Which one do you use? Technical or fundamental analysis?

[Realist]

Re: Which one do you use? Technical or fundamental analysis

A lot actually. Some traders will only concentrate on a single or a couple of companies and go long and go short repeatedly. CBA has gone from 42 to 47 down to 41 and back up to 46. That's around 16 dollars of movement compared to 4 dollars if you buy and hope. If you caught just 50% of each swing that's still 8 dollars of movement.

MIT

Well in the first 6 months of this year it's gone from about 43 to 47 to 42 to 45.

= 12 point's of movement.

And about $2 for buy and "hope" + $1 dividends.

If the trader catches half the movement they get $6 - $3 after tax, the same as the investor.

I own CBA myself. It's solid - that's all it's got going for it at the moment!

 

[mit]

Re: Which one do you use? Technical or fundamental analysis

Well in the first 6 months of this year it's gone from about 43 to 47 to 42 to 45.

= 12 point's of movement.

And about $2 for buy and "hope" + $1 dividends.

If the trader catches half the movement they get $6 - $3 after tax, the same as the investor.

I own CBA myself. It's solid - that's all it's got going for it at the moment!

Sorry the low was 41 that's where I got my $14 from. The investor also has a tax liability from the dividends (15%) and CBA when they eventually sell (50 cents for this piece of growth). So it is $3.50 against $2.35 and don't forget the trader will leverage.

Going back to my original point why does the investor get to use all of his money and it is low risk and the trader doesn't because it is "too risky"

MIT

ps. I'm holding CBA at the moment for my dividend system. It has returned 10% on my capital (leveraged) to date, Taking an average trade I expect to make 20% on it by the time I'll sell on the exdiv date. My tax will be lower as I'll have swap around half of the capital growth for the dividend and have the 30% tax credit if it is fully franked.

 

[Bobby]

Re: Which one do you use? Technical or fundamental analysis

Realist, get a copy of Nicks book ( Adaptive Analysis ) & read it over & over till you get it.
Also try reading as mentioned before Frank Watkins book ( Exploding the Myths ).
Iv'e got both & DO recommend them especially Nicks !

After you study them , you will have a new outlook we can only hope

Bob.

 

[tech/a]

Re: Which one do you use? Technical or fundamental analysis

Realist, get a copy of Nicks book ( Adaptive Analysis ) & read it over & over till you get it.
Also try reading as mentioned before Frank Watkins book ( Exploding the Myths ).
Iv'e got both & DO recommend them especially Nicks !

After you study them , you will have a new outlook we can only hope

Bob.

Sound advice if the recipient is looking for advice.

Clearly they arent.
They know it all ,Nick may learn a thing or 2.

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Going back to my original point why does the investor get to use all of his money and it is low risk and the trader doesn't because it is "too risky"

If an investor and trader are buying the same stocks then it is actually the investor who takes more risk.

I just don't see any reason why you'd want to buy CBA to be honest.

So it is $3.50 against $2.35 and don't forget the trader will leverage.

What the?

You borrow $100,000. Buy CBA shares at about $44 and make $3.50 after taxes etc. So an 8% return. But your loan costs you 8% p/a to pay.

How do you make any money?

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Hey guys!!

I read in the paper today that 145,000 people in Aus registered for new share accounts in the past year.

It showed some mum who trades from home. "I gave up on property, becuase I couldn't make any money. Now I trade for a living, I make over 100 trades a month on etrade"

Does that scare you?

your thoughts?


It makes me want to buy property.

 

[eddievanhalen]

Re: Which one do you use? Technical or fundamental analysis

Cripes - that's a sensible point Realist.

That does scare me a bit......more for her sake than anything else. I don't believe we have reached the point of a final flood of exuberance that often signals a top. And ofcourse plenty of people had their fingers burned May -June and it'll take some time before the newbies recover and/or a new batch arrive to be slaughtered one last time

So no........I don't necessarily think it says much about the market just yet but it does pay to keep that type of thinking in the back of your mind.

If she is an absolute beginner and is trading resource stocks and thinks she's going to make a nice easy living out of it for the next 10-20 years then she's in for a surprise I'd say. Whilst learning to trade in a bull market can be fun it invariably leads to a false sense of confidence ("Don't confuse a bull market with brains" etc.........)

I invested mostly in the 90's but didn't really hit the market hard with a decent size TRADING kitty until 2001-2002 and I am grateful now that I honed my skills during some pretty tough and volatile times. I learned more hard lessons (the best ones) in that 2 year period than I have in the following 4 years that's for sure.

Ed

 

[Bobby]

Re: Which one do you use? Technical or fundamental analysis

How do you make any money?

By not doing this :sheep: :sheep:

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

WooHoo someone finally agrees with me.

I saw ad's on tv in the states for home Forex trading kits. This lady reminded me of that. She tried property and failed, tried shares - soon to fail no doubt. What next? Amway.

It was in the Sydney Daily Telegrah about page 20 or so.

The thing that scared me was "I make over 100 trades a month". I got a shudder down my spine when I thought about the brokerage. :


Crazy..

 

[Bobby]

Re: Which one do you use? Technical or fundamental analysis

I got a shudder down my spine when I thought about the brokerage.

Gee that reminds me about the old fart who won millions in lotto some years back.
He was freaking out about how it would affect his pension

Bob.

 

[NettAssets]

Re: Which one do you use? Technical or fundamental analysis

You borrow $100,000. Buy CBA shares at about $44 and make $3.50 after taxes etc. So an 8% return. But your loan costs you 8% p/a to pay.

How do you make any money?

In the past 12 months you would have done this at least 3 times on CBA

Buy October - sell november
buy december - sell january
buy march - sell may
buy june - still holding

so about 6 months of interest or 4% for a 24% return.
Seems like there is money there!

But you may be better off using options and not margin.

John

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Gee that reminds me about the old fart who won millions in lotto some years back.
He was freaking out about how it would affect his pension

Bob.

Or is it like Michael Schumacher moving to live in Monaco to avoid tax?

 

[professor_frink]

Re: Which one do you use? Technical or fundamental analysis

Quick question for you realist,

You've mentioned previously that you would be happy with a 10% return on your money over the long term, could you explain to me the benefit of investing the way you do, as opposed to buying into an index fund, or etf?

I'm not trying to have a go at you here, I'm just curious as to the advantage of your way of investing over the lazy man's "buy the index" way.

 

[wayneL]

Re: Which one do you use? Technical or fundamental analysis

The thing that scared me was "I make over 100 trades a month". I got a shudder down my spine when I thought about the brokerage. :


Crazy..

Notwithstanding that a bunch of numpties will have their head handed to them on a platter by answering those types of ads:

When I ran my manufacturing business, wages were 10's of thousands per week, the lease on the building was 10' of thousands per year, as was insurance, and other overheads. I spent 7 figures every year buying raw material.

Did that bother me? Nope!

What I was looking at was the bottom line. Now I could have worked as an upholsterer and had NONE of those expenses, but $700 a week (at the time ) was not as appealling as the profit of running a reasonably sized business.

This is the same as brokerage. It is a cost of business when the business is trading share or derivatives.

What matters is the bottom line. Those traders who are sastified that the bottom line (after tax) in their trading business is greater than it would be if they merely invested their capital, will continue trading. Thats all there is to it.

Oh, and I paid tax when I was manufacturing too... company tax, income tax, sales tax (before GST) payroll tax etc etc et-bloody-cetera. Taxation as a trader is one whole lot more less burdensome than a manufacturing business.

The bottom line.... get it?

Cheers

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Good question Prof Frink. First of all I think I said I was happy with 12% after all taxes and expenses are taken out. That is about my success point longterm, of course in good times like the present I need to make more, cause sure enough the bad times will come.

I do not know of any Aussie index funds?? Do you?

Also index funds charge fees - I don't like fees as you know. Fees over the longterm eat into profits quite significantly. I would not buy into a managed fund because of that (and the fact they trade too much), I am thinking of self managing my super actually.

But the main reason is - I enjoy the challenge of trying to beat the market. I quite like reading Graham and looking through reports and balance sheets to see if I can find an undervalued gem.

I aim to beat the market - everyone does, but I am realistic enough to be happy to equal it.

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

When I ran my manufacturing business, wages were 10's of thousands per week, the lease on the building was 10' of thousands per year, as was insurance, and other overheads. I spent 7 figures every year buying raw material.

Serious question. Does that manufacturing plant still exist Wayne?

Or has it closed down, because it is cheaper to import the goods from China than manufacture them here?

Their costs would be much lower of course.

High overheads will get you eventually.

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

Wayne, you also missed my point. I was not having a go at traders...

My point about that lady trading was she moved from property investment to trading 100 times a month just like that.

Does that not ring alarm bells to you?

I do not deny people can make money trading. But to jump in and trade like a bat out of hell is surely financial suicide?

 

[professor_frink]

Re: Which one do you use? Technical or fundamental analysis

Good question Prof Frink. First of all I think I said I was happy with 12% after all taxes and expenses are taken out. That is about my success point longterm, of course in good times like the present I need to make more, cause sure enough the bad times will come.

Sorry, 12% then(hey I was close anyway ).

I do not know of any Aussie index funds?? Do you?

I was actually looking at the etf today for the top 200(STW). Apart from that I'm not sure.

Also index funds charge fees - I don't like fees as you know. Fees over the longterm eat into profits quite significantly. I would not buy into a managed fund because of that (and the fact they trade too much), I am thinking of self managing my super actually.

yes, index funds do charge fees, but they are alot lower than managed funds.

But the main reason is - I enjoy the challenge of trying to beat the market. I quite like reading Graham and looking through reports and balance sheets to see if I can find an undervalued gem.

I aim to beat the market - everyone does, but I am realistic enough to be happy to equal it.

that's a good enough explanation for me

 

[Realist]

Re: Which one do you use? Technical or fundamental analysis

From the Daily Telegraph page 25..

One happy punter is single mum Cydney O'Sullivan, who started out developing property, but found it was too hard to make money - and to keep it, when she did.
"I decided to try share traing and I absolutely loved it", said the Kenthurst resident, who makes about 100 trades a month on E*Trade.
If you are a successful trader, the tax system is quite geared towards investors. You can keep more of the money you make," she said.
"In business, or in being a real estate investor...it's very difficult to make a profit"

"the tax system is quite geared towards investors"

what the hell is she talking about?

 

[wayneL]

Re: Which one do you use? Technical or fundamental analysis

Wayne, you also missed my point. I was not having a go at traders...

My point about that lady trading was she moved from property investment to trading 100 times a month just like that.

Does that not ring alarm bells to you?

I do not deny people can make money trading. But to jump in and trade like a bat out of hell is surely financial suicide?

Yes I do take your point, and yes it does ring alarm bells. I have no respect for the clowns that run these "seminars". The cost and hype seems to be inversely proportional to value and education obtained.

Trading should be viewed as an apprenticeship, not a "turn-key" wealth panacea as promoted. There are hard yards to be travelled and an unrealistic dream is sold by these heathen that this can be by-passed.

It annoys the bejeezuz out of me.