Can't sleep! The Q:Buy 'bargain' stocks or Let funds stay in offset?

[Bon]

Bon i think you have figured out the real truth to making money from investing in the share market.

The key to investing in the market is to know the difference between value and price.

If one is confident of ones valuation, then you can play the market against itself.

ie When investing switch off price and focus on valuation.

When trading focus soley on price.


And for those 'property investors' out there the same theory applies 100%, with the only difference being that property moves at a slower pace.

Are you a property investor or just a property speculator?

The "secret" to making money from shares isn't much of a secret, it's common sense.... nearly everybody struggles with the discipline and emotional aspect that comes from investing, the least talked about aspect and the MOST important aspect of gambling/investing/anything.

I've been made fun of and laughed on here about my gambling, but after gambling, investing in shares is almost like shooting fish in a barrel since it's such a slow moving game... seeing a paper loss of 10%, 20%, 50% doesn't phase me in the slightest. When I put a bet down, there's no cutting losses to salvage back some of my money like you can with shares if I get it wrong. I lose the lot.

I see other gamblers struggle with the discipline and emotional side of gambling and they will never be profitable while they struggle with this as they continue to make bad bets, especially after a bad streak. I've had bad streaks too, but I've been able to come back from them. I bet FAR LESS than 99.9% of the gamblers out there, there is only one other person I've seen who bets less than me.

As long as I'm confident that I'm right in my conviction, I'll continue to buy more and load up heavy while there's value there.. when you have a strong conviction, why would you only put a little money on it? In any given investment scenarios, 95%+ of the "opportunities" that are going to come your way are going to be ********, the key is to hold onto your money and pass, waiting for the select opportunities to make you good returns on your money... You don't need a lot of good opportunities, you just need a few good opportunities you have a strong conviction on and are confident enough to load up on.

You will also make the most money when you see things other people don't, i.e. when you're the leader of the herd and it's all sad and lonely It's foresight, looking forward and predicting the future that makes you money, not going by trends and 100 years of history... if it was as easy as looking at history to make money, then we'd all be millionaires.

Am I a property investor? I guess so, but not by choice... the house is on the market for sale. I want to buy shares.

 

[antonio]

@Bon, IV
That was the perspective that I was leaning towards.

If it's a perfectly good company fundamentally and just emotional market battering down the price - hey it's a 'discount sale'!


@IV
that's one thing that I'm learning now - don't just look at price
I've been furiously going through books from the library and trying to learn mistakes to avoid

I guess I need to learn how to 'value' a company to determine if there's a discount in the first place

Is this thinking wrong though:
Once finding a company that fits criteria of value - look at past price history and if price is back to where it was or below 2009 GFC - it's good buy?

 

[antonio]

Assuming they eventually go up....you definitely don't wish they stay down for long

Good point Aaron. From all the reading I've done, it seems no one has the crystal ball (if they do - they must be sitting pretty) that as long as it's near the switch point, going down or back up - it's good enough over the long run

 

[antonio]

Antonio, Why not do both? You can get 100k worth of shares for less than 7k per year. You could leave 85% of your money in your offset, or do what ever with. You can get a 100% loan to buy shares with about 3.5% interest non recourse loan, but to do this you will also have to pay about 1% for put options and pay 3 years interest in advance plus brokers fees will cost you about 15k for 100k. Which is tax deductible. So after tax maybe 10k but remember you still have you money in the offset saving you about 18 k in interest over 3 years. You might like to try 50k just to diversify and get some exposure. I think you risk losing more by not acting than you risk by acting. As small risk of the underwriter of the options going bust and loss a small bit of interest is small compared to potential gains. You could buy some shares directly with put options so you only have 1% dowside risk and huge upside as an example bought santos last monday for $11 plus 90c for put option, at the momment I think 12.15 .

Hey buster - thanks for your post and suggestion.

I admit I had to read your post 3x before replying - I think I get the general gist of the principle:

+Leverage to get funds to get shares (advanced so know upfront costs?)
+Use put options to cover *** (protect the loan) if goes south

but I still don't really understand the details

I have to look at what a non-recourse loan is, paying interest up front and advance brokerage with put options is all new to me

See - as Madonna sings... I'm a virgin....

 

[antonio]

In any given investment scenarios, 95%+ of the "opportunities" that are going to come your way are going to be ********, the key is to hold onto your money and pass, waiting for the select opportunities to make you good returns on your money...

You don't need a lot of good opportunities, you just need a few good opportunities you have a strong conviction on and are confident enough to load up on.

Great point Bon. Love the principle.

I guess the question is: How to learn to spot those opportunities

 

[wobbycarly]

I think buster is suggesting a capital guaranteed or capital protected product like one of these from Macquarie.

 

[antonio]

I think buster is suggesting a capital guaranteed or capital protected product like one of these from Macquarie.

Thx wobbyCarly. I'll check it out