".

Australian Stock Report promotes a number of products including the higher risk derivatives advice.

ASR could not provide a definitive response on its performance methodology and its website advertises an astonishing, though presumably selective, 408 per cent return on its "CFD Traders" product.

Fat Prophets's Geddes, Nojin and Rivkin's Nigel Littlewood all say they would welcome the introduction of some sector standards to provide. As Fat Prophets auditor David Foster from WHK Greenwoods says: "I think for the consumer to compare apples with apples then a standard methodology should be adhered that included all providers in the market".
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Tipsheets...

I pretty much always scoffed at these as merely a way for for the tipsters to profit from the hundreds of subscribers moving the market for them. However, in the interest of being open minded, would anyone like to offer some longer term experiences (eg. a year or more), positive or negative, with any of these companies?

The only ones I'm aware of at the moment are Australian Stock Report, fatProphets, Rivkin Report and Share Select.
 
The Stockwatch Report (http://www.stockwatchreport.com.au/) happily publishes a list containing all of their recommendations, not just the winners. The list is freely available on their website, along with some other reports pertaining to the performance of their recommendations.

I'm not a subscriber, but I've seen some of their reports. They recommend mostly short-term trades and don't just recommend shares, but options as well. They publish daily and move their stops on open positions each time they publish. I know it's not hard to pick winners in this kind of market, but I've heard they've been doing pretty well lately.

They currently have three open short-term trades (SRK, ACB, NXS), having held 6, 8 and 28 days. On current prices, those trades are up 11.82%, 22.66% and 20.47% respectively.

The report is fairly expensive though, compared to a lot of other tip sheets available. I suppose if you were just starting out and weren't able to conduct your own analysis but just had to invest directly in the market, they might be a decent place to start; they've certainly outperformed the index significantly since they began in 1992. They include an educational article with each issue and basically tell readers exactly how to conduct each trade, where to place a stop, when to get out, etc.
 
I've tried a few different tip sheets, one Im currently subscribing to is 10 bagger quarterly and they have a pretty good history.
 
Looking for "endorsements" from subscribers to Fat Prophets.

Do you recommend subscribing to Fat Prophets?
 
The last time I subscribed to a tip sheet was the Huntley's Penny Share Guide back in 1993. On the back of A SPEC BUY recommendation I bought 40,000 Dochlyn Ltd shares at arond 20c each. Dochlyn were in the spa business. Within 6 months they went broke. Thanks very much Ian Huntley.
Never again. I get better ideas from this forum on which to do further research than from tipsheets. Buyer beware I say.
DYOR
 
Ploddle tipsheet

Anything positive that punters may have to help me justify the 30 bucks a month as I am a sceptic when it comes to share help sites::confused:
 
Re: Ploddle

nrodman,

IMO , paying for professional advice on how to bet on the share market is lol - "a low percentage shot" (as the tennis players might say) ....

lol - the worst bets I have made (by a country mile) are when I've listened to experts (other than ASF strangely enuf lol) - and worst of all when such experts all agreed (HDR, CDR, TEL, etc etc - the list goes on lol)

Just a bit of trivia set to rhyme... :-

My trading debts were based on bets that paid-for-experts sent
without a doubt their luck ran out, and west my money went
and worst of all, if two should call, and two such men agree
their rise will stall, their stocks will fall, you’ll lose I'll guarantee
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PS I'll apologise for a post I make yesterday , since taken off ;)
 
Re: Ploddle

2020hindsight said:
Quote:
My trading debts were based on bets that paid-for-experts sent
without a doubt their luck ran out, and west my money went
and worst of all, if two should call, and two such men agree
their rise will stall, their stocks will fall, you’ll lose I'll guarantee
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I like the rhyme 2020!

Hi Nrodman, Checkout the other threads on tipsheets, try a search via the toolbar.
 
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