Your thoughts on this strategy...

[whizz21]

Hi there,

Assume there is a basket of stocks with many having gone down significantly in value since the time they were purchased, say in 2006-2007.

Assume some of the portfolio is in small stocks and another part is in index type funds.

Now, I'm thinking about selling these two types of investment in the not to distant future, at a loss and re-invest into large caps, possibly financial stocks. My reasoning is that as financial stocks have gone down the most (and may go down further) and are likely to re-bounce the fastest and the strongest. (and quicker than small caps as well as funds)

Any thoughts on this strategy?

 

[nioka]

I believe now is a good time to switch one stock for another. My suggestion is to forget charts and T/A and closely examine the fundamentals. If ever there is a time when F/A is superior to T/A it is now. There are many fundamentally sound stocks that have a price drop which is not justified. there are plenty of cashed up companies with sound incomes and a good future even in uncertain times.

 

[ROE]

Hi there,

Assume there is a basket of stocks with many having gone down significantly in value since the time they were purchased, say in 2006-2007.

Assume some of the portfolio is in small stocks and another part is in index type funds.

Now, I'm thinking about selling these two types of investment in the not to distant future, at a loss and re-invest into large caps, possibly financial stocks. My reasoning is that as financial stocks have gone down the most (and may go down further) and are likely to re-bounce the fastest and the strongest. (and quicker than small caps as well as funds)

Any thoughts on this strategy?

Are your stock portfolio good stock? ie are they making money, what's the ROE and ROIC, cash flow, market dominance, are management people like sort of WOW, JB hi-Fi, Reject shop, CBA type of management or more like Eddy Grooves and Phil Green type people.

if they are quality stock there is no need to get rid of them if they down in value because of bear market but if they are bunch of junk then get rid of them and move into better company.

Blue chip doesn't mean it's a quality stock nor price will come back when the market rebounce ... Market reward good company with solid profit and balance sheet.

If the earning is there price will reflect the earning sooner or later.
the market is mostly efficient so price will rise once the earning show up.

the occasional times when it's inefficient due to fear and panic that where I like to buy

 

[apra143]

If ever there is a time when F/A is superior to T/A it is now. There are many fundamentally sound stocks that have a price drop which is not justified. there are plenty of cashed up companies with sound incomes and a good future even in uncertain times.

Even if you found a company that had decent fundamentals and undervalued, it could be days/weeks/months/years before price swings your way.

Trying to get in "early" and "cheap" is like picking bottoms. Whatever happened to looking at the primary trend, and sticking to sidelines when there is just so much fear and uncertainty?

Beginners should look away, let the pros handle this market

Just my

 

[nioka]

Even if you found a company that had decent fundamentals and undervalued, it could be days/weeks/months/years before price swings your way.

let the pros handle this market

Just my

That is what investing is all about. Days weeks months years.

It is the "pros" that have created the problem.

 

[skyQuake]

That is what investing is all about. Days weeks months years.

It is the "pros" that have created the problem.

The myth with picking tops and bottoms is with fundamentals. Its too hard to pick a timely bottom when value is relative. Technicals *can* pick bottoms (eg capitulation lows, major support levels etc...)
Not saying one is superior to the other but you gotta look at both and understand the merits and weaknesses of both.

Anyways, jumping into financials because they are 'cheap' or have 'fallen harder than the rest' is simply dangerous. A lot of people jumped into AIG and Lehmans because it was 'cheap' and hit harder than everything else...
imo, re-analyse the initial reasons you bought the stock, are they still valid or has the picture changed? Are the reasons for ur buy and hold still valid?

 

[Trembling Hand]

If ever there is a time when F/A is superior to T/A it is now.

Would you like to prove such an out right ridiculous statement?

 

[Nick Radge]

Of course those that have been using FA over the last 12-months have no money left even if now was a good time to use it...

 

[nioka]

Would you like to prove such an out right ridiculous statement?

My bank balance proves it for me. I don't have to prove it to anyone else.

 

[wayneL]

My bank balance proves it for me. I don't have to prove it to anyone else.

Oh brother!

The king of cop out statements. LOLOL

 

[nioka]

Of course those that have been using FA over the last 12-months have no money left even if now was a good time to use it...

Possibly no SPARE money. It is all tied up in fundamentally sound stocks. Those taking the advice of a lot of posters here would have had margin calls that have decimated their capital and left them out of the market completely.

 

[nioka]

Oh brother!

The king of cop out statements. LOLOL

Thought you would say that. I'm waiting for the great expert , chops, for a reply too. I think he is busy on another thread.

 

[Trembling Hand]

My bank balance proves it for me. I don't have to prove it to anyone else.

We are all Internet millionaire's hey?

Funny about that you were only complaining a couple of days ago about your holdings being manipulations down. Must be some special bank account.

Here is your FA over TA for you. What a laugh.

 

[skyQuake]

Possibly no SPARE money. It is all tied up in fundamentally sound stocks. Those taking the advice of a lot of posters here would have had margin calls that have decimated their capital and left them out of the market completely.

How do you gauge the fundamental soundness of a stock in this environment with certainty? Stocks in the ASX 20 can move by 50% in a day. Fundamentals mean little when fear and greed take over.
So are you saying now is a good time spend all your money in value stocks and invest for the long term?

 

[mazzatelli1000]

I believe now is a good time to switch one stock for another. My suggestion is to forget charts and T/A and closely examine the fundamentals. If ever there is a time when F/A is superior to T/A it is now. There are many fundamentally sound stocks that have a price drop which is not justified. there are plenty of cashed up companies with sound incomes and a good future even in uncertain times.

Try using some common sense as well. It helps keep your bank balance positive

 

[nioka]

We are all Internet millionaire's hey?

Funny about that you were only complaining a couple of days ago about your holdings being manipulations down. Must be some special bank account.

Here is your FA over TA for you. What a laugh.

You show the chart for OZL. A good example. Sure I am in the red there

BUT. I traded MCR for OZL when MCR was worth more than OZL and increased the number I hold. Then as the OZL price ran ahead of the MCR I traded back. I now have 11% more MCR than I had a month ago. I believe they are both fundamentally sound and am prepared to hold both as a long term investment. In doing the trades I have a capital loss which I can use this financial year.

 

[skyQuake]

Could have a LOT more of both if u sold earlier...

 

[wayneL]

Thought you would say that.

As you correctly noted in another post, Aussies are not stupid. Yet you continuously insult their intelligence with posts like this and others.

As for the the TA/FA debate: It's all a bit tribal for some people, as if it really mattered that their method of analysis has to be validated by popular assent.

To get a true idea, we must look to the folks who do this for a living. Not fee takers like fund managers and brokers, people who pay the grocery bills and what ever other goodies they buy with their profit.

The reality is that there are both types of people in that group. Some use TA, some use FA.

Whatever works is real, and that varies from personality to personality.

Now let's have enough of this puerility.

 

[ROE]

Even if you found a company that had decent fundamentals and undervalued, it could be days/weeks/months/years before price swings your way.

Trying to get in "early" and "cheap" is like picking bottoms. Whatever happened to looking at the primary trend, and sticking to sidelines when there is just so much fear and uncertainty?

Beginners should look away, let the pros handle this market

Just my

Uncertainty and fear create opportunity for you to buy quality company at discount price.. any other time you pay full price and a whole lot more and your chance of getting smack around your capital is hell a lot higher than someone paying 30% or 40% less in a bear market if the core business
stay in tack...earn may go up and down but if the core business is intact you better off buying it at lower price.

and buying stuff cheap doesn't mean you are picking bottom, when the value of the stock fall below what I consider intrinsic value I call that is cheap whether the stock trade in a Bull or Bear market is irrelevant

What I consider cheap? If TAH ever fall to around $7 that is a cheap stock
not because it it's has fallen from $18-$19 Dollar but the earning power and
business going forward in my book going to earn you a lot more than $7 you invest into it some 10 years down the track.

Amen

 

[nioka]

Could have a LOT more of both if u sold earlier...

Remember I'm the dumb one. I don't have hindsight. Nor do I have a crystal ball or a time machine.

To me each day is a new one. I check my watch list and look for something that is overvalued, in my eyes, on that day. If I find one I sell and look for another that is undervalued that I may buy.

I don't worry too much about price on the day. I just stay invested as I have done for many years. I take the good with the bad. I don't believe in using borrowed funds and have enough cash available for the immediate future.

I'm also not trying to be the richest man in the cemetary and my conscience is clear that I have not got to be where I am at the expense of others. I also have a little more patience than some. Slow and steady wins the race.

P.S. I also have thick skin so all the rubbish that is thrown at me lately is just water under the bridge.