shares over property,now.

[bbruham]

Looking at the situation as of this minute I believe shares are a much better investment than property.
Property is at a all time high, shares are at an all time low.
"Buy low, sell high. You make your profit when you buy, not when you sell". Who said that?!!!!!!
Being a gambler from time to time,especially when it comes to shares. Keeps the blood flowing.Plus it's not as boring as property. Property is boring when you buy correctly, decent tenants etc.
I have my eye on one listing and I'm going to throw every penny I have in the world at it, which is good money. I've borrowed every bit I can scrounge. This stock should at least double in a reasonable time.
No Asy, I won't mention AMP-- ,oops my mistake!
Shares must be the in thing now.

bbruham.

[Tim]

I have to say that I think there are rumblings in the distance about the fact that the share market must be making a turn around - however I think that the risks in shares and property are different and cant really be compared (thus your comment that property is boring). One things that is not boring is creating wealth by either means.

i think it comes down to your risk tolerance, if you put all your eggs in one basket and win, you have done well, if you lose it all, you do poorly. At least with property, over a minimum 10 year period, it is very difficult to lose.

[jdp]

AMP? A few brokers were saying it was a great buy a few months ago at $19. Then Rivkin told all his followers (baa-aa-aa-aa)
to buy around $12. Today it hit 7.50...
Should be a really good buy when it hits 50c! :)

[TheBacon]

buying blue-chip stocks is like buying blue-chip properties.

You need to watch the current yield, future growth, fundamentals etc. A lot of people just buy blue chip (shares and prop) and hope.

If you buy just for capital growth you are SPECULATING NOT INVESTING.

A property or share must make financial sense NOW, not just in the one-day, maybe, rose-coloured future.

TheBacon

[Ajax]

I worked in a law firm in 1991-92 where one of our wealthiest clients liquidated all 16 of her investment properties to plough funds into the stockmarket.

These were dark times for the stockmarket. If you fired a gun in the Australia Square courtyard at lunchtime you'd be lucky to hit anyone (even luckier if you hit a stockbroker). I was told that this client, who was quite elderly, had switched in a similar dramatic fashion (property to shares or vice versa) on about 5 occassions over the last 40 years. I'd bet she's tempted to liquidate her property portfolio again.

I bought a swag of TNT shares at the time (at 50c). Despite being advised "to pin your ears back son" I sold at 55. I think they hit $2.50 within 18 months before they were taken over.

On BBruham's AMP call, can't help thinking there is more bad news out there.

This from AAP:-

"AMP warns profit may fall again
6:32 PM February 26

AMP Ltd has warned more bad news could be on the way after reporting a record $896 million net loss for 2002 and slashing its dividend payouts to shareholders.

The loss - the eighth biggest in Australian corporate history - was in line with expectations and represented a huge nosedive from AMP's $690 million net profit in 2001.

The earnings slump forced AMP to lop six cents off its final dividend to 20 cents a share, partly franked, while the total for the year fell five cents to 46 cents.

AMP's shares plunged 21 cents to a record closing low of $7.71 after earlier hitting $7.45.

Chief executive Andrew Mohl described the 2002 result as "very disappointing" and warned earnings would fall again in 2003 if equity markets continued to slide.

He blamed the massive loss on the poor performance by AMP's troubled United Kingdom Financial Services (UKFS) division and weaker global equity markets, which have sapped AMP's investment earnings.

"We recognise that shareholders have had a rough ride," Mr Mohl said.

"But as much as we would like to change the past, we have to go forward.

"We know the outlook is difficult, that's why we are cutting our cloth to fit ... we are working around the clock to implement the changes we need."

Mr Mohl said many of AMP's problems stemmed from the "real beating" it had taken from its acquisition-driven expansion in the UK.

During 2002, operating margins at UKFS fell 36 per cent to $211 million while new business dropped 21 per cent to $6.8 billion.

Mr Mohl said the outlook for UKFS was "very uncertain", with current market forces "pushing earnings lower".

The volatile conditions on Britain's FTSE 100 index, to which AMP has a major exposure through its equity investments, made it impossible for AMP to give earnings guidance for 2003, he added.

However, AMP had put in place several instruments, including hedging and derivatives, to reduce the impact of further market falls.

Its UK life operations were also exceeding minimum capital requirements and the group did not at this stage need to inject more cash into the business through an equity raising.

AMP tipped more than $1 billion into UKFS last year to shore up its capital position amid regulatory concerns.

Mr Mohl said he did not believe another company would be interested in buying the UKFS division.

"It would be wonderful if we could click our hands and someone walks in with a good price for that business ... it's not going to happen. We have to manage through," he said.

On the chances of a takeover for the entire AMP group, Mr Mohl said he believed it was a target just like any other listed Australian company.

He also refused to rule out further job losses as AMP continued to reduce costs. Last year, AMP's staff numbers fell by 3,465 to 11,403.

AMP's plunge into the red was largely a result of the previously flagged $1.2 billion in writedowns and $344 million in restructuring costs linked to Mr Mohl's major reform program.

Net profit before significant items fell to $495 million from $667 million.

AMP's Australian Financial Services (AFS) division's operating margins also fell nine per cent to $334 million while its new business dropped 11 per cent to $9.4 billion.

The only bright spot was new business for AFS' corporate superannuation unit rose 12 per cent to $2.4 billion.

AMP's Henderson Global Investors also suffered an eight per cent fall in operating margins to $192 million, while assets under management fell 13 per cent to $255.6 billion."

Ajax

[Steve Navra]

Hi All,

Very rarely will I offer direct share commentary, certainly never will I be predictive.

Shares, like property are governed by basic fundamentals and one of the most basic of fundamentals is how a corporation is managed.

One really needs to take a hard look at a corporations balance sheets over a sustained period (5 years) to ascertain if the management decion making process has and is currently sound.

It remains then of major concern when companies such as AMP and CML seem unable to demonstrate any management direction and when their senior management is leaving in droves.

On this basis alone, one might consider that the corporations risk profile is at best unsound.

Regards,

Steve

DISCLAIMER: THIS COMMENTRY IS NOT TO BE VIEWED AS ADVICE, RATHER IT IS MERELY A DEMONSTRATION OF BASIC FUNDAMENTAL PRINCIPLES. PLEASE REFER TO A LISCENCED ADVISOR FOR ADVICE REGARDING YOUR INVESTMENT SITUATION.

[tonyc00]

I think that there is an investment cycle to property and shares.

Oh sure, you can always find an exception but I do believe that in Sydney, especially in the inner City, the property cycle is near the peak.

On the other hand, some shares, eg telsra ($4.17), AMP ($7.62) are near their low, and consequently an excellent long term buy.

The usual disclaimer follows that the writer is an absolute idiot, and hold shares in the above companies having bought Telstra at $7.40 and AMP at $8.02, and consequently doesn't know what he is talking about - but hey, it's an internet forum - opinions (based on realistic assumptions) are cheap.


regards

Tony

[geoffw]

Originally posted by tonyc00
The usual disclaimer follows that the writer is an absolute idiot, and hold shares in the above companies having bought Telstra at $7.40 Hehe, were you the person who bought the shares I sold from my Telstra 1 float?

Thanks mate!

I don't know enough about shares to offer any other comment. It does worry me though that people start to recommend any share "because it is cheap".

A friend bought Telastra a few years ago, and was really gloating about it, as he bought it on his "buy" price of $6- well below the price when he first entered his buy price of $6.50. he still has ti now at just over $4.

That sort of thinking becomes a real gamble- ignoring the fundamentals of the stock.

At least Steve Navra looks at the fundamentals before reacting to the price. That seems to have a lot more promise.

[Pele]

Gday

I think that now would be a better time to dump your excess $ into the stockmarket versus the property market. However one thing they have in common is that if you do your research and buy quality you will be rewarded. And another thing: investing in the stockmarket is a lot more mentally taxing. When i read this forum i think that there is a bias against shares, but i rekon the best portfolio is a combo of both property and shares plus some cash. Dont shun the stockmarket just becasue you had a bad experience once or becasue you dont know much about it. Educate yourself just like you did with property investing. You could do alot worse than read any book about or by Warren Buffet. The bloke is a legend.

Pele.

[Bill.L]

JDP if AMP hit 50c I wouldn't touch it with a barge pole!! because the next target would be 40c then 30c ...you get the picture.

For anyone who studies the history of shares and what happens between one boom and the next, the overriding feature is that the leaders are never the same. In the 79-80 period it was the Resource boom and many mining (especially gold) companies boomed. Then in the mid 80's it was the time of the entrepeurners. Remember Bond corp, Bell Resources, Adelaide Steamship, FAI insurance etc.
The latest boom had the internet stocks but also had the banks and just because their fundamentals look good now doesn't equate with a high share price in 10 years time. Remember that in 1989 the prospects of CSR at $7 and Pacific Dunlop at $5 looked fantastic. In 1990 the banks looked like they could go under and the financial experts advised against purchasing them.

I have been playing the share market game for over 20 years and only rarely has purchasing the current blue chips paid off. Currently I am out of the market and with new 3 1/2 year lows is certainly NOT the time to purchase.

Bye

[GameBoy]

Shares are looking cheap, and I too have been keeping an eye on AMP. But to bet the farm on it is too risky for my liking. As with property, to make money out of shares you need to be playing the game. Money management and position sizing are VERY important in keeping you in the game! (imo) Example: you have 200k to invest in shares you would be wise to only risk 2% of your trading capital. So you are limiting your loss to 4k, if you put the entire 200k on the one stock, it only takes a small percentage move to force you out of the trade. Now if you were looking to buy shares in a stock worth $5 and know you’ll sell out at lets say $4.50 (preferably just below a major resistance level) then you can purchase 8000 shares. The next trade would then risk 2% of 196k.
Read some share books, they should cover the subject and or read some websites. After all we are investors not gamblers, arent we?

[Aceyducey]

hmmm.

I can't see any shares near their bottom on the market right now - after all their bottom is ZERO.

I've yet to see an investment property's value slide that low.

Blue Chip is a stockbroking term used to make retail (mums & dads) investors feel warm and gooey - look at the Blue Chip list from twenty years ago and that of today - comapnies do not stay Blue Chip for ever.

BIG is not a synonym for SAFE and if there is a war I think that new lows will be discovered.

Shares vs Property - Instead I'll take extensive research of ALL investment opportunities, the use of investment vehicles for appropriate time frames and a sprinkle of common sense thanks :)

Cheers,

Aceyducey

[Michael Croft]

Hi,

The shake out in the insurance industry post HIH and 9/11 has a few years to run. Those left standing will be lean, mean and have less competition.

Anecdotally, my prof. indeminity insurance premium has gone up 5 fold, my excess 10 fold and the policy exclusions have increased this year. It doesn't take a mathematical genius to realise that this rise is slightly above the cost of living increase and even the potential increase in exposure/risk.

So; lean = less than competant corp execs leaving, mean = premiums up dramatically, and less competition is obvious. So long term the insurance industry looks ??????????

What would I know I'm just a bell hop.

Regards, Micahel Croft

[natmarie73]

What about infrastructure? Does anyone on this forum have any knowledge of this new asset class? I have been having a squizz at Macquarie Infrastructure Group - they are a trust which own toll roads in Sydney, Europe and North America. It sounds safer than shares but of course not as much possible growth maybe?

Nat:rolleyes:

[Aceyducey]

Natmarie,

I see infrastructure trusts as having great investor-attraction potential because of comparative safety, but lower returns than other investments. They are influenced by population movements, contract lengths & government stability so it's worth closely investigating the types and locations of the infrastructure invested in and the contract terms.

And property trusts are really like buying your own, but without the control or discretion.

[natmarie73]

Thanks Acey,

That's pretty much what I thought. For a shareaphobic investor like me it is probably a good way to diversify in the future. At least no one will run off with the company profits lol.

Nat.

[bbruham]

I owned AMP(issued free) on listing. Sold for $21.50 a share.
Never taken my eye off them since, also watching CML and Telstra. Sold Telstra after the first float. Never bought into the second float. The whole market is still heading south.
Of course buying shares before the Iraqis cop it, is stupid.
So I'm waiting for the war.

My mate got rich quick on Telstra, bought parcels of them under bodgie names, you were only allowed to buy a certain amount per person. Even named them after the dog,cat and mother in-law. The maximum for each person. Bought tens of thousands.
The government of the day handed over the shares, didn't charge you for the shares for month or two. Sold at the last minute, never paid a penny for them, came away laughing.

bbruham.
,

[Aikido]

Hi all,

thought i'd make my first time post (please be gentle :p )

An interesting book I read about the sharemarket says not to buy at new low but rather buy when you know the stock in moving in an upward direction.

The thinking behind this is that if the company has hit an all time low it must be for a reason and there is a good chance that it will keep on going down. Unfortunately everyone wants to buy things cheap or at a bargain ( I feel sorry for all the investors who listen to RR's recommendation to buy AMP at $11). I wonder if he includes it in his hit rate calculations :D

Did he tell them to sell? Or is it a good long term investment. The biggest myth I've come across in the sharemarket is holding onto losing trades with the phrase of "Long term investment". I do not understand buying Telstra at $7.50 and still holding it at $4 and hoping it will come back. What is long term? 5, 10, 20 years???? How does anyone know if Telstra will go back to $7 so you can break even in that period. And as well all know $7 today will not be the same in 5 years time. The same with AMP when will it ever hit the lofty heights of $36 again.

Not sure if this helps anyone and if I really know what I'm talking about but hey, you never know

:cool:

[Michael Croft]

Hello Aikido,

The way of harmony is a strange handle to adopt and I like it. Been a practitioner my self for 20 years.

Welcome!

Regards, Michael Croft

[Steve Navra]

Originally posted by Michael Croft
"Try, there is no try! there is do or don't do!" Yoda


Hey Michael,

What???

Are you no longer packing your own parachute?


:D
Steve

[Michael Croft]

Hi Steve,

Got bored with my signature but then I believe boredom is the sign of inactive mind ...................
:rolleyes:

Michael

[Mr Turkey]

I think the biggest and most important cycle in the share market is pictured in the gold/dow ratio. Financial assets versus hard assets like gold, oil and commodities. Fiat currency versus gold. Credit expansion versus contraction.

http://www.sharelynx.net/Charts/dowgold1900.gif

The two major turning points were the end of the roaring twenties and the go-go years of the 60s. I think we have completed a major turning point. I am worried about what I think is coming down the line. Gold at US$1500/oz DJIA 4500 would give us a ratio of 3.

Another good indicator is real rates of return. http://www.sharelynx.net/Markets/Charts/RealRates.htm When they approach zero and go negative gold and commodities go up. Or paper currencies go down and they can go to zero.

The CRB commodity index looks to have turned up strongly. Maybe stagflation like the early 70s?

Leading up to the 60s people remembered the great depression and didnt borrow so much. In peoples living memory debt was associated with bankruptcy. People saved for what they wanted. But now its been a long time since debt got a bad name. Now most people believe debt is good and have little fear of it.

Might be time to look at farms instead of city property.

Mr Turkey

[WillG]

I agree with Mr Navra on basing a company on the track record of it's management over xx years.

Another reason to invest in a company is if it undervalued (not cheap) thus has growth potential.

If the impending war casues good companies to be undervalued then perhaps it is a good time to invest (not speculate) in those undervalued companies.

Perhaps it is worthwhile investigating the contracts of senior management (CXO's) before buying into a company. There seems to be a lot of CXO's walking away with millions of shareholders money at the moment. Do the senior execs know something we don't ? Are they taking their money while the company is not completely broke ?

[Sash M]

Hmmmm, AMP?

I shorted AMP at 12.13 and I'm still riding it down. You need to follow the flow and ride with the market, if it trends up you go long, if it trends down you go short.

Fundamentals that you read about are typically useless as the market has already factored in the price.

[bbruham]

Sash M,

Can't wait for the war, then all your theories are out the window.
Oh what a loverly war( who said that!!!!).
Although you do sound like you know what you're talking about.

bbruham.

[Alan H]

With regards to the above comments about war and the resultant sharemarket movements; I read a couple of interesting articles in the last few days which may be of interest.

The first by Annette Sampson entitled "History doesn't always repeat" also had a great little quote from Warren Buffet where he said:

"If past history was all there was to the game, the richest people would be librarians." Love it.... :p

The article/s were commenting on research that Russell Investment Management had done where they looked at some past crises and their effect on the US sharemarket.

The Russell research looked at a long list of 'crises' such as the Fall of France, Pearl Harbour, Korean War, Cuban Missile Crisis, US bombing of Cambodia, USSR in Afghanistan, Iraq invasion of Kuwait, Start of Gulf War, September 11 etc and then how the markets moved immediately after......then 25 days later......65 days later......125 days later and 250 days later.

Extracts from the article:

"History clearly shows a pattern where investors take flight at the initial news of trouble, but the sharemarkets don't take long to rebound.
In some cases the initial falls take a couple of months to work their way through the system; in others the fall happens in a matter of days.
And in some cases the market can go through a period of volatility at the bottom before recovering. But the message from history is that markets do rebound, and when they do the moves can be both sudden and dramatic.
On average, the crises caused the US market to fall by 7.7 per cent and, 25 days later, it had regained half its losses. After 65 days, on average, the market was only fractionally behind its pre-crisis point and it had made substantial gains after 125 days.

[Note: A second article I read put the average Australian Market fall at 4.2 per cent compared with the US figure of 7.7 per cent....]

"Perhaps more pertinently, the firing of the first missiles in the Gulf War was actually greeted as good news by financial markets as it ended months of uncertainty. The market rose 3.7 per cent in the initial days and was 11.5 per cent higher after just 25 days.
Russel Investment Management managing director Alan Schoenheimer also points out that there are differences between this crisis and those in the history books.
This is the first time for example, that the bursting of a sharemarket bubble has so closely preceded the outbreak of war.
The bottom line is that trying to predict what will happen on investment markets over the coming months is a mug's game. No one knows.
History tells us that the sharemarket will eventually rebound, but as Buffett's words indicate, that's only part of the equation.
It doesn't tell us how long we'll have to wait, whether the market has further to fall, or whether the rebound will be followed by further falls.
'Using guesswork to determine investment decisions is never a good idea' says Schoenheimer"

A little further food for thought...........


:)

[Michael Croft]

Hi,

The share pros I know will buy the day or day after the first bombs drop. But these guys are traders NOT investors.

Regards, Michael Croft.

[Mr Turkey]

Shares are my main source of income. In calendar 2002 I made 45% and I had the house bet on it. I don't watch the news, read the fin review or share mags. So much in the media is specifically put there to deceive its too difficult to filter it out. I use general economic conditions, fundamentals and technical analysis.

Currently almost everybody is asking shares vs property. The answer is obvious, neither.

There is one asset class that is seems nobody wants. Nobody talks about. But all my experience leads me to. Its been building for a few years. Day by day I have sat through the boring accumulation phase of what is likely to be one of the most dramatic bull markets ever.

Firstly the money metals gold and silver. Then commodities.

Alternatively you can think of it as a bear market in government issued fiat currency. The dollars (us and oz) will be burnt to support asset prices.

At this point either the oz$ will go down (relative to gold not the us$) or your property prices will go down.

The US$ is the worlds reserve currency. Iraq changed from $US to Euros, look whats happening to them. This war is about money. The US is an empire in decline and is headed into a depression at an accelerating rate. We will follow. An empire in decline strikes out.

There is a chance that the US will shut down the borders, change the currency over internally and repudiate foreign claims. There is no link between fiat currency and physical reality. This has been the case for 30 years. In the big picture its a giant experiment. We have never been here before.

The Kondratieff winter continues.

Mr Turkey

[adaran01]

Hello
I do not know very much about shares. I did read recently however that over the last 100 years, the average downturn in the stock market lasts about 12 years, considering we are about 3 years into the current one, there is a possibility of having to wait a long time before shares start to head back in the right direction.
Looking at the yeild of property at the moment, I would not touch that either. Im going to put all my effort into reducing my investement loan at the moment, so that when the time comes, and rents actually start to catch up to property prices, I will be in a good position.
Regards Adam

[Bill.L]

Ah Mr Turkey

I just love the doomsayers who come along to spoil the party with their words of wisdom and warning. I have heard this line that you follow for over 20 years and I'm still waiting. Are you following Prechter ?? He pushed this line a few years ago and called for the top in the DJIA at 3000, then 4000, then, then,etc. Maybe it's the Aden sisters who proved that gold was going to $US 4000 back in 1980!! The price at the time was south of it's high of around $US 850.

Let me see another little error in your calculations, the Fiat currency devaluing against hard assets. Let's assume inflation goes to 100% per month. My salary that is $50,000 goes to $100,000 then $200,000 then $400,000 then $800,000 then $1,600,000 all within 6 months.

My IP at $200,000 doesn't keep up with inflation and is only worth $350,000 then $600,000 then $1,100,000 then $2,000,000 then $3,500,000 again all within 6 months. Rents also went from $200 to $6400 in the same period.

OH and thats right, my loan of $200,000 went to $200,000 and the interest is fixed for another 4.5 years anyway.
So do you REALLY think I'm worse off??? I DON'T!!
May I suggest to you that you do some positive thinking about the future before you end up giving a great percentage of your net worth to the markets, and lose/waste a lot of time.

I,ve been where your at and I AM speaking from experience.

Bye

[investor]

Originally posted by Bill.L
the Fiat currency devaluing against hard assets.

The only Fiat I know is a car. :rolleyes:

Investor

[Aceyducey]

Originally posted by Mr Turkey
I don't watch the news, read the fin review or share mags.

So how did you know there might be a war coming?

Either you're aware of and thus responding to current events, or you're not, can't have it both ways :)

Originally posted by Mr Turkey
The US is an empire in decline and is headed into a depression at an accelerating rate. We will follow. An empire in decline strikes out.

There is a chance that the US will shut down the borders, change the currency over internally and repudiate foreign claims. There is no link between fiat currency and physical reality. This has been the case for 30 years. In the big picture its a giant experiment. We have never been here before.

I don't see any acceleration of a decline in the US from the figures, in fact I believe that the statistics show a mild recovery. Of course you could mean there will be a depression in the US sometime in the next 200 years (looking at your big picture)

Of course there is a chance that the US will shut borders, etc, etc, etc...but why???? There's more of a chance that Iraq will become a nuclear power (for about 10 seconds before becoming a cinder).

And of course we've never been here before, there is never a time when we have been :)

'Blessed are the Doomsayers, for they will never be proven wrong - just incorrect in their timing.'
Proverbs: 6547:132


Cheers,

Aceyducey

[Simon H]

Hi all

I guess our old friend Eric Snow is no longer hiding in the shadows.

He would have had a field day with this topic, perhaps his shares went south.


Simon H

;)

[Mark Laszczuk]

Sash,

Fundamentals that you read about are typically useless as the market has already factored in the price.

I really liked this statement, it made me laugh. Tell one Mr. Warren Buffett that, see what whether he agrees with you. Those fundamentals that you claim are typically useless have made him the richest investor in history. Think about that one. But then again, Mr. Buffett is just a four sigma event, isn't he?

Mark
'no hat, some cattle'

[TheBacon]

Please explain...

>a four sigma event

???

TheBacon

[Mark Laszczuk]

The Bacon,
Generally, a four sigma event is an unnatural phenomenon. In other words, some investors consider Warren Buffett to be a four sigma event, because they don't believe he or anyone can outperform the market as significantly as he has. In other words, they claim he just got lucky. Reading books like The Warren Buffett Way and Buffettology (which I am reading now, an excellent book, by the way, to understand Buffett you must read this) will shoot that theory to kingdom come.
Let me state here that I am not trying to rubbish Sash or his/her investment style, I assume it is working for them, and they should be congratulated for this, but to say that investing using fundamentals is useless really is a pretty silly thing to say, as it very conveniently ignores the fact that some of the worlds most successful investors (included the world's MOST successful investor) invest in this way.
To claim that the market is generally efficient and that stock prices are always correct also ignores the fact that in general the stockmarket is run by human beings that work on the greatest of human emotions - fear and greed. There are plenty of examples of stocks being valued too high or too low every day of the week. This hardly makes for an efficient market.

Mark
'no hat, some cattle'

[Jakk]

G'Day all,

now lets see, what words of wisdom can i offer about shares and stockmarkets??

My only vivid recollection is that of walking past the Stock Exchange on a certain day in the late 80s and having to wear a safety helmit for fear of being hurt by a falling stockbroker or share investor that had jumped out one of the windows.

regards

[tonyd]

Originally posted by TheBacon
Please explain...
>a four sigma event

Just to expand a little on Mark's comment in a hand-waving fashion...

It's a statistical term.
Given the assumption that no one investor was better than any other, then you'd expect their returns to be randomly distributed about some mean - the bell curve. The width of the bell curve is determined by 'sigma'.
Approx 99% of the investors would fall within ±3 sigma. Finding an investor outside this range becomes exponentially less likely given the original assumption.

Mark says Buffett is a 4-sigma event over many decades, so he is doing something right :)

Bradman was something like a 10-sigma event!

Mark, I've read 'The Warren Buffett Portfolio' which picks apart the favoured diversified portfolio of managed funds. It got bogged down halfway through in all this unnecessary crap - but that's the author, not Buffett. A book too far...

cheers, Tony

[TheBacon]

Mark, TonyD - thanks, I understand things a lot better when people start talking numbers and maths....

TheBacon

[JumJones]

within ±3 sigma

Hell, I was severely impressed by the +- sign before the 3 !!!! And i've only ben in IT for 10 years.

[Steve Navra]

Yeah VERY impressed:

So just HOW do you do the" ± ???

[tonyd]

Originally posted by Steve Navra
So just HOW do you do the" ± ???

I asked someone with 11 years IT experience :p

On a PC, Start menu > Program Files > Accessories > Character Map

[Mark Laszczuk]

Tony,
Yeah, I read the Warren Buffett Portfolio also. Not bad, not great. Have you read Buffettology though? I reckon it shoots both books out of the water, even though I think The Warren Buffett Way is an excellent book. The New Buffettology has just recently been released, I'm planning on getting that next.

Mark
'no hat, some cattle'

[Mark Laszczuk]

Just to clarify. I don't think Warren Buffett is a four sigma event, just a very intelligent investor with a lot of common sense who used the market's fear and greed factors to his advantage and made a lot of money.

Mark
'no hat, some cattle'

[dtraeger2k]

He'd make a billion dollars extra per day if he took some advice from Rene Rivkin and marketed for blind helpless sheep followers.

<--- disliker of Rivkin.

[Ross Sneddon]

Hi

Warren Buffet comments are often quoted, and in this thread several times, and his success over 50 years of investing is most likely the reason.

But last night's news, 5March 2003, quoted him as saying that in all the 50 years of investing, he has now reached a position where he cannot find any stock in which he currently has sufficient confidence to invest.

I would only consider myself as a very small player in this business and I cannot but nod sagely and accept the comments of Warren Buffet.

Regards

[tonyd]

Originally posted by Mark Laszczuk
Yeah, I read the Warren Buffett Portfolio also. Not bad, not great. Have you read Buffettology though? I reckon it shoots both books out of the water, even though I think The Warren Buffett Way is an excellent book. The New Buffettology has just recently been released, I'm planning on getting that next.

Hi Mark,

I've only read the 'Portfolio' book written by Hagstrom. Read it years ago. Soon after I focussed on property & property books, and now I barely glance at my friend's shares and options books piled up next to my bed.

I got a fair bit out of the 'Portfolio' book though since it was the only Buffett book I'd read. It turned me off managed funds immediately once I saw the difference in returns of 'value investing' vs 'risk minimisation via diversification'.

Thanks for the tip on Buffettology.

cheers, Tony

[Luke]

Originally posted by Ross Sneddon
Re: BUFFET
But last night's news, 5March 2003, quoted him as saying that in all the 50 years of investing, he has now reached a position where he cannot find any stock in which he currently has sufficient confidence to invest.
I would only consider myself as a very small player in this business and I cannot but nod sagely and accept the comments of Warren Buffet.


I believe I've also read similar comments from him sometime over the past year, but there is a critical difference between us (as very small players) and Warren Buffet.

Quite simply the size of his potential investments makes it extremely difficult to find new stocks in a way that doesn't limit us as far smaller investors. Buffet is not going to consider getting into a stock unless he can acquire significant interest AND it fits his criteria.

btw, he may have said that on 5 March, but on 11 Feb BerkshireHathaway acquired a company called Burlington for $US580m. What was it Dolf Deroos says about the deal of a lifetime.... Looks like even for Warren Buffet that they come along a little more often than once in a life.

btw² The Berkshire Hathaway site keeps al lot of Buffet's letters to the shareholders available on the website at
http://www.berkshirehathaway.com/letters/letters.html

Cheers,
Luke

[Ross Sneddon]

Hi

It is not always easy to know the true meaning of the statement attributed to Warren Buffett in the news report.

He has also recently stated in his last written report to his members that they are in a position to only be able to buy elephants and there are limited numbers of elephants roaming around.

So he can only buy big.

But if he was correctly quoted in the news report, he stated that in looking at the stock market today, he was disappointed to note that there were not any stocks that he felt confident in, rather than there were not any stocks that felt confident he could purchase.

I interpreted this to mean that size was not the issue but rather the quality and value of the stock on today's low and continuing to decline (US) market. He went on to say that the bottom was not yet clear and he preferred to stay away.

It was the auther, whose name I do not recall, who wrote the book about his "Father Thinking he Robbed Banks" who said, "those who scratch around the bottom only end up with smelly fingers".

I interpret all this to mean that now is not the time to invest in the stock market. Others know more than I in this matter.

Regards

Ross

[nigel m]

I must get on the Telstra bandwagon
Telstra shares must be undervalued at present
they must be worth $5 - $5.50 and therefore great value to buy now
Even Steve N has'nt discredited Telstra yet!

Must admit bought T1 sold at $ 8.76, bought T2 at $7.40 still own!!

Regards
nigel m

[Philby]

hi all, came across this little piece, hope it helps you wizards

http://www.moneymanager.com.au/articles/2003/03/03/1046540113786.html

:D

Oops :confused: :p forgot to paste this one

http://moneymanager.com.au/articles/2003/02/18/1045330592810.html

[Steve Navra]

Originally posted by nigel m

Even Steve N has'nt discredited Telstra yet!



Hmmmmm,

I've hardly credited them either :rolleyes:

TLS does pay good dividends, but I am not much in favour of any quasi government company. They tend to make 'non-business' decisions to keep their political masters happy. Hardly a great endorsement for the balance sheet. At this point in time the TLS management falls foul of my '5 years of sound management decisions' criterion.

Regards,

Steve

[Jamie]

Hi all,

Back to the original post for a moment...

Originally posted by bbruham

Looking at the situation as of this minute I believe shares are a much better investment than property.
Property is at a all time high, shares are at an all time low.
"
bbruham.

Hi Bruce,

Whats to say that shares wont fall further?

Since you made the post (shares at an all time low), both TLS and AMP have fallen further... while well chosen property has remained steady or risen in value...

Any further thoughts since your first swipe?

Jamie :p

How many examples are there of shares whose value has gone from $5-10 per share and then ended up at zero...

Now how many residential investment properties have done the same...

[Steve Navra]

Seems we are back on the old debate:

Which foot is better when running the 100 meters??

Why on earth would you attempt to run a portfolio with only one foot then?

:D
Steve

[Mr Turkey]

There is gold, the opposite of the rest of the sharemarket. And selling short.

Can I just point out that some listed property trusts have just entered downtrends. This signals the end of the bull market for that sector.

Mr Turkey

[Steve Navra]

Now we're talking turkey!

Seems Mr. Turkey's in the 4-legged race :D

[Jamie]

Hi all (and esp. Steve :D )

I agree, a balanced portfolio of shares, property and cash should win out in the long run (after all, I have been to Steve's seminar :D :D )

My point was with bbruhams first post around two weeks ago...

He said that shares were at an all time low (and mentioned TLS and AMP). Now both shares have fallen since... so obviously they are NOW AT AN ALL TIME LOW

So Bruce... when is the time to buy? Anyone who had bought when you recommended the market 2 weeks ago would have lost money at the moment... ( in the short term of course...)

Mr Turkey, you make a very valid point... my only real point was that shares can fall to zero... residential property cannot.

As always, I will defer to Steve...

Best wishes,

The Devils Advocate

:D

[Mr Turkey]

> when is the time to buy?

I know this question is to Bruce but I have the answer. There are different times to buy. The bottom is when nobody is left asking if its the bottom. And nobody cares.

Mr Turkey

[Jamie]

Originally posted by Mr Turkey
> when is the time to buy?

I know this question is to Bruce but I have the answer. There are different times to buy. The bottom is when nobody is left asking if its the bottom. And nobody cares.

Mr Turkey

Hi Mr. T.

I agree with you...

My question was rhetorical...

My query was with Bruce G's original post...

Best wishes,

Jamie :D

[Steve Navra]

QUOTE OF THE WEEK!! :D

Originally posted by Mr Turkey
[B The bottom is when nobody is left asking if its the bottom. [/B]



Picking the bottom / top of the market is like trying to find a black cat in a dark room; especially when there is no cat!

You can never know if it is the bottom of the market. (Unless you are a genuine psychic; like most stockbrokers claim to be)

The answer perhaps lies in buying through the low.

Meaning that you buy and continue to buy as the market declines. After all, the share is getting cheaper and even cheaper . . . now isn't that just so logical?

When the market turns, then you would have bought the majority of the share at around and about the bottom :)

What happens if the share NEVER recovers????

Answer: Your fundamentals were faulted; DON'T BUY SHARES THAT CAN GO BELLY UP ON YOU :D :D

Regards,

Steve

[Mr Turkey]

The lesson I have learnt is that there is more than one approach. And each approach works best at different times. Then is deep-value investing, growth investing, momentum investing, day-trading and whatever else works at the time.

Here is the approach extreme value investors use. This works best during a recession. They use fundamentals to the extreme. Looking for shares with high net tangible assets or high revenues. They may not be making any margins just crawling along. They sometimes buy shares that can go belly up. Often they are the only buyer (appart from the directors). But they may only put 5% of their portfolio in each share. The winners can go up 2x to 5x or more coming out of the recession. So the winners cover the losers and the approach is very stable (its hard to go broke).

Day-trading works (so they tell me) for a short period of time towards the very top of a crazy bull market. Occasional nasty shocks gradually wipe them out. And you dont hear of them for long time. Is there an element of day-trading in property investing currently? This approach is unstable (you might lose heaps).

Technical analysis tends to work best at the top of the market. So you can do well in the last half of the bull market. This approach requires trading skills. This approach is semi-stable.

Thing is most people make a religion out of their approach condemning all others. Just like the debate between property and shares. Fundamental investors think Im a chartist and most chartists think Im a value investor.

Now bringing things back to property. What would the signs of a top in investment property be? High volume with price going sideways would be the technical analysis sign. Ive heard so many times about the way property "plateaus" and then turns up. Thing is such a plateau would have decreasing volume making it a continuation pattern. A top occurs on increasing volume and then turning down trapping people at the top. The most famous plateau was observed by the economist Irving Fisher who said "Stocks appear to have reached a permanently high plateau.". He said that on 15 Oct 1929.

Mr Turkey

[Mr Turkey]

>my only real point was that shares can fall to zero... residential property cannot.

It can because it has. At the bottom of the great depression property became a liability because of property taxes. People couldnt give some of it away.

Lucky for property investors, we dont have a gold standard so the government will inflate the money supply before that happens. Thats why I keep saying at this point either property goes down or the dollar does.

I believe this is why gold has been in an uptrend for the last two years. The boomers have made a bubble out of everything else. Why not gold?

Mr Turkey

[Steve Navra]

Originally posted by Mr Turkey
What would the signs of a top in investment property be?

Seems you understand shares well, so use the 'property' P/E ratio.

So the top in IP's would be if their P/E was too high, relative to the norm. P = selling price and E = rental income.

At the moment, you will notice decreasing yields . . . tells you something; yes??

Regards,

Steve

[Mark Laszczuk]

Mr. Turkey,
Yeah, and no one saw that one coming... or maybe they just didn't want to see it. Not in the 'shares always trend up' basket I suppose. So what do you think of today's market? I've been reading some very interesting stuff from Jim Puplava in the last few months, and as a person who knows very little about the stockmarket, but trying to learn as much as I can, I'm kinda thinking the U.S. (read: the whole world) is headed for another 1929.
With the U.S. economy teetering on the edge with a foundation of foreign capital investment, what do you reckon may happen in the near future, say within the next five years? I know you (and everyone else) are not fortune tellers, just wanting to initiate a little discussion on the subject so that I can continue my education and get a few different views.

Mark
'no hat, some cattle'

[Mr Turkey]

To Steve

I dont have the figures for property, just a vague memory of when average yields were much higher. Im a property novice but have decided to do some learning now. Im sure it will come in handy.

This is another pointer to anticipate currency devaluation. When a return of zero on gold seems like a good deal on an inflation adjusted basis. Or alternatively stocks that are likely go ok in that environment. Stocks that will increase pricing power. Now I know our rates are above the US. Lets see what the RBA does, they have been threatening to raise them. I prefer food over banks at the moment. And of course the 5-sigma money that was a few years ahead of everybody is on silver.

I am worried about the debt levels of some people. Sure property will eventually benefit from currency devaluation as it always does eventually. But I fear some people are going to be really hurt.

Mr Turkey

[Mr Turkey]

Mark

I think Jim Puvlava is very right. The US market is still 40% overvalued. Have you seen what happens to insurers when equity markets tank? Look at AMP. So the US insurers are next? The chart of the DJIA suggests to me its being bought by someone desperate to hold it up.

This is just out
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1045511373906&p=1012571727088

Now when the Swiss insurers start getting the wobbles you might start wondering.

I have a few scenarios that are possible. All of them suggest silver, gold and food. This is the savings of the baby boomer generation that is getting crushed. Have they been saving less than they thought. Then there is the pension black holes our stage governments are developing. Who will be taxed for that? If taxes rocket maybe another country might be an idea.

To Steve, remember a common mistake in shares is "too-earlyism".

Mr Turkey

[Steve Navra]

Originally posted by Mr Turkey


To Steve, remember a common mistake in shares is "too-earlyism".



As opposed to " too-late'ism'?? :confused:

I'm a major protagonist of "just-rightism" :D

Steve

[GameBoy]

There are many ways to make money from the market. Buy and hold is one. It took the US market a long long time to regain its loses after the 1929 crash, wouldn’t want to have used a buy and hold strategy then.
I guess one would call Steve Navra a system trader, having developed a mechanical system that gives him an ‘edge’ on the market. Once this edge has been gained its simply a matter of exploiting it again and again. Like a casino, they know they have an edge over most gamblers and exploit it.
Another thing to consider is that very few people actually make money from trading shares, with buy and hold its difficult to outperform the market. So if a crash does happen from baby boomers retiring, the current down turn ect you’ll feel the same pain the market feels. Robert K thinks such a crash is coming (I don’t know and don’t care really), as im looking to make money no matter which way it goes.
My strategy (as a client of Steves) is to purchase shares in his fund and invest in his fund. The money I invest in his fund will preserved on the way down, then will be in a strong position to take advantage of the upturn. Without having to pick the bottom! Best of all because the fund outperforms the market it will be profitable, so those shares should go up in any market conditions.
Im not trying to promote Steves fund, but just to share my thoughts on an overall strategy to ride out any storm that should come our way.
Don’t you just love investing? It’s the ultimate strategy game.
:D

[Steve Navra]

Originally posted by GameBoy

Don’t you just love investing? It’s the ultimate strategy game.


Very appropriate coming from a 'GameBoy'

:D

[Macca]

My understanding of the pricing structure is that all bullion prices are calculated in USD. The AUD is closely tied to the price of gold so here in Australia, when the price of gold goes up, so does the AUD. Because of the exchange rate calculation required our actual buy/sell price can go down even though the US price of gold has gone up as long as the AUD goes up a higher % than gold %. Just a further complication to the timing.

Obviously, we also need to make some allowance for the Iraqi situation. Saddam Hussein is a very wealthy man, as are most of his assistants, they could well have been buying gold for sometime, in the event that they need to "change their PPOR" in the near future.

It is also possible that other middle eastern countries have been buying gold to support their currencies, should some nasty "lurgy" escape into the atmosphere during any bombing of facilities in Iraq their cash flow from oil could be severely disrupted.

When the Iraqi crisis is over gold may take a sharp turn to the south, and take the AUD with it.

Right now is a time in the investment cycle when there are so many conflicting opinions that to "stand aside" is looking very attractive until Iraq is over.

[Bill.L]

The share market and property markets are two different animals and each has it's own peculiaraties regarding risk/reward. Don't expect what works in one to work in the other.

The stockmarket has always been about SELLING paper with the promise of a high and growing return. The reality is the makers of vast fortunes are usually those that sold the float. Technologies and industries change over time, and what was once a great business will eventually get overrun by changes it can't keep up with.
Everything that is produced by the various sectors of the market is just a commodity that goes through a period of boom followed by an increase in production then an oversupply in which all players lose money through low prices. Things like communication are just another commodity and will/are following the pattern. At present in the stockmarket we are going through a phase where there are more sectors in the oversupply area with falling returns. When the market turns around (ie the ASX200) and eventually goes to new highs, the leaders will probably be from some new sector that does not show on the radar screen yet. If I knew what it was I'd be a 5 sigma event.:D

What I'm trying to say is that the stockmarket is a game and you have to understand the history, parameters and rules to make money. One of the best rules to follow is NEVER average down a loser. This is the opposite of what many financial advisors advocate. Remember that what are perceived as wellrun companies with good management and returns could be the next Bond Corporation or Quintex or Pasminco or or or...

I'll explain why property has different rules later.

bye

[Les]

G'day Steve,

I'm a major protagonist of "just-rightism"

Really?? Steve, I would have thought you are more a proponent of "just-rightism"

(.....beating Geoffw - the pedant - to the punch :D )

Regards,

[Steve Navra]

pro·tag·o·nist [ pr tággnist ] (plural pro·tag·o·nists)
noun: an important or influential supporter or advocate of something such as a political or social issue

pro·po·nent [ pr pnnt ] (plural pro·po·nents)
noun: proposer: somebody who proposes something

So Les,

Am I an influential supporter, or a proposer?

Just defending myself :p

Perhaps the Judge and Jury himself can decide,

Ahem, where are you Geoff?? :D

[Les]

G'day Steve,

:o I think I just obfuscated myself .......

From "somewhere" I had the thought that protagonist was "in opposition" to an idea.....

Regards,

[geoffw]

Originally posted by Les
G'day Steve,

:o I think I just obfuscated myself .......

From "somewhere" I had the thought that protagonist was "in opposition" to an idea.....

Regards, Les,

You're probably thinking of "antagonist".

[bbruham]

G'day all,

Yes, I'm still here.
Waiting for my best mate(big George) to blow the crap out of the Iraqies!!!!!!
My little bundle of money has been deposited with the broker.
Now we're ready to go!!!!!!!!!
Every cent I have is now on three big stocks.( Almost as good as betting on a nag!)
$100,000 on AMP.$50,000 on TELSTRA and $25,000 on COLES.
If I had a stronger back bone (bloody coward I am.) I would put even more money into AMP.

bbruham.

[bundy1964]

Originally posted by bbruham
$100,000 on AMP.$50,000 on TELSTRA and $25,000 on COLES.
If I had a stronger back bone (bloody coward I am.) I would put even more money into AMP.
bbruham.

:confused: One is bleeding badly and doesnt look like being back for another year, one is a market leader with a few problems in it's past to straighten out and the other needs to stop the bleeding and move forward.......I own 2 out of 3 :rolleyes:

If I am going to buy shares I would look for a better performer than those 3 at the moment :p

bundy

[geoffw]

I'd buy into those companies at the moment- as long as they were put options :D

Though I might have trouble finding a taker.

(For those who may not know- "put options" are things which you can buy when you expect a stock will move downards- so you make money if it does)

[Steve Navra]

Originally posted by bbruham
Every cent I have is now on three big stocks.( Almost as good as betting on a nag!)
$100,000 on AMP.$50,000 on TELSTRA and $25,000 on COLES.


Hi Bbruham,

Let it be known that I like yourself am entering the market reasonably aggressively . . . but:

AMP: Major worries about the groups management. (If you can call it management at all)

TLS: Quasi governmental stocks are problematical . . . they tend to make political, rather than good business decisions.

CML: Similar to AMP, the current management leaves some to be desired and even giving the new board the benefit of the doubt, well it might not do any harm to give them some time to prove themselves.

All being said and done, hopefully it works for you . . . at least you have entered around a 4 year low, perhaps you might want to diversify amongst a few more stocks.
Anyway mate g'luck :)

Regards,

Steve

[Alan H]

Buy at the low of the market(property or shares) and Sell at the.........weeeelll..........at least Buy at the low of the market.........certainly gives you minimal downside. Sell if you like.

This is certainly pretty obvious advice to maximise profit but to do this in practice is often MUCH more difficult. Emotionally it is often akin to sticking your head in an oven or jumping off a cliff. Not exactly 'instinctive' things to do!

The current situation is a wonderful example of how our human behaviour responds in a 'heightened' investment environment. Property has been bubbling along beautifully and shares look a disaster.

If you follow the above theory then it may appear likely that now is a good time to be getting into Shares........but the figures show most are doing the exact opposite. Why?

"Well.... Shares could still drop further!" is a common response.

Yep. They sure could......but buying at the 'low' of a market is not necessarily the same as waiting for the 'bottom'. Many can judge when a market is 'low'....... very, very few can predict a 'bottom'. Buying 'low' may be sensible.......waiting for a 'bottom' may be considered by some to be stupid.

While all of us here have an active interest in property, I think the current situation is similar to having the opportunity to observe a comet that only comes around every few decades. The current interplay between Property/Shares/Bonds and World Events should really make us all ask ourselves how we are currently investing and why. No 'right' answers but IMHO it would certainly be a wasted learning opportunity if we didn't take advantage of this current period. Might learn a little about ourselves too. :rolleyes:

End of ramble........


:)

[Nicholas H]

My 2c for what it is worth, is that who knows if it is low, we know it is low for what it has been, but if it drops 50% more then at the moment it will look high then low. I was told do not pick the bottom but watch and wait for it to rise, when it is starting to turn then I will get in. Granted there is a chance I will not make as much money, but I have less chance of losing it. Maybe I am just risk averse.

[Bill.L]

More lambs to the slaughter.

An investment psychology that says the price is cheap and getting cheaper therefore I must buy is doomed to failure in the long run. When this thread was started AMP was around $8.00 and has now lost around 20%.

The opposite investment strategy goes along the lines that the price has risen and getting higher therefore I must buy before it gets higher next week.!!

Readers of this thread should do themselves a favor and study how the best traders and best long term investors made their money.
The short answer goes along the lines that you buy if prices are going up and sell if prices are going down.

P.S. Sorry to all the market guru's who charge thousands for the SECRET to market success. I just gave it away for free:D

bye

[Bill.L]

Oops my mistake, that's 25% now on AMP.

bye

[Ross Sneddon]

Hi

Debate is now about whether we have reached the bottom of the stock market, or is it still to fall and by how much and when and whatever. Most of the debate seems to rest on the position the market is in today, based on little more than “well it is now at a low of $XX so it must be near the bottom”. But is it?

There are a number of indicators commonly used to measure trends. Bill L says the price of AMP was around $8.00 and has now lost a further 20% or was it 25% and he rightly questions the bottom and asks who is prepared to buy at this price. One of the many types of indicators is the Stochastic Indicator that measures both price and volume (there are others). In simple terms, when the number of people prepared to pay the above $6.00 falls below the current value then there is a cross over of demand and price, and the bottom may have been reached. Now sit and wait for two more trading days, if the trend remains constant, then the bottom may have been reached so buy.

In property, you could argue that when the number of people bidding at an auction falls to a level whereby the demand at the present prices slows to the point where the number of successful auctions falls noticeably, then we have reached the peak.

Neither is perfect but they are indicators and we need to look at more than simply price.

My analysis of the stock markets around the world is that the markets have still some way to fall. Now add the approaching middle east conflict, and all the other world factors and I personally can’t see the bottom yet.

DISCLAIMER: THIS COMMENTARY IS NOT TO BE VIEWED AS ADVICE, RATHER IT IS MERELY A DEMONSTRATION OF BASIC FUNDAMENTAL PRINCIPLES. PLEASE REFER TO A LICENCED ADVISOR FOR ADVICE REGARDING YOUR INVESTMENT SITUATION.

Regards

Ross

[bbruham]

G'day all,

Lossing $175K is heart braking, but, think of how you would feel if these stocks return to there best!!!!! AND YOU DIDN'T BUY ANY OF THESE SHARES!!!!!!!! Could you sleep at night knowing that you knew there was all this money waiting for you to pick it up, but you didn't have the courage. OPPORTUNITY LOST FOR EVER. That would haunt me for ever and a day,I could not forgive myself.
I can understand you not doing the above, but I'm different!!!!
I would hate ME to my dying day. Being cowardly.
Lossing the $175K is my next five new cars and four holidays to Noosa. Spread over seven or eight years.
No big deal, I always treat financial losses as new cars.
When I did money on managed funds(still got them) I forgot a new car and bought a six year old ford, for $4K,naturally an ex- taxi.

bbruham.

[Bill.L]

23 years ago when I was relatively new to investing I waited for silver to go down in price before I purchased. I believed all the hype about how high it HAD to go. I bought at about $15 / ounce as this was as low as it had been since it's high of $50 /ounce. I thought of the fortune I was going to make (of the new cars) and how I would feel if I missed out.

I still have those kg bars of silver as a reminder of investment folly. At a current price of about $7.50/ounce in greatly deflated dollars, I have still lost about 80% of the purchasing power of the original.

Good luck with your recent purchases at new lows, you'll need it.

bye

[bundy1964]

Belive it or not!

AMP went up today.

Now was it a bounce on the steps down or has it bottomed out now?

bundy

[Mark Laszczuk]

Bill.L,
Now let me say first that I am relatively green when it comes to shares, but I am confused. How do you come to the conclusion that selling on the way down and buying on the way up is the way to make money?
See, I just don't get it. All the reading, talking to people and trading I have done has been the opposite, and I made decent returns. Have you heard of people like Warren Buffett, Charlie Munger and Peter Lynch? They are considered to be among the worlds greatest investors and they work in exactly the opposite way that you claim is the way to play the market.
I'm not saying you are wrong, you may have been quite successful up to now (but why you held onto that silver and continue to hold onto it, I don't undestand, one of the first things I learnt about investing was NEVER ride the losers, get rid of them a.s.a.p.) but to be correct saying what you are saying means completely ignoring the successes of those mentioned above (and many others also).
So having read my post, do you feel that I am totally off the mark? Do you feel I know nothing? I am genuinely interested, as having more than two decades experience, you must know a lot and I would like to hear more from you.

Mark
'no hat, some cattle'

[Mr Turkey]

Mark

Here is a problem for you. You say "NEVER ride the losers". Now if a loser is something that goes down in price after you have bought it, you would have to buy at the precise bottom or on the way up. Otherwise you have bought on the way down and it would be a loser that you would sell.

And the bottom is a level where maybe only a few went through. Your position size might prevent you from getting in at the bottom.

So is it possible not to ride a loser and not to buy on the way up?

Mr Turkey

[Alan H]

Don't want to step on Mark's toes here as I'm sure he'll have a response himself but IMHO I wouldn't necessarily always describe a share that has fallen in price as 'a loser'. It may be a 'loser' but more likely it depends on the Fundamentals of the stock? Depending on this it may indeed be a good time to sell....or......indeed it might be a good buying opportunity.

What makes a company fall in price? Can be many, many things that are independent of the Fundamentals of the stock. How many companies out there have partly fallen in price because a big well known Mum and Dad stock like AMP has fallen? Probably a few. Confidence has fallen for a variety of reasons and yet the fundamentals of some of these other stocks may be fine.

I guess the ideology of the 'Value Investor' is that in percentage terms if you stick with the fundamentals of a stock(as Mark has mentioned with Buffet etc.) then you may indeed occasionally buy an out of favour stock that may still be sliding in price but that should show a greater upswing in time. I guess it's akin to buying quality even though you know in the short to medium term there is a further downside risk.

May be like some people's view of buying the worst house in the best street. "Why would you have bought that when you could have bought a nice new one!". "Because it has potential and a greater chance of increasing in value" would be other's response.

As with Mark, I'm very new at this though and very much appreciate listening and learning from those who have been doing this for many years.




:)

[bundy1964]

Hi

I think you need a stratergy of when to buy and sell.

My view is to buy under valued shares or ones that have hit the bottom and are on the way back up.

I also look at the WIIFM factor NAB ranks up there with there similar to pro package for shareholders.

I should set a low price to cut my losses and run.

I should also set a sell price for when they go up.

At the moment I am just buy and hold :rolleyes:

bundy

[Mr Turkey]

The trick is the same price at different times can mean different things. The important thing is the concept of position. Consider a share at it all time low. Everyone is holding at a loss, that's their position. Now how many people really take stop losses? The answer is very few and within all the people holding the share at its lows, none of them do. So what are they doing? They are holding on to get their money back. Now if everyone is holding on for an emotional reason, who is holding on for fundamentals? Well you cant tell but it might be nobody.

So what you want to see is the process of accumulation. Where shares are transferred to people holding at a loss to people holding at a profit. And you want to see them holding. An indication of this would be a drop off in volume above the low. Look at some of the fallen shares and you will see lots of volume. That's the same shares, same money, same people juggling a hot potato. They don't feel comfortable with it because of the sobering effects of ownership.

So you dont have to buy at the bottom but you do want to see some sort of accumulation.

Mr Turkey

[Mark Laszczuk]

What I meant by a loser is holding onto a share that has gone down and stayed down (like Bill.L's silver). Buying on the way down and holding onto/selling the shares as they go up (as long as you have done your homework) is, in my opinion, the best way to work the stockmarket. Even Warren Buffett doesn't hold onto all his stocks. If he finds something that is performing better than something he is holding, he will move into that to get the best return. Isn't that what we are all aiming for? Getting the best return? Imagine if Bill.L had sold out of his silver years ago and reinvested elsewhere, he just might be showing a profit instead of a loss on that money. (Sorry Bill, I'm not picking on you, just using an example).
I might be completely wrong, but this way I think is going to get the biggest returns - Warren Buffett has achieved an annual compounding return of 23% over x years using a similar strategy.
And although I have an excellent financial advisor with an absolutely brilliant share fund opening up soon, I wouldn't mind having a bit of a play around with the techniques I have learned from Buffettology, you know chuck in a few thousand and see how successful I can be. Has anyone else out there read/used the techniques in the book? I'm just wanting to ask a few questions of those who have and what they thought/how they went.

Mark
'no hat, some cattle'

[Bill.L]

Hi all,

Mark, what I mean by buying high is that when a stock goes to a new high, (according to the time period you are trading) is the time to purchase as the trend is up and likely to keep going. Conversly selling short on a new low is the way to go. Also having a new low on a buy should be your stop loss point if it hadn't already been triggered.

I keep the silver as a reminder of how not to trade. I don't mind you having a go at me over it, as that's what I constantly do to myself.

All share purchases should be regarded as trades, as people buy with the intention of selling later at a profit. They must be sold at some stage as most shares eventually go to ZERO. Just ask investors in HIH, One Tel, Pasminco, ERG(not quite there yet) etc,etc.

My last 2 share trades were last year. I purchased Amcor as it was going up and chiquita as it was going up. Both were at new highs for the previous 2 months. I sold both when the trend had turned and there price was retreating. I made money in both cases. On neither occasion did I make the most amount possible on the trade, but I took the middle portion.:cool:

bye

[Ross Sneddon]

Hi

I question Bill’s comment about all share purchases being considered as a trade.

Holding for a short term and up to say a six months time period as a deliberate act of taking a position, with the view to making the profit on an estimated movement, may be considered as a trade. The reverse applies for short trading of course.

But would not a person who purchases a stock on the basis of a long term investment, perhaps years or even longer be just that, investing in the stock. The purchaser is prepared to ride out the rises and falls in the company, takes the dividends, issues and other benefits, which goes with it.

As in property. Those investors who purchase with the view to buy and hold for years are investing, while those who perhaps buy, renovate and sell in the short term are trading those properties.

Bill, I am not trying to debate terminology here. Perhaps we are basically in agreement with each other. There is a decidedly different approach required for investment or trading in both shares and property.

Regards

Ross

[Bill.L]

Ross, the reason I call it a trade is historical. If you look to find the top 20 stocks from 30 years ago, you won't find many in the top 50 now!
In fact many have either been swallowed up by larger companies or they just disappeared.

Property is different in that it doesn't just disappear over time(unless it's beachside and slips into the ocean due to global warming. :D )

Many of the top stocks of the last few years have been things like Telstra, AMP, Qantas, CSL, CBA, Futuris Tab etc. They didn't exist 20 years ago(in the stock market). Other top stocks(former top stocks?) like PBL, News Corp, Wesfarmers, Brambles, Burns Philp etc, etc were not in the top 50 20 years ago. They had large rises in price and growth that put them up as top stocks.

Of todays bluechips I'm willing to bet that more than half of them won't be in the top 50 in 15 years time. Therefore I believe that if you don't consider share purchases as trades then you don't understand the game and should stay out.

bye

[Ross Sneddon]

Hi Bill

OK I accept your reasoning and logic, indeed agree with it. If viewed historically over 15 to 20 plus, you are absolutely correct.

The point I was attempting to highlight is that if you are to consider a trade where you have calculated that the stock is going to rise in say one to three months to your satisfaction and decide to take a position, (all other things etc., considered), then this is in my mind, a straight out trade.

If you consider investing money into a company that you feel is going to be around for a decade or so, then you use different criteria of assessment in your decision making. This then becomes a long term investment, rather than a mid term trade. Sure you must trade to invest but it is with a different mind set.

Semantics I agree, but I was trying to draw a distinction between the two approaches without brawling with you. No point in that.

I contributed to a thread a number of weeks ago where I mentioned that comparing the stock market and property by using the All Ordinaries Index and mean average property sale prices is hardly comparing like with like.

The all ords comprises the "top 200" of the stock market today and 120 of the all ords used 10 years ago no longer exist today or are not used because they have fallen out of the top 200 for the reasons you mention.

Regards

Ross

[Bill.L]

Hi Ross,

I'm not a brawler either, maybe I'm not communicating very well.:o

I know many people who currently own telstra shares and they all say that it is a long term investment. However when they purchased(mostly during the second float) they were hoping to make money in the next couple of years. I asked them at the time when they would sell and most were hoping to double their money. There is a large group of investors who can't take a loss and change the justification for their original purchase. Of course the loss in the end is usually much larger because of deflated dollars, opportunity cost etc.

My point is that because of the rate at which companies fall from grace and get delisted, then any purchase should be regarded as a trade as the chances of the long term investment that gets passed on to the children in 40 years time are very slim. Property on the other hand will still be there.

The long term investment as spouted by so many financial advisors(for shares and managed funds) is just a myth, especially when you use history as a guide.

bye

[Ross Sneddon]

Hi Bill

{B{The long term investment as spouted by so many financial advisors(for shares and managed funds) is just a myth, especially when you use history as a guide.{B}

This says it all. You don’t have to be looking at the 40 year history you were talking about, ten years or less is often more than enough.

The pity is that in a short while, when the market commences its upturn again, as it will, these stock market urgers will be out in force promoting the same stocks and using property as the means of “proving” their point, making the same illogical comparisons to make a dollar.

The second pity is that only a short time after they commence this practice, the general public will be hanging off their every word and believing in them as though they are the oracles incarnate themselves.

Regards

Ross
B]

[Bill.L]

Hi Ross

When those urgers come out again during the next rise in the stockmarket it won't be with the same stocks, it will be in the new sector that catches the imagination( I just wish I knew what it will be).:confused:

In the mid 80's the urgers were pushing the entrepeurners like Bond corp, Bell Resources, FAI, Adelaide Steamship, Quintex etc. Then a year or two after the crash it was CSR, BTR Nylex and Pacific Dunlop etc as "safe" growth plays. For the last couple of years it has been Telstra and the banks as the "safe" blue chip play. I'm willing to bet that this tune changes in a few years during the next bull run.

bye

[Ross Sneddon]

Hi Bill

I don’t think that the bottom of the market has been reached as yet and has still some distance to go downwards. My feeling is that Australia will not make a strong move upwards until the rest of the major world economies get their states in order, mostly banking and then their stock exchanges will follow.

Australia will at least be held in check until this occurs. The effect of the Australian stock exchange, controlling around 2% of the world stock exchange funds, is relative small so we will need to see the major exchanges of the world making a move first.

When it does occur, I feel that there will be a growing and accelerating upwards surge which may be uncontrollable. Typically the downwards bear pressure is sharper than an up tend, but there is such pent up pressure at present that I fear the bull run will be strong when it happens.

If you discover those specific stocks to be included in the next run Bill, please whisper in my ear, I wouldn’t mind making a dollar. But would that mean I will be riding on the back of a bucking bull? It’s a worry.

Regards

Ross

[bundy1964]

Where did that bull come from today :confused:

bundy

[Ross Sneddon]

Hi Bundy

Did you ask one or two questions? I am smiling.

Looking at the more serious question. I think that the world markets, but particularly the US market, has had a bad state of the jitters for some time now. They couldn’t work out if or more likely when George Dubbya was going to send in the troops.

Timing now seems much clearer and that gives the market a little more confidence, rightly or wrongly, so one bull has broken clear and run, but he is only a little fellow, surely. This allows the Funds and Trusts to shift some stock. But look at the hedging. For the past week, the price of gold has slipped downwards quite noticeably. Wall Street is guarding its big A.

So let’s look ahead a little way when we are told the worst of the conflict will be over, massive destruction will have taken place and George Dubbya then has to go to Congress to ask for billions of dollars to rebuild after the enormous damage which I, from my innocent viewpoint, think will be obvious.

The UN doesn’t seem to be holding up its hands yet to say that they will jump in too quickly to help, so this will have to have an enormous effect on the US market, and to quote the well worn adage, “Wall street sneezes, the World catches the cold”.

But hey, its easy to be an economist, they all argue with each other and no one can really be said to be in the wrong, unless they oppose you. What do you think?

Regards

Ross

[stirling]

Information on shares vs property. Offerred without comment.

http://www.amphenderson.com.au/Our-news.1000/pdfs/CC20021206IComOIHousePriceBubble.pdf

Stirling

[Lotana]

What else can you expect from a fund manager?

Lotana

[bundy1964]

Originally posted by Ross Sneddon
Hi Bundy

Did you ask one or two questions? I am smiling.

Hi Ross

I was waiting for the news that would send the market south. I had the shotgun loaded with bear shot with my targets picked out.

The news came out but it was a bull doing the running :eek: It may only be a small bull but it was enough to put my plans out and it proved the experts wrong :rolleyes:

bundy

[Ross Sneddon]

Hi Bundy

Hold the plans, I think that they are valid.

The Bull is only a Poddy and will stumble soon then your bear shot will be valuable. Some of yesterdays papers were suggesting it is running out of puff already, although I haven't seen todays assessments.

There are still dollars to be made in the next bear attack.

Regards

Ross

[GameBoy]

When is a market a bear market and when is it a bull market? Are we in a long term bear or bull market? What is long term? Are we in a little bull, within a small bear from a big long term bull? This is the way I see the charts, but im a newbie to trading and don’t confess to know the answers. If I did know the answers or the short term direction of the market I would bet the ‘house’ on the SPI (Futures, plenty of leverage and big returns for those who either have an ‘edge’ or are prepared to punt on the markets direction).
Instead ill use tight money management to limit my risk, cut my losers fast and ride my winners until my profit stops are hit. Shares are more profitable than we are lead to believe, because there are plenty of high leverage products available that you can make money from, no matter which way the market is headed. The hard part is, your are generally competing with ‘pros’ rather than mums and dads.
I still consider property No1, but we should be aware there are share products that give us similar leverage if not more and you can make money in either bear or bull markets. I think this is Robert Ks message in ‘Prophecy’, we need to learn to how to make money no matter what the markets/ economy throws at us. Example: Deal 4 Free gives you 80% leverage on CFDs (like shares, check their site) with low interest rates and gives you the ability to long or short. I don’t know much about options, but I believe they give you similar leverage.
I don’t mean to come across to know it all, as ive stated I don’t! Just don’t believe everything we’re told about shares. They can be equally as profitable as property in the long term (including leverage) and can only add to the armory of a ‘sophisticated’ investor, imo. Something I hope to become.
;)

[Bill.L]

Hi Gameboy

The difference in the high leveraged products ie options, futures etc, is that you have a time decay premium built in. This is usually fairly high compared to a house loan interest rate and they don't return a dividend to boot.

bye