Millionaire thru shares

[The Y-man]

So, like property and rent returns, you would looks for shares with a good regular dividend?

Hi Brenda,

For fundamentals - yes. However, like property, where rental yield is only part of the story, there are a number of other key factors in share selection, just as there is in property (eg, location, demographics, building type, age, etc etc etc)

For example, you may not only look at the dividend regualrity, but whether it has grown over time.

Typically, you may look at things such as:
1. Sales growth
2. ROI/ROE
3. Debt levels
4. Interest cover
5. Industry segment
6. PE, PE Growth
7. Market Capitalization
8. Dividend growth

Cheers,

The Y-man

 

[topcropper]

To add to Y-mans comment,

Avoid shares when they go silly.

Brenda, you obviously have an ability to recognise deep value and to be able to ignore the hype and crowd behaviour. How else could you have made so much dollars from buying cheap and unloved [or a better word, despized] property when you did?

The silliest period ever was October 1987. Share dividends averaged about 3%, however interest rates were into double figures. The market crashed in a few days and values halved.

Early 2000 was another period of overvaluation with the tech boom.

In contrast, half the ASX 200 could have been positively geared into in March 2003.

Brenda, you know all about values.

I have been selling some shares in recent times. If the market continues to rise, I will sell so that I have no gearing, or recover initial capital and let the profits run. If it does something really silly like from January 1987 to October 1987 where it almost doubled, I would be out early and wait for the inevitable correction. Avoid a stampede.

See ya's.

 

[Andrew_A]

To add to Y-mans comment,

Avoid shares when they go silly.

Brenda, you obviously have an ability to recognise deep value and to be able to ignore the hype and crowd behaviour. How else could you have made so much dollars from buying cheap and unloved [or a better word, despised] property when you did?

The silliest period ever was October 1987. Share dividends averaged less than 3%, however interest rates were mid teens. The market crashed in a few days and values halved.

Early 2000 was another period of overvaluation with the tech boom.

In contrast, half the ASX 200 could have been positively geared into in March 2003.

Brenda, you know all about values.

I have been selling some shares in recent times. If the market continues to rise, I will sell so that I have no gearing, or recover initial capital and let the profits run. If it does something really silly like from January 1987 to October 1987 where it almost doubled, I would be out early and wait for the inevitable correction. Avoid a stampede.

See ya's.

Far out Topcropper with such thinking why are you still farming? Perhaps you could try the financial markets full time

I predict your thoughts will appear very appropriate at some point in the near future, there were articles about seasoned property investors selling in the US in 2004 and 05 into extreme strength, which of course is where the very smast people are usually selling. Who knows when the party ends though? Only in hindsight are people ever proven to be genius forecasters.

 

[willy1111]

Hi Topcropper,

Is it silly to ask why you wouldn't consider hedging your shares if you think they are nearing the top?

Assuming of course that there are put options available on the shares you own.

I remember hearing a story from a guy about Aristocrat he bought in at about $1.15 in May 03 and watched it go to $6. Sold out at $6 as he thought it had ran out of steam.

It's now worth $11.55, for roughly $.60 he could have bought a 12 month put option - locking in his profit, and still have exposure to upside for another 12 months.

I know it is a bit like the big fish that got away - but thought I would ask if it was something you would or have considered.

 

[Simon]

http://www.motivatedmoney.com.au/

Some of you might find this book illuminating. It talks about a solid share portfolio based upon yield as the goal.

Cheers,

 

[topcropper]

Hello Andrew A.

I might try investing full time when I retire in 30 years. Or in between fishing, reading, travelling, exploreing, camping, bushwalking, dirtbiking, actually, Nah. Give it a miss. Too much stuff to do.

Didn't you take profits back in April? Well I didn't. I've underperformed badly since April. Too much in BHP, RIO, and oilers.

I need to learn more about TA I think. Usually when I use a stop loss it just locks me into the bottom. So I don't generally use them. I'm not a trader. I try to hold long term. Don't think I would make a good trader. I'm not much of a stock picker either. I'm better at picking long term trends and cycles. My results overall would be similar to the market. But with gearing I'd beat it by a bit. But I could have done that using managed funds. Oh well. If you'd asked me in April I may have been more cocky! When BHP was $30, I was a legend in my own mind.

Far out Topcropper with such thinking why are you still farming? Perhaps you could try the financial markets full time

As for farming, rural land has historically shown similar capital gains to resi property and shares. Also similar yields. I think I'm good at farming, I enjoy it, It's way more exciting than any other job, so I will continue with it. The media is busy portraying agriculture as a dead industry with little future. That means that the opposite is likely. China and Asia is on our doorstep. Aquifers are dropping everywhere. Rural workers are leaving for the mines. So are managers. Supply and demand, this means lots of opportunities. Less and less people know how to manage a farm. I like contrarian thinking.

Farming is no longer a tough job. I sit in airconditioned comfort. The gear has auto steer. I just turn stuff around at the end of a run. Everything is handled in bulk. I work long hours when I have to. Say 16 hour days at planting and harvest, but at other times I work very little. Driving around checking things. Researching shares, posting on somersoft. There are periods when there is not much to do, so I can take many short holiday periods. I love my job.

Shares also fit well with farming. Farm land has very very safe capital gains. My farm is nearly all land content. But the income is all over the place. One year I could lose a quarter of a mil. The next I could make half a mil.

Shares are the exact opposite. Capital gain is all over the place, but the income is so safe. It comes in handy if I've just been hammered by mother nature. They are a nice match. Countercyclical.

Cheers mate.

 

[topcropper]

Hi Topcropper,
Is it silly to ask why you wouldn't consider hedging your shares if you think they are nearing the top?

.

I've just never thought of it. It's hard enough to pick when a share will go up, let alone go down. The trend for hundreds of years has been up, as with property too, so you are more likely to win going long than short.

I do know that there are very distinct periods when shares get very very overvalued and Oct 1987 was just one of those periods. But, I would have called 1987 overvalued in about March. It just kept going. I think I could have lost mega by October by going short. If I was short in 1987, I could see me losing heaps, then bailing just a day before the crash. Ouch.

The old saying is the markets can remain irrational longer than you can remain solvent.

I'm just a farmer. I think I would just take profits when I think things are getting expensive. Go all cash in an Oct 1987 situation and sit it out.

Remember too, in October 1987, property had great values, and after the stock crash, property then went on to be a great investment for 3 years untill it too slumped in the early ninetees. In the ideal world, go from one overvalued asset to an undervalued one. Sounds easy in theory. LOL.

Cheers.

 

[Trogdor]

Hi Brenda,

For fundamentals - yes. However, like property, where rental yield is only part of the story, there are a number of other key factors in share selection, just as there is in property (eg, location, demographics, building type, age, etc etc etc)

For example, you may not only look at the dividend regualrity, but whether it has grown over time.

Typically, you may look at things such as:
1. Sales growth
2. ROI/ROE
3. Debt levels
4. Interest cover
5. Industry segment
6. PE, PE Growth
7. Market Capitalization
8. Dividend growth

Cheers,

The Y-man

Agree with the Y-man. But I think Brenda your very correct, the crux of it is value and long term cash flows.