Tell me what you think.
A mate of mine has 2 stocks bought in the last 3 months.
One now worth $2,700 and the other $800
He can only contribute $700 each month into buying stocks, and these existing two are on the up.
He doesn't want to take a marginal loan, in case the market turns down the track, but he wants to maximise his exposure and use this foundation plus the monthly extra, to build a pool that he can then use to expand his portfolio.
Things like, should he top up the $500 into both these each month, at good buy points of course, or save this until he can buy a $2000 parcel eg, or buy new low spec parcels hoping on growth (i.e. aex etc).
I have told him what I think, but recommendations would be really appreciated.
And no, it isn't me :)
Thanks
Profitseeker
16th-April-2006, 10:58 AM
Hi,
First your friend needs a trading plan. He should also pay particular attention to cash management. That is to say your friend needs to spread his risk. I never have more than 10% of my portfoilio in more than one stock.
pharaoh
16th-April-2006, 11:15 AM
True, good point.
But when you only have such small amounts, it is hard to make them worthwhile, don't you think? Is it not better to throw the 2 or 3 eggs into a few small baskets, and build that up to then spread it out, then build that up then spr....etc.
Also, with a trading plan, just the basics? i.e. identify risk ratio, financial goals, etc...
Profitseeker
16th-April-2006, 11:22 AM
There are many good threads on this forum on how to develop a trading plan. I don't feel that I have enough knowledge yet to be giving good advice on what a trading plan should and should not incoparate. What I do know is since I introduced to my plan, stop losses and cash management I have had a lot more success. It is hard to do when you are strating out with limited capital. Therfore I would not be investing back into the same shares when you save more money but look for other opportunities and gradually diversify.
tech/a
16th-April-2006, 12:09 PM
With a singular $3k all you can really do is trade one stock.
Have a tight initial stop and if it runs stay with it until it goes flat or reverses of its highs significantly enough to warrant an exit.
Unfortunately $3k wont plave you in a position to develop much of a portfolio style trading methodology purely due to undercapitalisation.
Use the cheapest online broker you can as you cant stay with a trade that moves below your initial capital---its got to move immediately into profit!!,or you must move immediately out!
You cant trade margin unless you have around $15k so thats out.
Save up to buy decent parcels as brokerage on a $700 purchase will be the same as for a $2k purchase.
Protection of capital is all important and you will have to be very comfortable with taking small losses very quickly because if you dont you will find yourself $500 or more down and not prepared to take that size loss--next week it could be $1000.
If its making $$s stick with it like glue in particular if its 20% above your initial purchase price---give it room to fluctuate,losing the 20% gain in an effort to make longterm gains of 100%+ is no problem a 20% loss of initial capital is a BIG problem and could be disasterous.
IGO4IT
16th-April-2006, 12:12 PM
Pharoah,
questions you need to ask your friend are:
Purpose of investing (financial goal):
why is he/she investing? long term - collecting stocks that will grow in future? when is the future? when would he/she realise gain? or short term?
Risk capacity:
how much is your friend willing to lose if markets turn back for any reason? up to 10% or up to 50%? of course that will help you determine which stocks to engage in.
Control methods:
how & when will he top up? on dips only or whenever cash is available? - you need to answer financial goal question above first to answer this question.
Reinvestment:
what would your friend do with the money gained if any? re-invest all? re-invest part? if you keep putting money into same set of companies you're increasing risk on long term. practically if that company had done a mistake or market had a bad appetite for that share then you're risking long time savings!
as mentioned by others, a trading plan is a must regardless of whether you're investing $10 or $100,000.
Fees on small amounts will destroy any hopes of any short term gain & the more you sell short term on small amounts the more work you'll have to do in research to find others.
trading $2000 in 1 lot is not the solution, $2000 in low risk BHP or RIO could still get you no big gains because their value is high & will be equal to investing $200 in say MUL. (Not that I recommend buying into any of these companies of course!)
if you send me your email address, I can send you detailed pdf file that contains the way of how you make a trading plan & that plan will ask you all these questions above & more, after you do it once trust me you'll feel a lot more comfortable trading with small & big amounts.
if you follow your trading plan "strictly & religiously" & you'll have a very high chances of achieving your goals whatever they are.
cheers,
tech/a
16th-April-2006, 12:39 PM
IGO4IT
How do you know your or any trading plan is or has the potential to be profitable.
Having a set of rules/plan in itself doest guarentee profit.
There has to be a way of determining potential before implementation of any plan,how do you do it?
Ive seen many plans which look great in theory and absolute disasters in practice.
With $3k to invest Simplicity is all that can be expected.
IGO4IT
16th-April-2006, 01:30 PM
IGO4IT
How do you know your or any trading plan is or has the potential to be profitable.
Having a set of rules/plan in itself doest guarentee profit.
There has to be a way of determining potential before implementation of any plan,how do you do it?
Ive seen many plans which look great in theory and absolute disasters in practice.
With $3k to invest Simplicity is all that can be expected.
tech/a,
my plan doesn't guarantee a win position but at least give you higher chance to succeed.
More or less give you an idea of what you want to reach & when you want to reach it so you don't lose focus & randomly collect any profits while if you wait you could get more!
buying & selling points should be based on T/A or fund change in any share, also after filtering thru your plan & making a decision on what price range your stocks should be under then your chosen stocks must statisfy basic tests to guarantee that you're not buying false hopes in dreaming companies but real potential & high possibility of future growht. its never an insurance for your success.
any plan even if it was with ferw thousands or millions will return ONLY what you set for it to return for you, if you set it to return 10% in the shortest possible time frame then it will, good on you if 10% was $100,000 or $100, the most important thing is that it works to return POSITIVE 10% on capital, then even if it returns to you $100 today it may next time if you decide to re-invest return $110 & that by itself is a successful investment strategy.
I don't personally think regardless of any TA analysis or fund analysis that there's any insurance in stocks for not losing, you automatically start buying the share on a loss sitituation since you pay your brokers commissions immediatly, unless you have a plan you'll never know when to buy or sell & you'll be shocked to see a lot of stocks skyrocket few days after you got some profit & you may find yourself regreting selling. if you have a plan, then you'll stick to it as long it shown positive returns before.
Julia
16th-April-2006, 02:03 PM
Hi,
First your friend needs a trading plan. He should also pay particular attention to cash management. That is to say your friend needs to spread his risk. I never have more than 10% of my portfoilio in more than one stock.
Profitseeker
The principle of not having more than 10% of a portfolio in one stock makes very good sense where the investor/trader has a reasonable level of capital.
However, with $3000 in total invested, I wouldn't like to see it divided into $300 lots. Brokerage alone reduces potential profitability.
I agree absolutely with Tech-a's suggestion when dealing with $3000.
Going for a speccie may appear to be getting a lot of shares for your $'s.
But how will that help if the company isn't profitable?
Imo people starting out in the share market and with small amounts to invest can do a lot worse than buy a relatively small amount of a blue chip company which has a proven history of capital gains each year and reliable and increasing fully franked dividends.
If you had bought BHP or QBE at the beginning of February this year, you would be up more than 25% already. ANZ over the same time up around 10%.
Julia
michael_selway
16th-April-2006, 02:10 PM
Hi guys
Tell me what you think.
A mate of mine has 2 stocks bought in the last 3 months.
One now worth $2,700 and the other $800
He can only contribute $700 each month into buying stocks, and these existing two are on the up.
He doesn't want to take a marginal loan, in case the market turns down the track, but he wants to maximise his exposure and use this foundation plus the monthly extra, to build a pool that he can then use to expand his portfolio.
Things like, should he top up the $500 into both these each month, at good buy points of course, or save this until he can buy a $2000 parcel eg, or buy new low spec parcels hoping on growth (i.e. aex etc).
I have told him what I think, but recommendations would be really appreciated.
And no, it isn't me :)
Thanks
I think he shoudl save up until atleast $2000 before buying otherwise the brokerage will cost him a fortune % wise!
thx
MS
SharonK
16th-April-2006, 02:32 PM
Just a thought,
Commsec has share packs where they pick I think it was 6 shares and you can pick the catagory of growth, income there were two others which I can't remember and it selected 6 blue chip shares for you all for a brokerage fee of $66
I thought this was pretty good value for when your starting out if your looking at holding them long term and adding to them in the same way as you get more funds.
cheers
Sharon
michael_selway
16th-April-2006, 02:48 PM
Just a thought,
Commsec has share packs where they pick I think it was 6 shares and you can pick the catagory of growth, income there were two others which I can't remember and it selected 6 blue chip shares for you all for a brokerage fee of $66
I thought this was pretty good value for when your starting out if your looking at holding them long term and adding to them in the same way as you get more funds.
CommSec Share Packs – The easiest way to start a portfolio
30 Dec 2005
With more than 1,700 securities listed on the Australian Stock Exchange, deciding what to buy can be a real challenge. But with a CommSec Share Pack, you can have your own Australian share portfolio in minutes.
Simply decide how much you want to invest and the type of portfolio you want – it’s as easy as that. You can choose from four different investment styles:
Market Leaders
Capital Growth
Income
Tax-Effective Income
Each pack contains a diversified portfolio of six leading blue-chip companies, chosen by an independent team of CommSec analysts. That means you can invest with confidence, knowing that your shares have been thoroughly researched by a team of experts.
CommSec Share Packs – The easiest way to start a portfolio
30 Dec 2005
With more than 1,700 securities listed on the Australian Stock Exchange, deciding what to buy can be a real challenge. But with a CommSec Share Pack, you can have your own Australian share portfolio in minutes.
Simply decide how much you want to invest and the type of portfolio you want – it’s as easy as that. You can choose from four different investment styles:
Market Leaders
Capital Growth
Income
Tax-Effective Income
Each pack contains a diversified portfolio of six leading blue-chip companies, chosen by an independent team of CommSec analysts. That means you can invest with confidence, knowing that your shares have been thoroughly researched by a team of experts.
This is an excellent idea I believe for the small funds which are being used. or you can just chuck the whole lot on mmno or aexo or mmn or aex.
rederob
16th-April-2006, 05:45 PM
crackaton
I like your idea.
But anyone who wants to invest in the markets needs to know how they prefer to invest, or trade.
If someone gave me $3000 to invest relatively safely I would put $1500 on CWT and $1500 on OXR: Each is trading well below the valuation I would put on them and each is from a different spectrum of the market.
CWT yields over 10% and is trading 15cents below NTA (an absolute steal!).
OXR will offer its first dividend this year, but its growth potential as an established metals producer about to reach its potential is quite phenomenal.
nizar
16th-April-2006, 05:47 PM
With a singular $3k all you can really do is trade one stock.
Have a tight initial stop and if it runs stay with it until it goes flat or reverses of its highs significantly enough to warrant an exit.
Unfortunately $3k wont plave you in a position to develop much of a portfolio style trading methodology purely due to undercapitalisation.
Use the cheapest online broker you can as you cant stay with a trade that moves below your initial capital---its got to move immediately into profit!!,or you must move immediately out!
You cant trade margin unless you have around $15k so thats out.
Save up to buy decent parcels as brokerage on a $700 purchase will be the same as for a $2k purchase.
Protection of capital is all important and you will have to be very comfortable with taking small losses very quickly because if you dont you will find yourself $500 or more down and not prepared to take that size loss--next week it could be $1000.
If its making $$s stick with it like glue in particular if its 20% above your initial purchase price---give it room to fluctuate,losing the 20% gain in an effort to make longterm gains of 100%+ is no problem a 20% loss of initial capital is a BIG problem and could be disasterous.
Tend to agree, excellent explanation and good advice..
1 stock is the way to go but with strict risk-management
Going for a speccie may appear to be getting a lot of shares for your $'s. But how will that help if the company isn't profitable?
Julia: a company doesnt have to be profitable for you to make money in the SHORT-TERM. I made a motza out of TOE, SAU and others, and they arent profitable...
But pharaoh, ask ur mate about risk, how much he is prepared to take and make sure he knows how to manage/minimise that risk through stops, etc...
pharaoh
16th-April-2006, 06:02 PM
Thanks guys,
The 6 pack from Commsec is interesting, will let him know.
I think he wants to play short term atm, so he can try to grow this small nest egg - and where many of you mentioned understanding his risk profile, it will be high risk, but he is willing to take that.
If he invests in 1 stock initially, he is prepared to lose it, or a portion, it is better than taking out a marginal loan after all.
One of his 2 was ENG that I recommended him to, and he doubled his money already thanks goodness, so is keen to keep finding similar growth stocks.
I tend to think personally that this is the way to go initially at least, growth stocks, high risk and top up each month with these small amounts.
Over time, as long as the stock does well, it will become a substantial holding.
It's good to hear opinions though and that is the best way for us all to gain knowledge, through thoughts and experiences.
Blue chips were mentioned.
I had always assumed one can't get into blue chip unless you are buying 15k parcels, otherwise not worthwhile - would anyone agree?
Julia
16th-April-2006, 10:02 PM
Blue chips were mentioned.
I had always assumed one can't get into blue chip unless you are buying 15k parcels, otherwise not worthwhile - would anyone agree?
No.
Given the new info that your friend is happy to lose his money, then delete my earlier comments.
Julia
StockyBailx
17th-April-2006, 12:49 AM
Im lost on Julia's last comment, but definatly thoughts and exsperience are the only way to get him through the ropes. 3k can go along way in a short period of time. he needs to be looking at his options, bye keeping his eggs in the same basket, that qualify's for a excellent short or long term profit.
Go through your commonities agian and see whats cooking, I suggest buying into the penny, small change market on a winner. Let that rise to a stop profit of $2, t0 $5 or a percentage of 150 and above. e.g. sell 100% buy another penny for extra nickles and so. Using this sort of reasoning a capital can be gained quicker than you think.
Using most of the advice from above and choosing your own parameters I think you couldn't do any worst, than what he has already achieved.
The rest is up to you?
money tree
17th-April-2006, 06:50 AM
with $3k you could do a risk-free dividend strip.
This will give you a $5k profit every year till you die. And its risk-free.
bullmarket
17th-April-2006, 09:23 AM
Good morning everyone :)
Pharoah, with $3000 imo your friend is basically limited to 1 stock (2 tops) and so in this case, to help minimise the risk of losses doing thorough research on a company's fundamentals and outlook is even more critical than say with a diversified portfolio of 20 stocks.
But seeing your friend can top up ~$700 per month then depending on his objectives and experience another alternative could be to maybe save that $700/mth (say in a high interest online savings account) for 12 months thus accumulating ~$10000.00 during which time he/she can read up on developing and paper trading a trading/investment plan until they are happy with it and then in 12 months time start trading slowly with ~$10000.00 capital, which is not large but at least you can then trade up to 3 opportunities simultaneously if they arise.
cheers and good luck :)
bullmarket :)
pharaoh
17th-April-2006, 10:33 AM
Morning all.
Look at all this wonderful advice, you guys are great.
Firstly, bullmarket and others that said it, imo I think I will tell him to formalise a financial goal.
Atm, it will be like this;
1. Goal based on med-high risk stocks in the 1st 12 months with existing cashflow and regular monthly input - in order to grow base capital to use for future investments
2. Top up each month
3. As this money grows, either stay in and top up or sell and buy new
The ING account saving for a while would be sensible, but he is impatient.
Maybe 1, poss 2 stocks the way to go. Eggs have to really go into the one basket when you don't have much to invest. But, with strict management of course.
money tree, what is a risk-free dividend strip? And how does it work?
OzFrisky
17th-April-2006, 12:21 PM
with $3k you could do a risk-free dividend strip.
This will give you a $5k profit every year till you die. And its risk-free.
Risk Free ? There is such a thing ? :)
bullmarket
17th-April-2006, 12:54 PM
Hi ozfrisky
I must admit I had a little chuckle as well when I saw that 'risk free' claim :D
But don't worry, I doubt anyone takes the risk free part seriously and anyone that does probably still believes in the tooth fairy ;)
ooooooooops....sorry if I just shattered anyone's belief in fairies :eek:
If that claim was true then I suppose he would also say that $300k would give you $500k a year risk free until he dies.........yeah right :rolleyes:
Dividend stripping is just one of many strategies people can use but to say it is risk free is simply not a true statement imo.
cheers
bullmarket :)
nizar
17th-April-2006, 01:08 PM
I doubt anyone takes the risk free part seriously
Tend to agree, i certainly didnt...
THe way i see things, the risk-free rate is what the official interest rates stand at and this is what most banks would give which is 5.50%... (or some banks may give 50pts higher)
ANything higher than this is either not true, or requires some degree of risk...
But, still, im curious, maybe moneytree can elaborate...?
IGO4IT
17th-April-2006, 07:11 PM
its amazing that everyone is assuming that $3k will be put into 1 stock & automatically that 1 stock may give a small return (god forbid that the chosen stock could dive in 5 minutes after buying the first lot!! which we all know happens!!), choice of stock, entry & exit point should be the question not the amount!
given that the controller of the cash & stocks bought is expereinced enough to know their entry & exit points & their right selection of stocks....assuming all that...I think that person who has all that experience shouldn't really care about the amount as it will grow sooner or later.
small amounts for someone who knows the roles is exactly the same as big amount, the difference is the time frame taken until you start making real money!! with small amount, you have to be patient ....with big amount, you can get real money sooner assuming that you have enough experience but of course your risk is higher.
imo, $3k should be invested on big potential starter company that can provide a few bagger on med - long term (1 - 3 years term), if you decide to trade on short term basis, then time taken on research to maintain short term trading on many stocks will be worth MORE than the average 10-30% short term return on $3k.
Commsec packages are useless, return is low & a bit safe but realistically how will you feel with $600 return from your $3k after 1 year. You defenitely need a small company that will hit it big on the long term.
cheers,
tech/a
17th-April-2006, 07:48 PM
its amazing that everyone is assuming that $3k will be put into 1 stock & automatically that 1 stock may give a small return (god forbid that the chosen stock could dive in 5 minutes after buying the first lot!! which we all know happens!!), choice of stock, entry & exit point should be the question not the amount!
Nobody has assumed that at all.The question was investing $3000,consensus is best return would be from 1 stock selection not multiple.Other than that youve stated the obvious for any trade.
given that the controller of the cash & stocks bought is expereinced enough to know their entry & exit points & their right selection of stocks....assuming all that...I think that person who has all that experience shouldn't really care about the amount as it will grow sooner or later.
Traders should always be intersted in best use of funds,rate of growth or lack there of.Experienced or novice.
small amounts for someone who knows the roles is exactly the same as big amount, the difference is the time frame taken until you start making real money!! with small amount, you have to be patient ....with big amount, you can get real money sooner assuming that you have enough experience but of course your risk is higher.
Well I dont agree I trade large amounts (Your idea of a large amount and mine maybe different) totally differently to smaller amounts.
Risk is no different a 10% loss is a 10% loss wether that be $1000 or $10000.
imo, $3k should be invested on big potential starter company that can provide a few bagger on med - long term (1 - 3 years term), if you decide to trade on short term basis, then time taken on research to maintain short term trading on many stocks will be worth MORE than the average 10-30% short term return on $3k.
Dont agree or disagree either,with the right software and knowledge you could double the $3k in a week.No not every week but many here have done just that.The trader needs a trending stock,how long that trend lasts and its speed will determine rate of growth.
Commsec packages are useless, return is low & a bit safe but realistically how will you feel with $600 return from your $3k after 1 year. You defenitely need a small company that will hit it big on the long term.
Id feel bloody good with a 20% return on $3k or $300k its 20%
ghotib
17th-April-2006, 10:50 PM
Hi guys
Tell me what you think.
A mate of mine has 2 stocks bought in the last 3 months.
One now worth $2,700 and the other $800
He can only contribute $700 each month into buying stocks, and these existing two are on the up.
He doesn't want to take a marginal loan, in case the market turns down the track, but he wants to maximise his exposure and use this foundation plus the monthly extra, to build a pool that he can then use to expand his portfolio.
Things like, should he top up the $500 into both these each month, at good buy points of course, or save this until he can buy a $2000 parcel eg, or buy new low spec parcels hoping on growth (i.e. aex etc).
I'm confused.
The thread title says "Investing $3000", but that's not really what your mate has right now (maybe that's where he started?). He's got a portfolio of 2 stocks worth $3,500 at market close last Thursday, plus $700 per month discretionary cash that he is willing to invest on the stock market.
The only way he'll have $3000 to invest is to wait a few months for the $700 amounts to accumulate, or to sell some of his existing holdings. It doesn't sound like he wants to sell what he's got at the moment, seeing as they're both on the up, so the choices come down to what he can do with $700.
I ain't offering advice here, but I'd like to point out that even $20 brokerage is really $40 if he sells because the sp dives immediately, which means $60 if he wants to reinvest the balance quickly, which means that his remaining $640 needs to make $63.15 in 4 weeks to do better than if he'd left the money in an at call bank account.
Whether or not that's significant depends on a whole lot of other factors, but nobody else has mentioned it so I thought I would :)
Good luck to your friend
Ghoti
money tree
18th-April-2006, 06:33 AM
Hi ozfrisky
I must admit I had a little chuckle as well when I saw that 'risk free' claim :D
But don't worry, I doubt anyone takes the risk free part seriously and anyone that does probably still believes in the tooth fairy ;)
ooooooooops....sorry if I just shattered anyone's belief in fairies :eek:
If that claim was true then I suppose he would also say that $300k would give you $500k a year risk free until he dies.........yeah right :rolleyes:
Dividend stripping is just one of many strategies people can use but to say it is risk free is simply not a true statement imo.
cheers
bullmarket :)
Its quite funny when I see someone acting in a condescending know-it-all arrogant manner when they clearly dont have a clue what they are on about.
Some time ago there was a thread where we discussed risk-free strategies. They do exist. Ignorance costs. Ever heard of hedging? You cant get $500k p.a from $300k because the limit on franking credits is $5k.
bullmarket
18th-April-2006, 08:09 AM
no problem money tree ;)
I assume you are talking about the 45 day rule for dividends and claiming franking credits on tax returns when you mention the $5000 limit.
In your earlier post you made a statement that effectively said that dividend stripping on its own is risk free. I don't believe it is and unless you post some verifiable numbers that there is absolutely 0 risk in dividend stripping on its own I will continue to believe there is some element of risk in it.
I'm sure most if not all are aware that hedging can be used to reduce and sometimes eliminate risks in all sorts of investments but that is not what you said in your original statement ;)
see you in the swamp ;)
bullmarket :)
money tree
18th-April-2006, 10:29 AM
with $3k you could do a: "risk-free dividend strip".
edited above quote to clarify. "risk-free dividend strip" is the NAME of a strategy. It does not mean div stripping is risk-free.
bullmarket
18th-April-2006, 10:48 AM
ok no problem money tree :)
edited above quote to clarify. "risk-free dividend strip" is the NAME of a strategy. It does not mean div stripping is risk-free.
Good to see you at least corrected the error in your original post.
cheers
bullmarket :)
tech/a
18th-April-2006, 11:10 AM
Its quite funny when I see someone acting in a condescending know-it-all arrogant manner when they clearly dont have a clue what they are on about.
Yeh I hate it as well but you better get your facts/terminology accurate.
Some time ago there was a thread where we discussed risk-free strategies. They do exist. Ignorance costs. Ever heard of hedging? You cant get $500k p.a from $300k because the limit on franking credits is $5k.
edited above quote to clarify. "risk-free dividend strip" is the NAME of a strategy. It does not mean div stripping is risk-free.
Youre a financial planner tree and your statement is obviously misleading and designed to attract those who dont know better.
You wonder why people hate financial advisers.
bullmarket
18th-April-2006, 11:35 AM
Hi tech/a
.........Youre a financial planner tree and your statement is obviously misleading and designed to attract those who dont know better.........
I agree with you on this one tech/a :) and geeeez...I see you agreed with me earlier in another thread :eek: ..............I guess hell must have finally frozen over :D
If we start agreeing then there is still hope for the Middle East I guess :D
cheers
bullmarket :)
OzFrisky
18th-April-2006, 11:45 AM
You have to question the ethics of someone peddling a strategy as 'Risk Free Dividend Stripping' when they acknowledge that div stripping is not risk-free. The name is very deceptive, nothing is ever truely 'Risk Free'.
tech/a
18th-April-2006, 12:08 PM
Just to clarify My feelings with Tree.
Basically I think the guy has something to add.I also think he has the perfect vehicle to gain clients through here.
The only thing is he seems to keep shooting himself in the foot.
If you set yourself apart and let your course do the spruking then clients will beat a path to your door if it exceeds expectations.
money tree
18th-April-2006, 01:24 PM
You have to question the ethics of someone peddling a strategy as 'Risk Free Dividend Stripping' when they acknowledge that div stripping is not risk-free.
You have to question the I.Q of someone who posts such a statement. "Dividend stripping" as a strategy is not risk free. However, "Risk-free dividend stripping" as a strategy is risk free.
The name is very deceptive, nothing is ever truely 'Risk Free'.
And you know this......HOW !?
Ever gotten off your bum to see if E = mc2 is actually true?
Or are you just another parrot regurgitating what some other parrot once said?
People like you argued with the likes of Capurnicus and Columbus. "your wrong mate......the earth is flat and the sun revolves around it!"
Unless you have actually bothered to do your own research, ie testing a few hundred strategies and building computer simulations....please dont make statements of fact without evidence to back them up.
tech/a
18th-April-2006, 01:28 PM
You have to question the I.Q of someone who posts such a statement. "Dividend stripping" as a strategy is not risk free. However, "Risk-free dividend stripping" as a strategy is risk free.
And you know this......HOW !?
Ever gotten off your bum to see if E = mc2 is actually true?
Or are you just another parrot regurgitating what some other parrot once said?
People like you argued with the likes of Capurnicus and Columbus. "your wrong mate......the earth is flat and the sun revolves around it!"
Unless you have actually bothered to do your own research, ie testing a few hundred strategies and building computer simulations....please dont make statements of fact without evidence to back them up.
But clearly client liason isnt a strong point.
bullmarket
18th-April-2006, 01:35 PM
oh dear moneytree
Why have a go at ozfrsky in a condescending way especially when you posted earlier you don't like it done to you. :rolleyes:
You chose to make the earlier statement which said that dividend stripping is risk free - no-one forced you to post it and then you only corrected it when I and a couple of others pointed out the innacuracy in your post.
I bet that if I post the screen dump of your original post on other sites that most of the people that read it will also believe that you said that dividend stripping on its own is risk free.
Imo you've only got yourself to blame for the reaction you got to your original post ;)
cheers
bullmarket :)
Happy
18th-April-2006, 02:41 PM
With so little amount it almost makes sense to invest in wholesale managed fund, with no entry and exit fees if there is one like that.
But this is whole New World and I have no idea how to find good managed fund.
But it rings the bell that you can add 100 a week, so you could build up some size before dipping toe in yourself.
doctorj
18th-April-2006, 02:52 PM
Wow. I've been absent for nearing 3 months and it looks like nothing's changed...
Anyway, on topic.
First and foremost, $3000 isn't going to make him rich over night. It sounds obvious, but it needs to be said. $3000 isn't going to buy you a balanced portfolio either. If you start actively trading with only a $3k line you're very going to find that transaction fees are whittling away any profits that you're lucky enough to make. It seems the most reasonable way to approach the markets with this amount of money would be to trade a single stock (as someone suggested) with stops wide enough that you're not going to be in an out very often. A fundamental understanding of the company you're trading in this manner would be helpful.
The other approach to take is that $3k isn't a sheep station and its a relatively cheap education into the world of trading/investing. He may make money, he probably won't, but if he applies some of the information on this board and elsewhere he's likely to learn some invaluable gems that will help him for the time will eventually come when he has a big enough line or is willing to invest on margin.
mlennox
18th-April-2006, 08:24 PM
Personal opinion don't go blitzkreig on me.....
your friends best option is CFDs without a doubt, working off a $3000 bank taking 10% of the bank into positions at 3% margin could put him into positions for $6000, limit the risk with tight stop losses. This would allow him to get into say 4 stocks...
You might have trouble finding someone of your low caps on any of the providers, pretty much his only obstacle, plus CFDs are tax free ;)
dingo37
18th-April-2006, 08:44 PM
HI PHAROH,
try a safe bet like BMX FOR THE LONG TERM PLAYER,
AND STUDY YOUR CHART'S,
BMX WOULD HAVE TO BE ONE OF THE BEST FUNDAMENTL AND T/A STOCK'S AROUND AT THIS POINT IN TIME,
OR EVEN JUST PAPER TRADE OR EVEN TRADE THE BLUE CHIP STOCK'S FOR A WHILE,
THERE IS NOTHING LIKE GETTING FOCUSED ON YOUR TRADE'S ESPECIALY WHEN YOU HAVE MONEY WRAPRD UP IN THEM
EVEN IF YOU GET IT WRONG WITH THE BLUE CHIP'S THEN OVER TIME YOU WILL GET YOUR MONEY BACK WITH A PROFIT.
GOOD LUCK :D :D
Odysseus
18th-April-2006, 09:55 PM
I feel that what Julia suggested earlier makes good sense. Your friend should not put all his money into just one or two stocks, but spread his risk, and the best would be for him now to buy something pretty "safe" with little volatility and good ongoing prospects, like QBE or ANZ. Thus he would have three stocks - still not enough, but better than two, and I'd guess that perhaps the two he already has are not quite as "solid" as either of these two. Another good alternative ,which would get him into a RANGE of blue chips at one go, would be to buy one of the best LICs - listed investment companies investing in mostly good stocks FOR him. You can buy these on-market, and he could keep adding capital to the initial purchase. Milton is a good one, or - particularly just now - Aberdeen Leaders (still unervalued). These would possibly be better than any other option because they themselves are - internally - diversified. Very good for the long run, particularly as your friend does not sound as though he knows much about the market or individual shares. Good luck!
Duckman#72
18th-April-2006, 10:28 PM
Hi Pharaoh
I'd say that you could go worse than telling your mate to get into ENG and BMX...but you might have already told him that. :D
By the way - my apologies in advance if ENG SP drop as I recently bought some. :eek: That should be the kiss of death for them.
Duckman
mime
19th-April-2006, 12:09 AM
You should not seek financial from this website.
markrmau
20th-April-2006, 11:48 AM
CFDs are tax free
CFD's are NOT TAX FREE
dennisll
20th-April-2006, 03:06 PM
When I first got interested in the sharemarket I rang up a full service broker (a big popular one) and told the guy that answered that I wanted to buy some shares. The broker asked me how much I had to invest and coincidentally (to this thread anyway) I said I had $3K. He told me to go away and come back when I had more money. Sorry, that was a bit too dramatic, he actually told me to put all the money in a managed fund as it was too small an amount. Obviously he knew that I was a newbie and that I wouldn't have known any better. Had I done that, I would not have learned much at all and would still be wondering what to do with money I have now. So in reply to your question, I would suggest you have a look at the market you want to be involved in and from what your strategy or objective is, make a decision and follow through. You may not be able to retire on your riches overnight but the experience and lessons you will acquire from this first step will serve you well through your investing/trading life.
Best of Luck!
Dennis
ob1kenobi
20th-April-2006, 07:06 PM
Paper trade the $3000 using a variety of different models. For example, putting the whole lot into one company, investing in two companies, investing in bundles of $1000, $750, $500 and see which one is most effective for the circumstances. Include GST and brokerage in your calculations. When the time is right, use an online broker like Comsec or Etrade.
banjo_pete
20th-April-2006, 07:44 PM
Wait untill VB comes on special @30buck, buy 99 slabs and a quick pick lotto.
StockyBailx
23rd-April-2006, 01:53 PM
Wait untill VB comes on special @30buck, buy 99 slabs and a quick pick lotto.
Or put it all on Foster's! Excellent commercial detail banjo Pete. Bound to win lotto after drinking all those slabs. Excellent! :2twocents
-----A Penny a day keeps the doctor away-----
pharaoh
23rd-April-2006, 07:18 PM
Aha, good advice guys.
This has been a long thread - almost like a short story, and since so many have contributed, I thought you may like to find out how it ends.... :)
He has put $1000 each onto ENG (41c), BRO(2.7c) and;
IMP at 1.5c, and as he did, they ann'd a 1:4 deal so he gets another 1/4 of his current holding, for 0.8c each - nice.
He's going to sell out his position on bro if it goes up to 3.5c or maybe 4c and reinvest into ENG or IMP, and def sit on ENG as they ann subscriber numbers in the coming weeks and jump to 50c...prediction there...
So there you go, and they all lived happily ever after.
Thanks to all for posting, response was awesome.
I think this is a great post as it is good for newbies who come along.
So pls drop a thought or two in here if something good comes into your mind, I myself have got a lot of good ideas out of it too.
And oh, let me know what you thought of the end...
emily
22nd-May-2006, 02:41 PM
i believe $3000 goes a long way, you have to start somewhere..... the thing that pharaoh didint mention and alot of you asssumed, is the knowelege and expereince pharaohs's friend has. At the moment its looking good for pharaohs friend. not mentioning any names, i really dislike it when people say that u cant do much with 3k. profit or no profit, its a learning experience, and u have to try it in order to learn from it. He has already bought shares with that 3k, we should be supporting and helping in ways he can tackle the share market with 3k instead of suggesting what to do with the 3k eg. bank deposit, cfd's.......isnt gona help. u guys make it sound like 3k isnt much at all, to some people its money they worked hard for. i am very disapointed as i was reading this whole thread, how off topic it got.....
i strongly believe u can get somewhere with 3k, its all about picking the right stock, with 3k, forget about theories, risk n krap...... do your research, pick the right stock, and away you go........ anything can happen, who knows he might be the next warren buffet.
the bottom line is, Pharoah's friend is doing very well, put a word in to him for me..... show these people that mention "3k wont do much" how its really done.
keep us updated =D
yogi-in-oz
22nd-May-2006, 05:36 PM
i believe $3000 goes a long way, you have to start somewhere..... the thing that pharaoh didint mention and alot of you asssumed, is the knowelege and expereince pharaohs's friend has. At the moment its looking good for pharaohs friend. not mentioning any names, i really dislike it when people say that u cant do much with 3k. profit or no profit, its a learning experience, and u have to try it in order to learn from it. He has already bought shares with that 3k, we should be supporting and helping in ways he can tackle the share market with 3k instead of suggesting what to do with the 3k eg. bank deposit, cfd's.......isnt gona help. u guys make it sound like 3k isnt much at all, to some people its money they worked hard for. i am very disapointed as i was reading this whole thread, how off topic it got.....
i strongly believe u can get somewhere with 3k, its all about picking the right stock, with 3k, forget about theories, risk n krap...... do your research, pick the right stock, and away you go........ anything can happen, who knows he might be the next warren buffet.
the bottom line is, Pharoah's friend is doing very well, put a word in to him for me..... show these people that mention "3k wont do much" how its really done.
keep us updated =D
:)
What a great post, Emily ..... well done ..... !~!
No doubt the would-be gurus mean well, but their skewed
ideas are quite FAR from the realities of trading with
a small account .....
..... apparently speaking from the comfort of "deep pockets",
they simply spew out the standard "lower-the-risk" spiel,
that they have read in the text books of their trading hero.
That approach, simply will NOT work on small accounts,
unless you have a decade or three, before you want quit
your day job ..... !~!
Yes ..... $3,000 CAN go a long way towards building
a meaningful capital base, if we develop our own
profitable and tradable plan, in advance.
As there's no chance of leveraging, by the use of
margin trading (a risk in itself), then to make money
on limited capital, we must be prepared to take on
risk in other ways, if we want to make profits in a
reasonable timeframe .....
Spreading the risk across many stocks, simply increases
the brokerage load and substantially stretches out the time
frame to make comparable profits ..... likewise, investing
in blue chips may be safer, but our exposure in share
numbers is MUCH LESS and so our profit potential, in a
reasonable time frame is affected, yet again.
..... and blue chips go up and down too, so the buy and hold
theory does not apply to small accounts, since their pockets
are not deep enough to weather a sustained drawdown.
-----
So, higher risk is a factor, that most small account holders
have already accepted to a degree or they would not be
in the markets, at all.
Since we have the example here of trading two stocks, with
a $3,000 account, let's continue down that road.
Testing and honing a systematic, mechanical approach
to the markets should be easily achieved inside 1-2 months
of paper-trading (with some outside help) .....
..... it is a pointless exercise to paper-trade the markets
for extended periods, if the bugs have already been ironed
out of the system, because traders will not learn anything
about trading emotions, by paper-trading ... ie ... your mind
(and emotions) are with your money !~!
-----
Compounding our winners is a positive tool, but an even
more important tool is better market timing for both entries
and exits .....
..... "Being there, first" is the motto of Henry Weingarten's
Astrologers Fund and if our market-timing is good, then we
limit downside risk substantially, no matter which market
we may be trading.
If we enter early, downside risk is minimal and if we exit
before the masses, we again limit the risk of a fast downside
move, as other traders head for the exits, in a panic ..... :)
-----
In summary, before the skeptix tip-the-bucket on us, let's
look at a few of examples posted here, recently:
BRW - THX - EPE - PCP - CNN and more, like PHL .....
Last week for example, CNN finished 39% up in a
negative week for the markets, overall !~! ..... and some
handy complementary earnings for a wage-earner.
This week it's PHL ..... up marginally today, on
very low volume ..... not bad on a day, where the
general market was down, another 70 points !~!
Using our 2-stock model, for $3,000 we could have a
holding of 75,000 in each of the companies above,
online brokerage included ..... and certainly more attractive,
than a handful of boring blue-chips ..... !~!
-----
Nope, we don't get them all correct, but we do get
enough right to pay the rent each week ..... :)
So for small accounts, better market timing, self discipline
regarding stop loss levels, compounding winners and cutting
losers adrift quickly, all add to more profit POTENTIAL
for small account holders.
So, take heart small account holders, it CAN be done .....
..... just by ignoring the self-annointed gurus and
"being there, first", yourself ... !~!
For a FREE dowload, addressing many of the issues traders
confront in building their own trading plan, please go to:
