Agree 99% As I say "Pyramid selling"
However I dont agree that it is too late and we should pack it in. Realise it is happening and will not change much in the short term. Ride with the punches and use them to your advantage.
I see a large part of the problem as organizations and markets which make money from share trading rather than the companies that are represented by the shares.
The theory of the stock market is that companies float with a prospectus, investors buy shares based on the story and the quality of the management. Again in theory the company proves commercially successful - or fails- and the result is reflected in the SP and/or dividends.
The reality ? I think the stock market resembles a giant casino with hundreds of mini games. Many are bent and almost all with the house taking it's cut.
In this reality the stock brokers and stock markets are forever wooing punters to buy shares because
1) They get commissions on sales
2) They are selling shares for companies and get commissions on successful placements
3) The owners of the stack market get wealthy on the turnover.
It doesn't actually matter a hill of beans what gets sold , or how worthwhile it is. Every sale rings a commission regardless of the quality of the stock. That should make one think.
Again in this reality if someone can just tell a good enough story to get enough people to believe a stock will be a winner that belief alone will encourage enough people to jump in and create the price rise that will give the quick buck. We call this ramping don't we ? Or it could be market sentiment.
And sitting in the middle of all this are the people who establish companies with a pitch and a prospectus, give themselves millions of shares for their efforts and then turn these paper assets into real dollars if they can convince enough punters to jump in.
All of this will make big, quick bucks. You would have to be a right mug to pass the easy money for the hard uncertain work of actually building a profitable business when it could be so much easier to play this game.
And this is the cornerstone of our economic system and our financial security.
way too late. Lets pack this in...:
The problem if there is no catalyst for the market to bridge the gap between what you think the intrinsic value is and the current market price there is no reason why the stock will not continue to trade at that discount. But in the interim there is a huge opportunity cost associated with holding the stock if it just goes sideways and even more so if it goes down.
I actually don't trend follow, but now I look for a reason for the market to bridge the gap, I don't have the capital base to hold stocks for years and now I'm willing to miss the first 10-20% before buying in.
Any of the LICs
I don't have the capital base to hold stocks for years and now I'm willing to miss the first 10-20% before buying in.
OK I guess by definition a contrarian thread will never be popular. I thought I might list a couple of investments I have made that might generate some interest. I understand it is a fine line between value investing and contrarian investing but here goes:
FGE Forge Group. OK these guys are the flavour of the month but when shares purchased from mid- April to late May we were in the middle of mining tax, soverign debt and talk of asset bubbles in China.
Average price paid $2.582
Price Today $3.71
Paper Profit 43.7%
Dividend to be paid $0.05
JBH JB HiFI. JBH also look good but when purchased mid June things were not looking good (read above minus mining tax)
Average price paid $18.636
Price Today $21.81
Paper Profit 17%
Dividend received 0.33
FRI Finbar Group. To quote Comsec Market Bulletin regarding sharemarket sectors " Real Estate - Investors are not ready to embrace commercial property " All other sectors except IT are rated index weight or over weight.
Purchased early this month
Average price paid $1.061
Price Today $1.025
Paper Loss -3.4% I hope it gets cheaper so I can buy some more.
It's been about 3 1/2 weeks since the above post and I thought I might update my little contrarian portfolio's progress. After the above post I recieved a bit of feedback from trend followers particularily regarding the loss with FRI with warnings of opportunity costs, the trend is your friend ....
FGE
Average price paid $2.582
Price Today $4.07
Paper Profit 57.6%
Dividend recieved $0.05
JBH
Average price paid $18.636
Price Today $21.13
Paper Profit 13.4%
Dividend received 0.33
FRI
Average price paid $1.061
Price Today $1.025
Paper Profit 17.8% I hope it gets cheaper so I can buy some more
Yeh but its a little like...what hasn't gone up in the last 3 and a half weeks.
Yeh but its a little like...what hasn't gone up in the last 3 and a half weeks.
Excellent point. If there had happened to be a series of bad news events from the US, and/or here, the market would likely have gone down instead of largely up.
This is not to rain on your parade, but just to keep a check on the macro economic factors involved. Hope your picks continue to do well.
OK I guess by definition a contrarian thread will never be popular. I thought I might list a couple of investments I have made that might generate some interest. I understand it is a fine line between value investing and contrarian investing but here goes:
FGE Forge Group. OK these guys are the flavour of the month but when shares purchased from mid- April to late May we were in the middle of mining tax, soverign debt and talk of asset bubbles in China.
Average price paid $2.582
Price Today $3.71
Paper Profit 43.7%
Dividend to be paid $0.05
JBH JB HiFI. JBH also look good but when purchased mid June things were not looking good (read above minus mining tax)
Average price paid $18.636
Price Today $21.81
Paper Profit 17%
Dividend received 0.33
FRI Finbar Group. To quote Comsec Market Bulletin regarding sharemarket sectors " Real Estate - Investors are not ready to embrace commercial property " All other sectors except IT are rated index weight or over weight.
Purchased early this month
Average price paid $1.061
Price Today $1.025
Paper Loss -3.4% I hope it gets cheaper so I can buy some more.
Hey Robusta, you should check out a thread by SKC, "SKC fundamental positions" or something, his method appears to differ to yours a little (more of a short term focused arbitrage sort've gig going), and both differ from my 'value investing' style of deep value plays (CFE and LNC 1 or 2 months ago good examples of the types of companies and at what prices I like to buy). Just a suggestion to have a look, it's a good read, and you might look to branch out a little from ol' Roger Montgomery's Value-Able method of valuing stocks.
Thankyou I will have a look - allways looking to learn. CFE and LNC are not really on my radar as I have trouble finding a value for mining / energy stocks.
I bought a heap of ERA earlier this year and only got out loosing half my shirt.
Mind you I have found the returns using ol' Roger Montgomery's Value-Able method of valuing stocksto be very satisfactory so far.
Hey Robusta, you should check out a thread by SKC, "SKC fundamental positions" or something, his method appears to differ to yours a little (more of a short term focused arbitrage sort've gig going), and both differ from my 'value investing' style of deep value plays (CFE and LNC 1 or 2 months ago good examples of the types of companies and at what prices I like to buy). Just a suggestion to have a look, it's a good read, and you might look to branch out a little from ol' Roger Montgomery's Value-Able method of valuing stocks.
All of you guys have good points. There are multiple ways to earn big bucks in the market. It is as true to a value investor as to a day trader. The only question is if you are good enough. To me, Mr. Warren Buffett is the most successful one ever in this business, and it makes sense to follow his lead. Why bother to try other stuff while the method to success has been tested over forty years?
All of you guys have good points. There are multiple ways to earn big bucks in the market. It is as true to a value investor as to a day trader. The only question is if you are good enough. To me, Mr. Warren Buffett is the most successful one ever in this business, and it makes sense to follow his lead. Why bother to try other stuff while the method to success has been tested over forty years?
Being contrarian is just that and it is gambling.
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