so you think stocks are the way to go?

Technical definition of a 'doozy' = A big one.

Bill L,

Your example is good but crazy because no one would have only $100k of AMP in their portfolio. The key to risk minimisation (as you would know) is education and diversification.

There is very little risk if the two are followed and with a moving stop loss in place, youre safe.

BILLVAL, THE MARKET IS NOT RISKY!! Its only risky for you because you dont know what you are doing....thats it.....bottom line.

Maybe you should have stated in your first post 'The stock market is risky for me because i dont know enough about it and i have a low risk tolerance.

Personally i have a high risk profile and take risks and lose some money but make money as well.

My buy of AMP a while back was risky (it was risk combined with education) but i made a couple of grand for a few mouse clicks, i'll take that risk any day.

I knew that NAB tried to take over AMP a few years ago and couldnt do it at $21 a share, so i knew it was bound to happen again at about $6.50 which it did.
 
Brains (this nickname doesn't suit you, put a NOT in front of it)

Your somewhat arrogant attitude is due to your ignorance.

Everyones circumstances are different.
I said it before but you choose to ignore it.

We all take risks to an extend, but we decide on our own depending on our circumstances what is is acceptable and what is not.

I have 4 mortgages, we are a single income family so thats a risk in itself, I took measures to minimise my risks such as landlord's insurance just in case the tenants trash the properties or decide not to pay, and income protection just in case it all goes horibly wrong.

I also have increased my line of credit and have parked 50K in there for a rainy day. My loans are all lines of credit so I only pay the interest back and because of the increase in my credit limit I can afford not to make any repayments for 12 months if I had to.

Do you think I should take that 50K and play Rausian roulette with it in the stock market? I don't.

I Know well what I am doing, if under these circumstances I went and invested my extra money in the stock market I would be puting my property portfolio at risk.

Your circumstances are obviously different and hense your high risk profile.

The good thing with property is that we all need somewhere to live, so if we buy in an area where the population is on the increase and land is scarce, the risk will be minimal.

The other good thing with property is that we can borrow the money to do our investing, you can't do this with stocks, or even if you could its not advisable.

Bill
 
For those of you who perhaps think that it is risky and volatile investing in business (i.e. buying shares) as opposed to speculating over share price movement, I have a book for you.

It's cheap and small and is a fantastic book for anyone who may have a lot of knowledge about property investing and not quite so much about shares.

It's written by an Australian, mainly about the Australian market and with a lot of good examples.

I think for everyone who thinks property is low risk and shares are high risk should really read this book, because hopefully it will open your eyes a bit.

His name is Peter Thornhill, his site is:

http://www.motivatedmoney.com.au

Even if you don't buy the book (which I highly recommend you do), read his articles and comments in the 'My Say' section for a bit of insight into the Australian Share Market.
 
This discussion has actually raised an interesting side point about what different people regard as risky.

IMHO, if you either are unfamiliar with something, have little knowledge of it, or have acquaintances, friends or family who have had a bad experience with it you will see it as a higher risk than it might actually be.

This actually has little to do with the actual risk, it has to do with FEAR leading you to assign it a higher perceived risk.

For whatever reason applies, you have a FEAR that doing whatever that something is will result in a negative outcome. This is usually disproportionate to the actual risk of that outcome occurring.

Overcoming the FEARS that distort my perception of the world is one of my ongoing life goals (and it's a toughie!).

I have found over time that when you confront these FEARS armed with sufficient research, a positive attitude & the internal decision that the worst case isn't that bad anyway - and is highly unlikely - that you become a more effective person. It improves your investment decisions, personal decisions & business decisions as you are not making decisions out of FEAR but out of knowledge.

So it's always important to assess whether you see something as risky because you have analysed it objectively or because it is outside your comfort zone for whatever reason.

Just ask PaulZag (who I respect and admire greatly) about his past bankrupcy - today Paul is making decisions that to me clearly prove that the fear of bankrupcy is no longer a barrier to him. He is able to look at financial situations very objectively & accurate assess the risks without falling victim to any disproportional FEAR of the worst possible outcome.

Cheers,

Aceyducey
 
Thats a very good point Acey, very obvious, now that you have mentioned it.

I suppose I have a fear of shares, because I have no control over them, and dont know enough to pick a good one.

Many people would have a fear of giving up their Job, mortgaging their house and investing the lot in a business that they had little real knowledge of. I don't, as long as I have a gut feeling for it, and not all of them have worked for me, but most did.

We are all different, and we should be very glad about that.

ABCD
 
Well after researching and buying a few IPs I decided to trade shares and have done well so far (250k in 8 months). Note I said trade as opposed to invest, especially invest with your eyes closed (no stop loss). Money management, education and back testing are critical in the share market, same as any investment I guess. Without this it is too risky.
Bill.L’s advice is wise for a longer term investor imo. Generally Im short termer so stops that wide don’t suit me. Stockdoctor is a good program for stock selections on fundamentals, combine that with some basic technical analysis and stop losses then you should be ok.
As for not borrowing to invest in shares, I know many traders who would do it no other way. It is not advisable if you don’t know what your doing, but if you do the rewards can be multiplied greatly. Forget this historical returns on shares too, that’s just what we can historically bench mark funds on. For good private investors/traders 20% + is closer to the mark and that isn’t including leverage.
PS Im not trying to buy into a property V shares debate as I think both are great. But to say shares are to risky isn’t true imo but they may be too risky for you. BTW theres nothing wrong with that.
 
Bill, i give up!...good luck with your future investing endeavors.


Originally posted by billvals
Brains (this nickname doesn't suit you, put a NOT in front of it)

Your somewhat arrogant attitude is due to your ignorance.

Everyones circumstances are different.
I said it before but you choose to ignore it.

We all take risks to an extend, but we decide on our own depending on our circumstances what is is acceptable and what is not.

I have 4 mortgages, we are a single income family so thats a risk in itself, I took measures to minimise my risks such as landlord's insurance just in case the tenants trash the properties or decide not to pay, and income protection just in case it all goes horibly wrong.

I also have increased my line of credit and have parked 50K in there for a rainy day. My loans are all lines of credit so I only pay the interest back and because of the increase in my credit limit I can afford not to make any repayments for 12 months if I had to.

Do you think I should take that 50K and play Rausian roulette with it in the stock market? I don't.

I Know well what I am doing, if under these circumstances I went and invested my extra money in the stock market I would be puting my property portfolio at risk.

Your circumstances are obviously different and hense your high risk profile.

The good thing with property is that we all need somewhere to live, so if we buy in an area where the population is on the increase and land is scarce, the risk will be minimal.

The other good thing with property is that we can borrow the money to do our investing, you can't do this with stocks, or even if you could its not advisable.

Bill
Click to expand...
 
Originally posted by billvals
Brains (this nickname doesn't suit you, put a NOT in front of it)

Your somewhat arrogant attitude is due to your ignorance.
Click to expand...

As much as I disagree with Brains at times on a lot of things, I don't think he is ignorant.

bundy
 
Please consider this for a second:

Imagine if, in order to purchase shares in a business, it took 30-60 days and you needed to pay legal fees and stamp duty. Further, imagine if the share price for businesses were only displayed a few times a year, say every quarter.

Now imagine if it cost next to nothing to purchase property and the transaction of ownership occurred in seconds. Also, imagine if the property prices for each suburb were displayed on TV every night and morning along with the daily news.

What do you think the price volitility of property would look like next to the price volitiliy of shares?

Now, the fact that people can drive past property and see it makes people more comfortable with their investment. "I live in a house, I know about property". Property is accessible to people without much knowledge of investment, they are familiar with it.

There is no doubt that shares appear to be more complex, to people who are uneducated about shares and business. Add to this, many people being confused between the terms like invest, trade (i.e. speculate) and thinking that's how you make money in shares: buy low, sell high, and that sounds awfully risky.

If property is such a low-risk, easy way to make money, what are all these companies doing in business? Shouldn't they all just go an buy residential real-estate? Isn't that the easiest, fastest, most risk free way to make money and retire early?

Give me a break.

I'll take my consistent, timely, tax efficient franked dividend checks twice a year for zero effort over highly leveraged property, costs/time for management, maintenance, vacancies, body corporate/land tax, rates, and risks of property damage and the rent is fully taxable.

Not to mention the transaction costs and time for property, what happens if the market sours and you can't find a buyer or a tenant? 30 days, legal, agent and advertising costs to sell?

Horses for courses, but I urge some of you to please educate yourselves about the share market if you want to become true investors rather than property investment trendwhores.

Flame on.
 
Hehehe.

I'm not saying don't invest in property! I'm saying educate yourselves about all the options. I myself own 2 investment units. But I also have a lot of equity in shares.

You must diversify. People whose interest in investment was sparked by property should follow through and learn more about all asset classes, how they work and where the opportunies are.

People need to look at everything, not just property with blinders on.

Specifically, the argument i was rebutting in my post was that the share market is risky. Not whether one should invest in property or shares.
 
Some great input here, people - and all of the "cut-and-thrust" reminded me of the ideas espoused by Bruce Davis.

For those that have his book "How to Build Riches", have a re-read of Ch 27. It is a few pages that summarise a lot of what has transpired in this thread. And the timing could be spot on, too!!

We are in our own forum, and I'm reading polls that say "Has the boom ended", and "yields aren't what they were", and ""I wouldn't buy the same property NOW", and "Time to get into shares", and "diversify". Haven't heard much of these over the last 3 - 4 years, but now we seem to be becoming our own "taxi drivers", etc.

Perhaps the time IS right to consider other options....... Note, that DOESN'T make us traitors, just thinking people.

As others have already noted, whatever each of us decides is a very personal thing. No rights, no wrongs, just "our decision" based on what we know at the time. There will be some that NEVER buy/trade shares, just as there'll be some that buy both.

Good luck with YOUR decisions,

Regards,
 
Hi all,

Gameover your quote

"You must diversify. People whose interest in investment was
sparked by property should follow through and learn more about
all asset classes, how they work and where the opportunies are."

WHY??

You talk about diversity, yet Peter Lynch calls it to "diWORSEify". Warren Buffet says to keep all your eggs in the one basket and "Watch it like a hawk".

Both would argue that if you are doing well at something to keep going and not be distracted. Does your guru suggest that they are wrong??

History shows that long term "invest and forget" approach to stocks for the 6 monthly "fully franked dividend" DOES NOT WORK.

It is good too see that you have trading rules that you abide by. All written advice about trading indicates that 90% of people playing the game lose, and many people who think they are educated because of some past results end up being in that 90%.

Gameboy, I would also like to ask you if you understand the rules of the game, because you are not buying businesses on the stockmarket, but pieces of paper that entitle you to a piece of the business at present, but not necessarily in the future(just ask Pasminco shareholders).

bye
 
great post guys .. seems we are all being challenged a little on this.

Bill.L - Peter L and Buffet have proven successful, true ... however every philosophy must be taken in context to see the real story...

For example, share diversification is taught in many University and Fin. Advisor courses... not to say it works!

But take your average part time investor and see what failing to diversify in any asset class can do to the probability of an acceptable ROI ?

BTW .. some of my money is in 'Invest and Forget' and apart from some bouts of trading here and there, has made me more money in the sharemarket than all the other shares i've "fully investigated" ... warren may be right, but how much can you really find out about your Enron ?:p

I do agree it pays to continue to improve and succeed in what you already know (property for many here), however I'm sure Lynch and Buffet would move on from their big holdings in XYZ coy. if they see the market trending away from the company's products ... to flip again .. if property 'crashes', then we need to use the existing skills to take advantage of the opportunities a crash presents us ;)

hope some of you understand my post.
ps: spending the day reading about options trading friday :p
 
AWESOME POST!!....I loved it and so true. But remember we are on a property forum here and dealing with the myopia of peoperty investors. Not all but a majority.

Personally i love both property and shares (i just love money :))
And if people want to really get ahead and not just 'provide for their retirement they should take a holistic approach to investing.

Billvals called me ignorant - funny that - its been a long time since ive read such ignorant and narrow comments on investment from a person. I think Bill is the type of guy would find crossing the road risky - Hey Bill, have you ever had sex with the light on? :)

Your fear of risk (and possibly fear of failure) will hold you back your whole life.

Embrace life - embrace investing - take a risk, prosper and have some fun while youre at it.

I think i said ' i give up'....oh well.....i cant help myself sometimes:D







Originally posted by gameover
Please consider this for a second:

Imagine if, in order to purchase shares in a business, it took 30-60 days and you needed to pay legal fees and stamp duty. Further, imagine if the share price for businesses were only displayed a few times a year, say every quarter.

Now imagine if it cost next to nothing to purchase property and the transaction of ownership occurred in seconds. Also, imagine if the property prices for each suburb were displayed on TV every night and morning along with the daily news.

What do you think the price volitility of property would look like next to the price volitiliy of shares?

Now, the fact that people can drive past property and see it makes people more comfortable with their investment. "I live in a house, I know about property". Property is accessible to people without much knowledge of investment, they are familiar with it.

There is no doubt that shares appear to be more complex, to people who are uneducated about shares and business. Add to this, many people being confused between the terms like invest, trade (i.e. speculate) and thinking that's how you make money in shares: buy low, sell high, and that sounds awfully risky.

If property is such a low-risk, easy way to make money, what are all these companies doing in business? Shouldn't they all just go an buy residential real-estate? Isn't that the easiest, fastest, most risk free way to make money and retire early?

Give me a break.

I'll take my consistent, timely, tax efficient franked dividend checks twice a year for zero effort over highly leveraged property, costs/time for management, maintenance, vacancies, body corporate/land tax, rates, and risks of property damage and the rent is fully taxable.

Not to mention the transaction costs and time for property, what happens if the market sours and you can't find a buyer or a tenant? 30 days, legal, agent and advertising costs to sell?

Horses for courses, but I urge some of you to please educate yourselves about the share market if you want to become true investors rather than property investment trendwhores.

Flame on.
Click to expand...
 
Hi Gameover

I receive Thornhill's missives every week and enjoy reading them.
He has a very pragmatic approach to share investing and dividends.

Unfortuantely, like most share investors, he could never be convinced that investing in property can be a better alternative.

In fact, your quotes sound remarkably like the words and examples he uses, and he mounts persuasive arguments.

I like both shares and property and with enough knowledge, both have their place.

I think I'm an the point where sharesVproperty is an apples and oranges argument.

Good post everyone.:cool:

Garry
 
Indeed. There are opportunities everywhere, and sometimes I think some people (like Thornhill) look at shares with their blinders on!

It is important not to get bogged down in a property vs. shares debate, or a trading vs. investing debate.

Whats important is that people learn more every day and don't let opportunities, wherever they may be, pass them by.

Also, I'd like to say that optimism, motivation and attitude is great, but it is absolutely not a replacement for rationality or logic. I notice people posting things like 'Don't be negative' or 'have some optimism'. I don't remember the last time optimism made me any money.

You need to be pragmatic and rational, not influenced by greed, fear or any other emotion for that matter. It is important to keep a cool head, for those that say that any asset class is the be-all and end-all of investment.
 
Originally posted by gameover
Indeed. There are opportunities everywhere,
<snip> I don't remember the last time optimism made me any money.
Click to expand...

When I started my last business, I was very optimistic about its success, if I hadn't been I would never have started it.

Therefore my optimism, versus negativity, caused me to begin the venture.

The result was a damned good income for 6 years, and a healthy figure when I sold up. This lead me to IP's, and a further healthy CG sitting quietly wating for my retirement.

Without that optimism, I am not sure where I would be today, other than probably working some 9-5 job. Instead of sitting here in sunny QLD lloking for the next venture that has an optimistic future.

Optimism has its good points for some people. :D
 
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