Achieving wealth through shares...how?

[Sunfish]

Systematic is repeating exactly the same process each time.

Often people think they are not making a random decision but it's more or less what it amounts to (not saying this is you btw).

I'm a tradesman, not an English professor. Carry on your esoteric discussions without me, if you don't mind.

 

[Edmond Dantes]

Or a random house?

You don't buy random houses?

Nope, I don't. The definition of random is (me not being a native english speaker).

Made, done, happening, or chosen without method or conscious

I try to apply a method when I buy property. So, nope, I don't buy random houses.

Why do you believe I would buy random stocks?

Where did I say that... ? I believe your success in stocks is based on anything but randomness.

 

[Sunfish]

Too much word play in this thread. See ya! (as TC would say)

 

[Intrinsic_Value]

Making money in the stock market? Buy shares at any price and sell them at any price higher, Its that simple.

The biggest mistake - by far - i see people making is thinking they know more than the market. What i mean by this is if the market thinks a share is crap, don't buy it thinking you know better. You don't.

If the share price isnt rising or falling, the market thinks either the particular share is crap, the sector it is in is crap, and/or the overall market is crap at that time. Could be either one, two or all 3. But the signal is 'dont buy'.

We arent Warren Buffett.

I have to disclose that i lost a lot of money with this mistake in my early years. Now - with robust risk management in place - i rarely lose money. And often make some.

i'm surprised nobody has commented on this approach Evand. In my opinion this is the best comment in this whole thread.

It its application should be mandatory when trading. Why because trading involves profiting from the movement in share prices not the underlying intrinsic value of the asset.

No trader has ever lost money buying and selling higher. Plenty of traders have blown up by trying to dollar average downwards, or buy using debt without stop losses.

I also believe it is partially relevant to investors. Retail investors have so many disadvantages compared to the large pro's. However a retail investor has one incredible advantage that most don't use. Because their investment pool is small relative to the market a retail investor can be nimble. They can get in and out of positions without effecting the market pricing.

So if an investor starts seeing a share price decline consistantly in a position whereby the investor likes the underlying asset: get out, move to the sidelines and wait for the selling pressure to abate. Once the selling pressure abates and the share price levels out, the investor can move back into his position.

Its hard for me to do this with US shares because of my set up. I have to pre-place orders Australian time for overnight on the US market.

However i am using this approach in the Australian market, and its been quite effective.

 

[wobbycarly]

I would think that $5-10k in EACH would be self-defeating.

You are thinking like a property investor so I can't help you.

I said it wasn't easy. That implies time and study to pick winners, not a broad brush approach. But if I were to dump on property using some national averages you would quickly remind me that property is local. So is mining.

Actually, mining is global. The TSX and NYSE have thousands more juniors so you'll understand if I refrain from stock picking.

This is the answer I was looking for - and I guess, should have expected! Wasn't seeking this month's hot tip!

I vaguely remember reading somewhere (may have been Colin Nicholson) that there are 2 industries that are difficult to analyse; banking and mining. Banking, I think because of the way they report assets (?), and mining, due the requirement to (usually) understand the drilling reports, etc.

So, Sunfish, can you elaborate at all on the study you employ to analyse these fledgling miners? Is it learning how to read the drilling reports, etc?

Thanks

 

[Sunfish]

I'm not the expert you guys are looking for. Sorry.

For the record: There are no gurus on the stock market. You only find them where no licensing is required such as property and fortune telling, and where you can't check the quality of the advice every morning.

 

[willair]

I'm not the expert you guys are looking for. Sorry.
.

Now you tell us..

 

[wobbycarly]

I'm not the expert you guys are looking for. Sorry.

For the record: There are no gurus on the stock market. You only find them where no licensing is required such as property and fortune telling, and where you can't check the quality of the advice every morning.

What?! No guru!!

I was merely trying to pick the brain of one more experienced...

 

[Sunfish]

I'm forced explain, but I shouldn't be.

I have cashed out of the ASX. I have no Australian miner in my portfolio and, as I'm not about to buy back into that sector here in Oz I am not up to date, so please don't PM me for tips.

I've had a few winners of the type I describe in the past but the companies that have bought out my holdings pandered to the board, not us shareholders. This is a lesson learned at great cost. I still have a significant holding of one of these on the TSX. While I still have that elephant in my portfolio (Which dropped $50k overnight early in the week) I have no idea how to progress so why should you be asking me?

I'm not trying to do anything more than pique your interest in the only form of investing, other than Au/Ag bullion, where I (personally) think the odds are in your favour. But as I said: It ain't easy and it ain't random.

 

[wobbycarly]

Tooth extracted!

OK, I see the point that one may need to open one's mind to more than their immediate environment (beyond AUS). Appreciate the comments.

 

[Intrinsic_Value]

Well my fellow Australian investors, there are some people on this forum that constantly bad mouth buffett, but here is an opportunity in my opinion.

TESCO

Why?
this is a mixture of high AU$ and low UK price against a company with high long term barriers to entry.

You even have a chance to hop on board at prices significantly lower to buffetts's purchase price.

Lets see how things play out, but this is not a short term trading opportunity. This is a long term strategy given buying in opportunity against both underlying intrinsic value (expressed in UK pounds) and exchange rates (expressed in AU$/GBP).

This is a 10 year investment comparison viewpoint.

But i think for australians this represents an opportunity (on a 10 year view point, and on a net position view point, ie local return (GBP) adjusted for movements in exchange rate).

 

[Graemsay]

When I was over in China about three and a half years ago, I was very surprised to see my then girlfriend's family had a groceries from Tesco.

I don't know how big the company is over there, but the fact it's got a foothold there suggests that there's room for expansion, particularly as the population gets richer.

The problems that Tesco faces in the UK are:

1. It's pretty much reached market saturation here. They take £1 in every £3 spent on grocery shopping in the UK.
2. The chain feels rather low-rent compared with the competition. They have a focus on price rather than quality. In contrast, Waitrose has been expanding by following the opposite strategy.
3. There's a certain amount of opposition (political and social) to out of town / big box shopping centres, and to the expansion of supermarkets.

That said, as Intrinsic_Value pointed out, it's a typical Buffet investment, with a relatively inaccessible niche. A lot depends on whether it's been oversold, or is a company in distress.

I've made the point before, but I still reckon that the FTSE 100 / 250 / 350 offers a good, dumb investment for Australians because of both its current low level and the relative strength of the AUD.

 

[evand]

It has taken me many years and not a small amount of losses to fully understand that concept. And now, that i do, i can pretty much make money often by not losing money in the market. Which is pretty much what its all about.

Everything else is fluff. Mostly caused by people not really knowing what they are talking about but commenting anyway.

Talk is cheap. Show us your results.

i'm surprised nobody has commented on this approach Evand. In my opinion this is the best comment in this whole thread.

It its application should be mandatory when trading. Why because trading involves profiting from the movement in share prices not the underlying intrinsic value of the asset.

No trader has ever lost money buying and selling higher. Plenty of traders have blown up by trying to dollar average downwards, or buy using debt without stop losses.

I also believe it is partially relevant to investors. Retail investors have so many disadvantages compared to the large pro's. However a retail investor has one incredible advantage that most don't use. Because their investment pool is small relative to the market a retail investor can be nimble. They can get in and out of positions without effecting the market pricing.

So if an investor starts seeing a share price decline consistantly in a position whereby the investor likes the underlying asset: get out, move to the sidelines and wait for the selling pressure to abate. Once the selling pressure abates and the share price levels out, the investor can move back into his position.

Its hard for me to do this with US shares because of my set up. I have to pre-place orders Australian time for overnight on the US market.

However i am using this approach in the Australian market, and its been quite effective.

 

[evand]

From what your saying about Tesco, sounds more like a (legend) Peter Lynch play. Sort of a One Up On Wall St thing.

I'm not big on FA but the China things sounds good.

http://en.wikipedia.org/wiki/Peter_Lynch

When I was over in China about three and a half years ago, I was very surprised to see my then girlfriend's family had a groceries from Tesco.

I don't know how big the company is over there, but the fact it's got a foothold there suggests that there's room for expansion, particularly as the population gets richer.

The problems that Tesco faces in the UK are:

1. It's pretty much reached market saturation here. They take £1 in every £3 spent on grocery shopping in the UK.
2. The chain feels rather low-rent compared with the competition. They have a focus on price rather than quality. In contrast, Waitrose has been expanding by following the opposite strategy.
3. There's a certain amount of opposition (political and social) to out of town / big box shopping centres, and to the expansion of supermarkets.

That said, as Intrinsic_Value pointed out, it's a typical Buffet investment, with a relatively inaccessible niche. A lot depends on whether it's been oversold, or is a company in distress.

I've made the point before, but I still reckon that the FTSE 100 / 250 / 350 offers a good, dumb investment for Australians because of both its current low level and the relative strength of the AUD.

 

[intrigued]

Everything else is fluff. Mostly caused by people not really knowing what they are talking about but commenting anyway.

Talk is cheap. Show us your results.

Can you direct me to where you have posted yours.

thanks

 

[Graemsay]

Evan, I'd agree that Tesco could be a good buy. The share price was down 25% or more when Buffet stepped in.

The question is whether they're a company that's in trouble, or just suffering a cyclical problem due to the slow British economy. Buffet's probably betting on the latter.

I'd agree about China. Tesco is selling things, not IP or manufacturing things, and so there's a lot less scope for it to be ripped off by the local competition.

 

[Graemsay]

Incidentally, there's a post on the FT Alphaville blog about Tesco. The author suggests that they might actually have run into more serious problems with their business model.

http://ftalphaville.ft.com/blog/201...ip-is-easier-to-salvage-than-the-supermarket/

 

[evand]

I used to most about deification share results but stopped as I didn't want to be seen as pump and dumper. Or be giving peope advice, even indirectly.

What I meant tho is that a lot of people make posts about the stock market but the posts have no substance and it's clear beside a few people on here, the posters have no experience (and/or success) with the stock market.

Beside that, I have posted my stock market philosophy many times. Most recently in ths thread. Whats yours?

Can you direct me to where you have posted yours.

thanks

 

[Intrinsic_Value]

When I was over in China about three and a half years ago, I was very surprised to see my then girlfriend's family had a groceries from Tesco.

I don't know how big the company is over there, but the fact it's got a foothold there suggests that there's room for expansion, particularly as the population gets richer.

The problems that Tesco faces in the UK are:

1. It's pretty much reached market saturation here. They take £1 in every £3 spent on grocery shopping in the UK.
2. The chain feels rather low-rent compared with the competition. They have a focus on price rather than quality. In contrast, Waitrose has been expanding by following the opposite strategy.
3. There's a certain amount of opposition (political and social) to out of town / big box shopping centres, and to the expansion of supermarkets.

That said, as Intrinsic_Value pointed out, it's a typical Buffet investment, with a relatively inaccessible niche. A lot depends on whether it's been oversold, or is a company in distress.

I've made the point before, but I still reckon that the FTSE 100 / 250 / 350 offers a good, dumb investment for Australians because of both its current low level and the relative strength of the AUD.

You have hit the nail on the head, TESCO still has growth opportunities overseas (although i question its US foray).

In the UK its pretty much at saturation point In addition margin expansion has come from squeezing every bit of efficiency out of the business (read cost cutting, insufficient re-investment in stores). So expect to see future margin come under some pressure as it reinvests money (this will hamper future growth as the decline in margins falls through to the bottom line).


This is what has spooked the market and caused the large price decline.

But the key value in tesco is its infrastructure and distribution network, this is very hard to replicate (think coles/safeway in australia). One can test the long term quality of this business model by going back through numberous historical financial statements and looking at return on invested capital. It has scored consistently well on this factor (which is why i think Buffett likes the company.)

So the issues TESCO is suffering from at the moment are opperational issues, not long term structural problems. These opperational issues might take a couple of years to fix.

But at a PE of under 10 i think the share price is sufficiently low enough to compensate for no earnings growth (and even possible slight earnings declines) over the next two years. In good times and when the whole market was more bullish, this stock traded on a PE above 20.

In 10 years time profit should increase just because of inflation and GDP growth (some years more some years less, but over 10 years inflation +GDP is a conservative growth forecast).

Current dividend is around 4.6% (not great compared to Australian stocks, + with australian stocks we get the benefit of franking), but for the UK market this is quite good, especially against interest rates of 1%. Tesco has a good historical tendancy to raise dividends over time. Payout ratio is just under 40%, so the dividend should be secure and will rise over time.

I recently bought 5000 shares at 316 pence (3.16pounds) at an exchange rate of 1.486.

Anyway thats my plug, of course everyone should do their own research and have consideration of their investment time compared to this comment.

 

[redwing]

I used to most about deification share results but stopped as I didn't want to be seen as pump and dumper. Or be giving peope advice, even indirectly.

What I meant tho is that a lot of people make posts about the stock market but the posts have no substance and it's clear beside a few people on here, the posters have no experience (and/or success) with the stock market.

Beside that, I have posted my stock market philosophy many times. Most recently in ths thread. Whats yours?

Thanks Evand,

I may never use the word, but I'll always check if I drwa a blank when reading a post...I'm here to learn after all

Deification= de·i·fi·ca·tion (d -f -k sh n, d -). n. 1. a. The act or process of deifying. b. The condition of being deified. 2. One that embodies the qualities of a god.