Is it worthwhile investing 5K in shares?

[CuttingHorseFan]

Is it worth it. Heck yes....and it's fun!
I put in a measly 6K 'when the world was ending' in boring Blue Chips and it's fun seeing the increases and I'll continue to chip away at and adding to in gloom and doom times.
Dunno about 'expert' stuff. I'm part of the KISS crowd and following MY gut instinct. (I've been part of the Paritech, Michael Yardney, Jim Berg circle and worked with the boys, know of due to family connections friends etc) and I've had my days of Tech analysis, FTSE and assorted roller coaster rides.
I found for myself the old true-ism of slow and steady works best for me personally, and in the end I like diversification in property, shares and super.
I say go for it!

 

[Corey Batt]

Somersoft really needs a share subforum. Le sigh.

Does anyone here use trading software? I would really like to find a reputable model so I can use it to assist in finding favourable buy in times.

 

[random]

I looked at a lot of it and tried some but being mainly a chartist myself anyway, I found it pretty complicated and useless to me personally as charts do much the same thing and a lot simpler.
But , if your into lots of puter stuff and like your gadgets, I do believe some of it around does have strong merits . I couldn't recommend any though as it's been a few yrs since I looked at them and I could just imagine the minefield available now , such is the age of the web .

Cheers

 

[wobbycarly]

Somersoft really needs a share subforum. Le sigh.

Does anyone here use trading software? I would really like to find a reputable model so I can use it to assist in finding favourable buy in times.

Not sure if you mean a "black box" or simply some charting/filtering software.

I use incrediblecharts.com. Free (delayed - 18hr I think) data but a reasonable slew of filters, with more being added regularly.

Oh yeah, and the actual software is free too. If you need more timely data, you can subscribe to EOD data for about $18 pm.

 

[devank]

I was in this similar situation few months back. I didn't want to take too much risk by buying another IP due to my expanding family. So I thought it was a good time to learn about shares and have a go.

After reading few materials and talked to people who had large share portfolio, I came to the conclusion that there is no way in the world I could make money through traditional way. Here are few reasons.
1. Way too much information needed to get the whole picture about any company. Even then you don't know if you are getting the correct info.
2. I have to be always on alert.
3. By the time any 'information' reaches me it is too late.
4. I didn't have enough time and energy (after full time work and lack of sleep due to two kids under three).

It is simply impossible for me to pick the right stock which would preform well in the future. I don't want to throw my money based on others' recommendation alone either.

Still, I wanted to try out the shares before thinking about the next IP. So this is what I did.
1. Collected historical daily data on ASX top50 share price and other Indices as well as other economy related info such as interest rate, exchange rates and so on.
2. Researched on the web to see which stocks were recommended by so called experts.
3. Picked only the ones which were in ASX top 50. I was left with about 6 stocks.
4. Did a data modelling on the picked stocks using the data collected in step1. Remember I wasn't forecasting the future. I was simply modelling the past.
5. Plotted the actual value vs predicted value of the stocks I was interested in. Those two were always 'hugging' each other like the DNA pattern. Both values go apart and then come together.
6. Finally, I picked the ones that were far apart and the predicted value is higher than the actual. To me, that means those stocks were under valued at that point in time.

Basically, I didn't know how any stock was going to perform. I simply picked the ones that were under valued, recommended by the experts and on ASX top 50.

After three months here are the results (ordered by initial preference):

Stock : Capital gain : Total profit
Stock1 : 16.85% : 17.72%
Stock2 : 12.40% : 13.07%
Stock3 : 1.98% : 3.82%

Only because I dived in with real money, I'm tunning myself more to any business news now. As soon as I hear a bad news I look at the share price, Qantas for example

This is my personal journey. You may want to create one for yourself based on your strengths.

- devank

 

[wobbycarly]

5. Plotted the actual value vs predicted value of the stocks I was interested in. Those two were always 'hugging' each other like the DNA pattern. Both values go apart and then come together.

devank,
This has piqued my interest. Can you expand a little more more on how you calculate the "predicted value"?
Thanks,
Rob.

 

[random]

I did have one gadget on trial for 2.mths , one I could see was the real deal but it was way too complex for me and wasn't really my thing anyway.

I did manage to get it vaguely running for about 3 wks though. It really needed it's own computer and to be on line 24/7 even for Aussie stock.
It monitored up to 200 stocks at once and from what ever exchange you programed into it, it ran on market noise .
Basically a screen with all buy/sell/activity,volumes/ups and downs of any 200 stock or just a 1/2 a dozen or even one of your choice.
It sounded buy/alarms-sell, get ready,sudden activity, interest, whatever you programed it to do and in any form of stock noise and travel whatsoever and much more if you knew how to use it.
I got it running with 4 or 5 simple stocks for awhile as best I could and it was spot on 9 times out of ten , more in fact.

But being fairly dyslexic and hopeless with complex pc stuff anyway, I dumped it after a play.

Very interesting contraption though.

Cheers

 

[devank]

devank,
This has piqued my interest. Can you expand a little more more on how you calculate the "predicted value"?
Thanks,
Rob.

Need to do a bit of data modelling for this. I have SPSS to do all the modelling for me but I'll try to give you general steps to do this with excel.
1. Do a correlation analysis on all the variables.
2. Picked the ones which were highly correlated to the stock you are interested in.
3. Do a correlation analysis again on the selected variables.
4. Remove the one which are highly correlated to each other (apart from the stock in question)
5. Do a regression analysis with the remaining variables.
6. Now you can calculate the 'predicted values' based on the above regression results.

If you use a statistical software such as SPSS then you would get much better fit. However, Excel's simple regression should give good enough results.

 

[wobbycarly]

Need to do a bit of data modelling for this. I have SPSS to do all the modelling for me but I'll try to give you general steps to do this with excel.
1. Do a correlation analysis on all the variables.
2. Picked the ones which were highly correlated to the stock you are interested in.
3. Do a correlation analysis again on the selected variables.
4. Remove the one which are highly correlated to each other (apart from the stock in question)
5. Do a regression analysis with the remaining variables.
6. Now you can calculate the 'predicted values' based on the above regression results.

If you use a statistical software such as SPSS then you would get much better fit. However, Excel's simple regression should give good enough results.

Right. Thanks - I think! I know all the words but don't understand the meaning when they're all put together in that order!

I'll do some of my own searching on "regression analysis", but can you share some of the variables to analyse? Are you talking things like P/E, NTA, Debt ratio, EBITDA or some other stuff?

 

[devank]

We might be hijacking the original post. I will send you a private message.

 

[Rickardo]

Anyway, if this is all the money I can put into shares, is it still worthwhile doing it? I don't want to go into speccies anymore since that's where I got caught. What would you do?

Just wanted to point out if you had invested 5k in one of the shares some of us are tracking from the post in Buyer Beware on the day you made the original post, your $5,000 would be worth around $9831 now. Speccies can be risky, but very lucrative.

 

[JIT]

Just wanted to point out if you had invested 5k in one of the shares some of us are tracking from the post in Buyer Beware on the day you made the original post, your $5,000 would be worth around $9831 now. Speccies can be risky, but very lucrative.

But you haven't really made any money here until you've sold it.

Not exactly going to leverage off one of these babies...

Due to inherent share price volatility, those using stops may be stopped out early, and have to make another re-entry point decision.

Then the next question is when to sell... when it's gone up 100%?

''Cut your losses and take profits off the table'' as traders would say?

Or when it's gone up 1000%... ?

What's the decision-making process here...

 

[Intrinsic_Value]

JIT are confusing trading methodologies with investing methodologies.

The two dont mix.
As Mark Twain said 'never the twine shall meet'.

Looking at entry and exit points for investing and trading involve very different criteria.

Ive got a stock thats up 250% and i havent sold a single share, in fact i added to the position once or twice.
I had a stock that went up 20% and started offloading.

But thats because i am investing. So i look at not just current intrinic value, but the rate of growth in intrinsic value. I then compare this to the current share price. And the relationship creates the 'zone' in which i make my buy/sell decisions.

If i was trading i would be using very differnet buy/sell matrix.

 

[Corey Batt]

What Intristic said.

Until conditions for a small cap exponential growth seem to level to mediocrity, or factors which would jeopardise future growth or certainty I ride the wave. If conditions present themselves to be hard to estimate, offloading portions to realise part of the profits and then reinvestment into blue chip moderate growth + cashflow stocks.

 

[redwing]

I have a measley 5K to play with and I want to try shares again. I say again becuase I have tried it before (same amount) and GFC ate it all up. I just tried my luck but I unfortunately it wasn't there at that time.

Anyway, if this is all the money I can put into shares, is it still worthwhile doing it? I don't want to go into speccies anymore since that's where I got caught. What would you do?

What did you do