Your Investment IQ

[Julia]

Julia

Buying back in showed strength of purpose. Recognising a mistake and acting is what makes a good investor. It took me a while to do it and I can still improve.

I have read the book by the guy who did this quiz and really enjoyed it.
As a person who buys of fundamental analysis I really enjoyed the way Soros works which is sort of both fundamental and technical.

I know my biggest weaknesses are that when I have made a decision to buy then I often don't buy as many as I should and kick myself later e.g. I bought a few CSL shares at $14 and really should have bought as many as I could, like Buffett would have. I did the same with Woodside, buying at $15. At least I did the right thing with Oxiana.

My second weakness is that I can have too many stocks and have trouble spending adequate time on them. This caused me a big loss on one of them about 2 years ago. I had twenty two stocks at that stage.
I am correcting this slowly, looking for reasons to leave an investment. I think twelve is enough for me.

I suppose the secret is to know exactly why you are buying and then you will know when selling should take place. This can be influenced by the shareprice going up or down creating doubts. I think I am getting good at ignoring short term fluctuations.

If we compared our holdings to a technical trader, we have the advantage of less trades meaning lower costs (taxes and trading fees) and more time.
That said, the best traders can really do well and be hard to catch in performance, though I like to think I beat 80% of them. It's not that hard to beat the fund mangers though, as long as I beat them I feel I am investing OK.

I am finding it hard to get a good stock to buy at present. Are you finding this also?

Hi Knobby,

Yes, which is why I rectified my mistake with RCD. I agree about having too many stocks as I said in earlier post, but the upside of that is there is considerable diversity so I rarely find an all positive or all negative day.

Cheers
Julia

 

[It's Snake Pliskin]

If one is:

protecting profits - good and risk management is present.

looking for more profit - maybe it's greed.

kicking oneself in the but - emotions aren't sorted out.

 

[Knobby22]

Snake

In reply

1. If you take an early profit, you miss out on some of the gains.
2. If you are not continually looking then you are not trying.
Good investors are always reading information on various companies.
3. Not reviewing your mistakes then you will be condemned to repeat them.

 

[michael_selway]

I got 91.2% so why aren't I rich . Even though he basically a fundamental investor any TA trader would do well as the entries, exits and position sizes are very clear cut.

My weakness according to the report is a fear of pulling the trigger because I don't buy immediately. Depends on their definition of immediately as I don't buy on open but usually near close.

MIT

Depends what u consider rich!

Whats your NET GAIN before any taxes in shares so far, excluding dividends & interest foregone, but including Brokerage Charges

 

[It's Snake Pliskin]

Snake

In reply

1. If you take an early profit, you miss out on some of the gains.
2. If you are not continually looking then you are not trying.
Good investors are always reading information on various companies.
3. Not reviewing your mistakes then you will be condemned to repeat them.

Knobby,

1. I agree, and have not promoted this.
2. True, once again I have not promoted this.
3. Very true, I haven't promoted that either in my posts.

My points above are just to foster debate.

Snake

 

[Julia]

If one is:

protecting profits - good and risk management is present.

looking for more profit - maybe it's greed.

kicking oneself in the but - emotions aren't sorted out.

Snake:

You might like to define "greed" in your understanding of the term.

Julia

 

[Julia]

Snake:

You say "a concrete trading plan doesn't let you decide....." and
"I don't take much notice of brokers' reports".


Really?
So if your technical indicators were showing you it was time to sell and you read a concensus broker summary (just supposing your eyes happened to accidentally pass over it) with ten brokers all describing some new event re Company A which would mean the SP would likely increase substantially in the next month, you would ignore all those opinions and sell anyway?

And, if a concrete trading plan doesn't let you decide, similarly will you stick with your indicators regardless of some important fundamental market factor which inevitably must affect the share price?

Whilst I readily acknowledge that technical techniques are probably very helpful to the trader, I simply don't see how you can ignore the fundamentals of (a) the global situation, (b) the local market conditions, and (c) the specific company factors.

If TA is the be all and end all in stock selection and trading, why is it hardly ever mentioned in the financial press in contrast to endless articles by experienced and competent people discussing the fundamentals of various companies?

Julia

 

[It's Snake Pliskin]

Snake:

You say "a concrete trading plan doesn't let you decide....." and
"I don't take much notice of brokers' reports".


Really?
So if your technical indicators were showing you it was time to sell and you read a concensus broker summary (just supposing your eyes happened to accidentally pass over it) with ten brokers all describing some new event re Company A which would mean the SP would likely increase substantially in the next month, you would ignore all those opinions and sell anyway?

And, if a concrete trading plan doesn't let you decide, similarly will you stick with your indicators regardless of some important fundamental market factor which inevitably must affect the share price?

Whilst I readily acknowledge that technical techniques are probably very helpful to the trader, I simply don't see how you can ignore the fundamentals of (a) the global situation, (b) the local market conditions, and (c) the specific company factors.

If TA is the be all and end all in stock selection and trading, why is it hardly ever mentioned in the financial press in contrast to endless articles by experienced and competent people discussing the fundamentals of various companies?

Julia

Julia,

The word "GREED" has not been directed at your example.

I don't take MUCH notice of broker reports, meaning, I give them a cursory glance if I stumble across them, I didn't say no notice.

I would still stick to my plan and system. If anything good comes of a stock it may already be reflected in the price anyway - this hapened with TSE recently. News came out of more contracts, fundamentally good, and the price went up 9 cents and dropped, and hasn't been back there since. But, if my system stops me out, and the stock turns back up, I still have my capital to buy back into it if my plan lets me. I will not chase the market though.

With regards to the fundamental mindset, I do take notice of balance sheets, a few ratios and read some articles on the economy and investing, etc. before I shortlist stocks. Beyond that it's the plan.

Trading a plan doesn't mean T/A is the be all and end all. Fundamental anlaysis is easier than technical analysis to understand in my opinion. If you've got the money to buy a company then be like Buffett, I'm the first one to agree here.

Regards
Snake

 

[Julia]

Julia,

The word "GREED" has not been directed at your example.

I don't take MUCH notice of broker reports, meaning, I give them a cursory glance if I stumble across them, I didn't say no notice.

I would still stick to my plan and system. If anything good comes of a stock it may already be reflected in the price anyway - this hapened with TSE recently. News came out of more contracts, fundamentally good, and the price went up 9 cents and dropped, and hasn't been back there since. But, if my system stops me out, and the stock turns back up, I still have my capital to buy back into it if my plan lets me. I will not chase the market though.

With regards to the fundamental mindset, I do take notice of balance sheets, a few ratios and read some articles on the economy and investing, etc. before I shortlist stocks. Beyond that it's the plan.

Trading a plan doesn't mean T/A is the be all and end all. Fundamental anlaysis is easier than technical analysis to understand in my opinion. If you've got the money to buy a company then be like Buffett, I'm the first one to agree here.

Regards
Snake

Snake:

All that makes sense. Except that if you sell then buy back in then you have to take account of the brokerage both ways.

Regards
Julia

 

[wayneL]

I gotta weigh in on this one

You say "a concrete trading plan doesn't let you decide....." and
"I don't take much notice of brokers' reports".


Really?
So if your technical indicators were showing you it was time to sell and you read a concensus broker summary (just supposing your eyes happened to accidentally pass over it) with ten brokers all describing some new event re Company A which would mean the SP would likely increase substantially in the next month, you would ignore all those opinions and sell anyway?

Apsobloodylutely! Brokers just aren't right often enough for me to pay any attention at all to them. I don't even look...not even by accident.

And, if a concrete trading plan doesn't let you decide, similarly will you stick with your indicators regardless of some important fundamental market factor which inevitably must affect the share price?

It is true that fundamentals drive price....eerrrrr...hang on a minute! That can't be true! There would never have been a dot com boom if that were true. There would never be bubbles or crashes, it is sentiment which drives price.

You can have two stocks in different sector with similar fundamentals. One will be trade at P/E 60 and the other at P/E 12. Whats the the bloody difference? Sentiment! One could be in a hot sector the other in a neglected sector, but that would be the only difference.

Sentiment drives price. Technical analysis attempts to track this sentiment.

BTW T/A is not necessarily about indicators. Many don't use them. (depending on what we call an indicator)

Whilst I readily acknowledge that technical techniques are probably very helpful to the trader, I simply don't see how you can ignore the fundamentals of (a) the global situation, (b) the local market conditions, and (c) the specific company factors.

I have entered trades where I don't even know the name of the company, just the ticker symbol. Though I must admit to curiosity getting the better of me and at least finding this out after the event.....plus when earnings are due so I can get out of the way

If TA is the be all and end all in stock selection and trading, why is it hardly ever mentioned in the financial press in contrast to endless articles by experienced and competent people discussing the fundamentals of various companies?

"experienced and competent people"? hmmmmm Why would I listen to someone who writes articles for a living, giving me advise about investments?

Lets clear something up here. Nothing is the be all and end all. Not fundamentals, quantitative analysis, statistical analysis or technicals.

But to answer your question:

If one wants to be an "investor" rather than a "trader", then they should consider the fundamentals.

Investors read the financial press and this is where the financial press is directed. Traders don't read the financial press, not the mainstream anyway...unless trying to guess which way the herd is going to move.

A trader is a different beast altogether. In my time frame, fundamentals are irrelevant, save for extenal factors affecting sentiment such as the price of oil today and whether someone is flying jets into buildings or something. But this is not really fundamental info on a micro level. These are things that get people emotions going.

Just to belabour the point... investors and traders are different animals and to try to compare methods is a folly.

To give you an idea; I do this to pay for my groceries, I don't have a job. I need to write myself a cheque at the end of every month and not dip into my original capital (and hopefully leave some profit in for compounding). Fundamentals don't cut it for someone like me..they are irrelevant. I need momentum NOW. Doesn't matter whether short or long as long as it moves. If it's doing nothing I'm out, and looking for something thats moving. By the time the press writes about it, I,ve picked it up in a scan, been in and out and long gone.

Investors can afford to let a position develop over time...very different!

So you can see, for someone like me T/A IS the be all, but only because of the time frame.

So the press is not writing for me. I am the minority. They are writing for investors, who are the majority.

Julia

Cheers

PS Just throwing in some emoticoms to show my tone. No agro here.

 

[ocd]

I am with Wayne on this one! All the way.....

 

[ocd]

Took the test anyway just to satisfy my own curosity and here is the result....

 

[tech/a]

I gotta weigh in on this one

I have entered trades where I don't even know the name of the company, just the ticker symbol. Though I must admit to curiosity getting the better of me and at least finding this out after the event.....plus when earnings are due so I can get out of the way


If one wants to be an "investor" rather than a "trader", then they should consider the fundamentals.


A trader is a different beast altogether. In my time frame, fundamentals are irrelevant, save for extenal factors affecting sentiment such as the price of oil today and whether someone is flying jets into buildings or something. But this is not really fundamental info on a micro level. These are things that get people emotions going.

Just to belabour the point... investors and traders are different animals and to try to compare methods is a folly.

To give you an idea; I do this to pay for my groceries, I don't have a job. I need to write myself a cheque at the end of every month and not dip into my original capital (and hopefully leave some profit in for compounding). Fundamentals don't cut it for someone like me..they are irrelevant. I need momentum NOW. Doesn't matter whether short or long as long as it moves. If it's doing nothing I'm out, and looking for something thats moving. By the time the press writes about it, I,ve picked it up in a scan, been in and out and long gone.

Investors can afford to let a position develop over time...very different!

So you can see, for someone like me T/A IS the be all, but only because of the time frame.

So the press is not writing for me. I am the minority. They are writing for investors, who are the majority.

Cheers

PS Just throwing in some emoticoms to show my tone. No agro here.

Just some comment on waynes comments I've listed above.
brief because of time.

(1) I think both investors and traders can do this. I still dont know what SFE do.
My neighbour "invested" in a portfolio 3 yrs ago and to this day has no idea what they do.Its well in profit and thats all she cares or wants to care.Often I ask how its going and she doesnt know.
She picked them technically with a hand from myself--I ofcourse read here the memoranda of articles.

(2) Active traders are very different to investors.I personally dont enjoy short term buzzing around in the market.Often my portfolio rises 2-5% in a week---no buzzing and that equates to $3-8k,if I wanted to or had to live off of the earnings than I could with minimum of fuss and stress.If I ever do trade for income then it will be longer term and fully capitalised,not buzzing in and out.
I personally believe that MOST "traders" trade quickly in and out as they cannot capitalise trades to an extent that would allow a different more passive style.
Yes I know many like to trade this way and many argue that its more profitable--fine thats OK for them not me.

For me its simple.

I take control of my decisions,I keep trading simple and I know the Numbers.
I track NUMBERS.

Stocks and their nuances both Technically and Fundamentally are simply commodities used to trade within the business.

Endless discussion on technicals and fundamentals wont and doesnt make your profit.

 

[It's Snake Pliskin]

Snake:

All that makes sense. Except that if you sell then buy back in then you have to take account of the brokerage both ways.

Regards
Julia

Julia,

The brokerage is not a problem if I'm not overtrading. It's about taking the best trade you can find, as I don't need the money to survive on, but I want the highest probability trade. This means I have to wait and sometimes don't click the mouse to rack up comissions. Oh, and the brokerage is factored into the equation....

 

[It's Snake Pliskin]

I am with Wayne on this one! All the way.....

So am I.
I won't say me too, because it's gramatically wrong :

 

[dutchie]

The end all and be all is --- Inside trading.

 

[It's Snake Pliskin]

The end all and be all is --- Inside trading.

That would be true.

 

[Julia]

Wayne,

Your post clarifies the difference between you and me: you make your living from being active all the time so I can absolutely see how TA works for you.

I am a long term, largely buy and hold, investor, and echo the sentiments posted by Tech-A. Would come close to holding the philosophy endorsed by Buffet when he said "buy stocks you will never want to sell". Wouldn't take it that far, but 80% of my portfolio is made up of top 100 companies with solid record of increasing growth and dividends. If I had no other source of income I could live off the dividends comfortably. And each year there has been a decent growth in capital.

So, given the above, would you (or anyone else who wants to offer their 2c worth) say TA would materially alter my profitability?

My portfolio is such that I'd be quite happy not to look at it for many weeks on end, and would never have the application or energy to be trying to extract every $ on the way up with a long term stock.

Your point about brokers is well made. The non-performers in my portfolio are the ones recommended by full service broker when I was prepared to trust the recommendation. No longer using fullservice broker and have a conditional sell order on all of them.
That said, if I saw a consensus recommendation with ten brokers all recommending a Buy and backing it up with valid reasons why, I'd certainly take notice.

I guess as a long term investor, I'm a bit outnumbered by traders here, unless other long term members just don't speak up?

Julia

 

[canny]

Hey - Crash or Michael Selway - how do you post the chart on? I tried, but only the test was pasting.
TIA

Although Im only learning at the moment and have made only 2 trades, I completed this test. I couldnt answer a lot of questions and the results are bit sceptical for me

I plan on developing a trading plan so I assume the results of the test wouldve been a lot different if I had a system to trade to in place.

 

[tech/a]

Julia.

I think we are a rare breed---infact I think at our age we have earned it!
Bugga.

I have just one comment which may have you pondering.

There are times when you should not be long in a stock just as there are times you shouldnt be long in a market.
These times may or may not align.

I have shown testing that long methods are more profitable if you stand aside from trading them in Bearish moves (Quantifying a bearish move or period is much harder).That is exit all positions
In reality exiting one of my own portfolios in May cost me dearly in Tax which I hadnt factored into my testing--Bugga again!!

Maximising any portfolio is the next challenge if you can invest or trade profitably.

To me Technical analysis is the tool best used.
There are many ways this can be achieved.(Maximising Portfolio profits).
(1) Maximising position sizing in "Movers"
(2) Decreasing position sizing in stalling stocks or decliners still trading within a systems parameters.
(3) Identifying times NOT to be trading long.
(4) Free trading profits.
(5) Looking outside your backyard.(Trading other bourses and markets,commodities/stocks.) Technical analysis makes this possible without an indepth knowledge of that being traded.


Can anyone add any more?
Appears like a few others I'm a drip under pressure (an EX spert)