Address by Marcus Padley

Marcus Padley (stockbroker/analyst) was one of five guests on Radio National's "Fora" programme on "The economic downturn - what should we do".

His comments are something all new people (and plenty who are not so new) should listen to, especially those who believe that "if a stock gets cheaper, then it's more of a bargain", and that "averaging down" makes any sort of sense.

Marcus Padley is the final speaker.

http://www.abc.net.au/rn/foraradio/stories/2009/2555295.htm

Thanks for that Julia.

Marcus writes something called the Marcus Today newsletter (google it) and features every morning on 774 ABC Melbourne with Jon Faine. He brings a new light to economics and markets with what i find to be a no nonsense approach and tells it how he thinks it is without the gloss if need be.

I cant wait to here this speech though. Just downloaded it and whacked it in the iPod.

:bier:

blue

Marcus is often interviewed on Lateline Business......Ali Moore goes weak at the knees when interviewing him.....he is a very cool guy....

I made some hurried voice notes when driving home last night when listening to him.....about his main rules of share trading.....


- falling price always means 'sell'. the market falls 3x faster than it rises. therefore act quick in a bear m. humans take a long time to get the message, but you don't have time in a bear market

- cash is the best stock in a bear market

- no one ever tells you to sell... the finance industry is a marketing machine, designed to suck you in, not let you out. therefore sell decision has to be yours....and industry will resist you.

- nobody "knows".....investment comes with risk, don't ever think it's safe

- is buy and hold dead? good for Warren but not for those who haven't got their mortgage and school fees covered and can't afford to be patient with a 30+ year time line....buy and hold has always been dangerous and a compromise.....it's buy and watch like a hawk ALWAYS

Marcus Padley (stockbroker/analyst) was one of five guests on Radio National's "Fora" programme on "The economic downturn - what should we do".

His comments are something all new people (and plenty who are not so new) should listen to, especially those who believe that "if a stock gets cheaper, then it's more of a bargain", and that "averaging down" makes any sort of sense.

Marcus Padley is the final speaker.

http://www.abc.net.au/rn/foraradio/stories/2009/2555295.htm

Thanks Julia. Marcus is I think is probably one of the only stckbrokers out there who literally tell it how they see it. To bad his newsletter his to expensive. w.

"is buy and hold dead? good for Warren but not for those who haven't got their mortgage and school fees covered and can't afford to be patient with a 30+ year time line"

This quote seems to apply more to brokers rather than their customers. Brokers don't earn commissions unless their customers are churning their account.

This quote seems to apply more to brokers rather than their customers. Brokers don't earn commissions unless their customers are churning their account.

That's only if you ignore the customers who rely on bank dividends or living off equity, in this recession. i.e. ANZ share price halved and div just quartered....

....Ali Moore goes weak at the knees when interviewing him...


LOL .. I go weak at the knees watching Ali Moore

LOL .. I go weak at the knees watching Ali Moore

get in line.....she certainly asks some of the more astute questions of her guests, which I hope she thinks up by herself.....there's no greater turn on than brains and beauty, with a cheeky grin. :)

she certainly puts the usual ABC pinko goons to shame (Tony Jones, Kerry O'Brien).

.


- falling price always means 'sell'. the market falls 3x faster than it rises. therefore act quick in a bear m. humans take a long time to get the message, but you don't have time in a bear market

- cash is the best stock in a bear market

- no one ever tells you to sell... the finance industry is a marketing machine, designed to suck you in, not let you out. therefore sell decision has to be yours....and industry will resist you.

- nobody "knows".....investment comes with risk, don't ever think it's safe

- is buy and hold dead? good for Warren but not for those who haven't got their mortgage and school fees covered and can't afford to be patient with a 30+ year time line....buy and hold has always been dangerous and a compromise.....it's buy and watch like a hawk ALWAYS
Yep. Thanks for posting these points. Hopefully it might encourage a few more to listen to his comments.

- no one ever tells you to sell... the finance industry is a marketing machine, designed to suck you in, not let you out. therefore sell decision has to be yours....and industry will resist you.
I reckon the Storm clients could attest to this.

I just listened to that again and you get more out of it after listening a few times.

Brief jotting down of his "6 points", apologies for any errors in spelling but he talks really fast.

1. Ever punching your arms up in delight it means time to sell.
2. One thing a falling share price tells you, its not buy me, if something falls in price everyone wants to buy it. What’s with this culture? It should be sell me not buy more. Stocks fall three times more then it rises, loses have three times more of an effect on you then wins.
3. Stock markets rise slowly and fall quickly. You need the confidence to make the decisions quickly.
4. Humans take a long time to get the message. Investors take a long time to get the message. Cautious at the bottom of the market and risk takers at the top, investors are not wired to be successful; we take too long to get the message, always behind the curb.
5. No one ever tells you to sell. Best stocks in a bear market are CASH, that’s it. Finance industry is a marketing machine, designed to suck you in and not to let you in. Very difficult to get out! The sell decision has to be yours, no one else will tell you to. Next bear market, you have to make this decision for yourself.
6. “No one knows”. The only person that knew what was going to happen was Karl Marx, he went short 100 years ago and went bankrupt, and timing is everything! Investment comes with risk, it’s not safe, don’t let anyone tell you otherwise.
7. Buy and hold breads inaction and denial. You can’t make a decision on today’s info to make a projection for 20 years in the future, its arrogance and blindly stupid. This is what caused people to lose 50% of their capital over the past 18 months. You can’t tell me that you wouldn’t be in a better position if you sold 12 months ago. We are not Warren Buffett. Buy and hold was never alive, its weakness was covered by a massive bull market. Now this is over and even he is losing money and getting slaughtered.” If you never sell it means you’ve never suffered a loss”, who ever said that is an idiot.

wonder.

Marcus is on Lateline Business every Tuesday nite...or is it Wednesday's, anyway
he comes across as pretty cool and very honest...often says hes go no idea why
XYZ went up or down.

Preaching to the converted perhaps, but for those who may have missed it, Marcus Padley has a column with Yahoo7 Money Matters

http://au.pfinance.yahoo.com/b/marcuspadley

Thanks all.

I heard some of it live.

Has anyone got a transcript of it?

gg

marcus has a weekly column in the west australian newspaper and i always get a kick out of it

Thanks all.

I heard some of it live.

Has anyone got a transcript of it?

gg
gg, as far as I know "Fora" doesn't do transcripts.

Thanks all.

I heard some of it live.

Has anyone got a transcript of it?

gg

I believe most of what has been mentioned by MP can be found here.

http://business.smh.com.au/business/that-sinking-feeling-20090502-aqhf.html

Thanks, Jack. Yes, that appears to be the first part.

Thanks Julia. Marcus is I think is probably one of the only stckbrokers out there who literally tell it how they see it. To bad his newsletter his to expensive. w.

If he dispenses information so freely, then who buys his Daily Newsletter? I would appreciate it if a current subscriber could rate it.

If he dispenses information so freely, then who buys his Daily Newsletter?

The information he dispenses is nothing compared to what you get in the newsletter. I've done one of those trial things before and you get three emails each day with updates. The morning email is very large like Charlie Aitken's "Under the southern cross" and Denis Gartman's "The Gartman Letter", if you have heard or seen any of them, proboably about 1500 words from memory.

Yes a good man to listen to and funny at times too.

Although I learned nothing groundbreakingly new from it I will listen to it a few more times. What a breath of fresh air he is.

especially those who believe that "if a stock gets cheaper, then it's more of a bargain", and that "averaging down" makes any sort of sense.

As a blanket statement I think that's a nonsense but reasonable advice for those who trade, time to 'fess up, I am not smart enough to trade

As an example, I purchased LEI $ $23.50 when I thought they were reasonable value. I purchased LEI again @ $18.14 where I though they were excellent value. The "price" today is $21.45 as I just checked now. Was I averaging down ? or was I happy to purchase what I consider a decent stock at a what I consider a good price ? Time will tell I guess :)

As a blanket statement I think that's a nonsense but reasonable advice for those who trade, time to 'fess up, I am not smart enough to trade

As an example, I purchased LEI $ $23.50 when I thought they were reasonable value. I purchased LEI again @ $18.14 where I though they were excellent value. The "price" today is $21.45 as I just checked now. Was I averaging down ? or was I happy to purchase what I consider a decent stock at a what I consider a good price ? Time will tell I guess :)
Could you say what your buy signal was at $23.50? If LEI continued to fall, would you continue to buy, as on your rationale above, the further it fell the more 'decent' the price would be?
Or perhaps I'm not properly understanding what you're saying.

Marcus Padley's denigration about the practice of averaging down is probably directed more towards stocks that are in a clear downtrend (think Allco, ABC Learning, BNB etc). And I don't think he's talking about short term traders at all.

The presentation on video if you prefer .... http://www.themonthly.com.au/node/1607.

W.

Could you say what your buy signal was at $23.50?

Yes. + or - $5 as I am pretty hopeless at valuation :) I had been watching LEI for some time. The Rudd Government is want to waste my tax dollars on poorly thought out infrastructure projects, LEI seem well positioned to get some of my wasted tax dollars back to me in the coming years, in the form of earnings. I was (and still am) nervous about LEI's dealings in Dubai.

If LEI continued to fall, would you continue to buy,

I did and yes I would have (my last purchase was in late Feb) but now, not so much. I stopped buying some time ago (back in late Feb). I assume LEI will fall back and I will purchase again if that happens, I am looking for even more value now, I no longer want to pay so much :) if not and it keeps going up, I will be satisfied with the purchases I made and look for other opportunities.

as on your rationale above, the further it fell the more 'decent' the price would be?

Indeed. A bit like how I buy and eat more tomatoes when they are cheaper but I have identified the value in Tomatoes before I buy and then determined the price I am happy to pay, the juxtaposition for me is that when they get to expensive, I stop buying, same with my share purchases. Others seem happy to keep buying no matter how expensive.

Or perhaps I'm not properly understanding what you're saying.

Possibly not.

Marcus Padley's denigration about the practice of averaging down is probably directed more towards stocks that are in a clear downtrend (think Allco, ABC Learning, BNB etc). And I don't think he's talking about short term traders at all.

No idea, I just thought it a sweeping generational that I disagree with, as a sweeping generalisation. eg What about those that purchased RIO at $120+ on a stock trending up ? I bet those "guys" are over the moon...

eg No matter how cheap ABC was, I could not see the value, I was still amazed that he guys in Singapore could, which gave me pause for thought a few times

I am guessing Marcus is buying LEI now :) ? 'cause someone sure as hell is.

I did and yes I would have (my last purchase was in late Feb) but now, not so much. I stopped buying some time ago (back in late Feb). I assume LEI will fall back and I will purchase again if that happens, I am looking for even more value now, I no longer want to pay so much :) if not and it keeps going up, I will be satisfied with the purchases I made and look for other opportunities.
What complete rubbish. Will buy cheaper with the downside bias?
Indeed. A bit like how I buy and eat more tomatoes when they are cheaper but I have identified the value in Tomatoes before I buy and then determined the price I am happy to pay, the juxtaposition for me is that when they get to expensive, I stop buying, same with my share purchases. Others seem happy to keep buying no matter how expensive.
Words like cheap and expensive are not good for investing nor trading.

There sure is a lot of crap out there.

There sure is a lot of crap out there.

Indeed.

I guess being retired (retired at 41) and living off my investments I am happy to follow a course that's worked for me over the last few decades.

Indeed.

I guess being retired (retired at 41) and living off my investments I am happy to follow a course that's worked for me over the last few decades.
LOL.
:star:

Marcus Padley's denigration about the practice of averaging down

I also "averaged down" BHP ---> $28.17, $27.86 and $25.09 back late last year, nice a bloke as Marcus appears to be on Lateline Business, I might eschew his "advice" on this one and apply my own rigour to valuations.

My point, albeit apparently poorly made, was averaging down is not the problem per se, buying crappy stocks is.

Part 2: http://business.theage.com.au/business/faith-in-the-creed-of-buy-and-hold-cost-us-10-years-20090508-ay4i.html.

W

I also "averaged down" BHP ---> $28.17, $27.86 and $25.09 back late last year, nice a bloke as Marcus appears to be on Lateline Business, I might eschew his "advice" on this one and apply my own rigour to valuations.

My point, albeit apparently poorly made, was averaging down is not the problem per se, buying crappy stocks is.
And it's an excellent point, Trevor. I was thinking that following your comments about LEI.

The thing I've noticed, though, is that there seem to be a lot of very inexperienced people who do average down with those crappy stocks and hopefully Mr Padley's advice might allow them to reconsider this.

Most people who average down, do so because they think the stock offers "good value". They will not accept stock's crappiness until it's too late.

Trevor it's not just BHP/LEI, the whole market has gone up, including the crappy stocks. Take Bank of America for example. Despite its toxicity, it has actually outperformed BHP. So I'm not sure if I would use price movements of BJP/LEI to make conclusions.

I also "averaged down" BHP ---> $28.17, $27.86 and $25.09 back late last year, nice a bloke as Marcus appears to be on Lateline Business, I might eschew his "advice" on this one and apply my own rigour to valuations.

My point, albeit apparently poorly made, was averaging down is not the problem per se, buying crappy stocks is.

M8 - BHP at under 30 dollars is a good thing... averaging down works fine as long as
u get the timing right...and are prepared to take profit at the appropriate time.

Don't listen to the trendies...there obsessed with the trend....its all they see.

They wouldn't know value, if it walked up and slapped them in the face.

M8 - BHP at under 30 dollars is a good thing... averaging down works fine as long as
u get the timing right...and are prepared to take profit at the appropriate time.

Don't listen to the trendies...there obsessed with the trend....its all they see.

They wouldn't know value, if it walked up and slapped them in the face.
A hindsight realisation of luck under the guise of "value" and "cheapness".

Ever the cynical idealists may want to be a bit more careful with risk determination rather than opportunity cost magnification.

But just on buying multiple times as a stock gets lower in price, why not just call it "buying value with a disregard to time and opportunity"?

Yes some trendies may be so inclined.

buying crappy stocks is.

And this is where FA and TA help.

And it's an excellent point, Trevor. I was thinking that following your comments about LEI.

Digging this back up. I am still happy with my decision to chase LEI down thorough the end of Nov '08 to Feb '09 but it doesn't particularly matter, as I haven't "taken a profit", probably to the disgust of Marcus and his take a profit philosophy (nothing wrong with "taking a profit") and his broking business in general.

I won't know if I have been "right" until I go to sell, which will probably be never unless I think LEI has gone completely off the rails or something totally unplanned for happens to me.

The thing I've noticed, though, is that there seem to be a lot of very inexperienced people who do average down with those crappy stocks and hopefully Mr Padley's advice might allow them to reconsider this.

There's a lot of inexperienced people buying stocks, highlighting averaging down as a bad policy is a nonsense when it's used to generalise IMO. I still maintain following ABC down (for example) is not the fault of using averaging down but the fault of picking a crappy stock, the market is replete with them.

If he dispenses information so freely, then who buys his Daily Newsletter? I would appreciate it if a current subscriber could rate it.

I have been subscribing for 2 yrs now, at about $500 a yr.

So on the whole, 8.5 out of 10

At its best, 10 out of 10

At its worst, 6 out of 10

From an update point of view its very good. He also picks up on a lot of things I have noticed other sites/analysts miss, or dont worry about.

And, the afternoon mail usually is quite good from the articles/stupid questions section.

I should add, that he does on a occasions have a slight bais, after all he is working for Patersons.

I should add, that he does on a occasions have a slight bais, after all he is working for Patersons.

Now he is but before that it I believe he was with Tricom.

Anyway, I don't consider that it really matters how people build their wealth provided it is legal and you haven't ripped someone else off. And if people are comfortable with their level of wealth, however you may describe or count wealth which may not necessarily be monetary, so be it and all good fortune to you.