New Investor's Journal

Hi all,

I've been reading through the forum trying to glean as much information as I can. It seems to be a really friendly forum and I look forward to learning more. I've started to take an interest in investing over the last 3 months and finally took the plunge this week, on Monday. I thought that it might be useful to start a thread here so that other people who are thinking of investing can learn from my successes and mistakes. In addition, of course, I'll welcome any input from other posters.

On Monday I started off small with start-up capital of $4,000. If I start to do well, I'll invest more, but for the moment I think it's best to start small.

I decided to invest in the 4 following stocks:

1. TOL
2. ASX
3. MFG
4. ANZ.

In invested in ANZ and ASX because I feel that, over the long term, which is the time frame I'm planning for, they will prove to be reliable, conservative bets, assuming of course that the market continues to recover.

I invsted in MFG because I had been watching it for three months and their recent reports are, to my mind, encouraging - profits up, increased funds under the company's management and the intention of taking on more staff. To me, this sounds promising in terms of further growth. Having said that, the stock has fallen since I bought it, but I believe its long-term fundamentals are promising.

I bought TOL because it had turned a profit under difficult circumstances - a sign of good management, in my opinion - are investing considerable sums in the business and as the economy continues to recover and Asia continues to rise, a freight deliver company seems well-placed to benefit. In addition, it is considerably below its historical peak.

So, these are the stocks I've bought and a brief description of my reasons for buying them. As things stand, it's a case of holding my nerve RE MFG given that it has fallen this week, and staying the course on the rest as they are doing pretty well. I have $700 of my original $4,000 left to invest and I am currently weighing up whether I should invest this in Magellan, taking advantage of the lower price, or cast about for a fifth firm to invest in. To this end I've been reading widely and trying to identify some possible low cap companies primed to give me some good capital gains. I haven't reached a final decision yet. I think that as a new investor, holding my nerve is the toughest thing, particularly as MFG had been experiencing great growth since I first started to follow it in December. I have set myself a rule of selling a stock if I lose 20% of my initial investment so that will prevent me from losing out too much on a stock.

I look forward to learning more about investing and feel quite excited by the prospect of taking control of my financial future (hopefully successfully!). Hopefully by the time I retire (I'm 30 now) I'll have a portfolio worth a decent amount!

Keep saving to invest because those parcels are small.

Too much of your capital will be taken up with bjorkerage fees.

Other than that, watch, read, learn and work out what you think suits you: short term, mid term or longer term trading or investing.

Enjoy.

Hi mate, I for one will be following your journal with interest (no pun intended, honestly as I'm sure it's been done before).
I too have been reading and trying to learn and like yourself, but just needing to take the plunge....

Quick question on the first of first steps .... Did you open an online brokerage and if so who with and why ??
Like the other comment here with 4K spreading yourself out over so many stocks might lead to more fees although to me and my very basic understanding you have also diversified yourself and are looking forwards to learning how this all works. I too am feeling your excitement.

I look forwards to more of your journal ........ Good work for taking the plunge !!

Stefal said:

H
On Monday I started off small with start-up capital of $4,000. If I start to do well, I'll invest more, but for the moment I think it's best to start small.

I decided to invest in the 4 following stocks:

1. TOL
2. ASX
3. MFG
4. ANZ.

Click to expand...

Hello and welcome to ASF

Your timing (IMO) is terrible, and 4K spread over 4 stocks is not a good idea, spending 2% of your capital on brokerage is not smart...Buying stocks AFTER they have risen substantially is a clear blue sky, bull market strategy...the fundamentals do not support this view.

6 months comparison chart below.
~

So_Cynical said:

Hello and welcome to ASF

Your timing (IMO) is terrible, and 4K spread over 4 stocks is not a good idea, spending 2% of your capital on brokerage is not smart...Buying stocks AFTER they have risen substantially is a clear blue sky, bull market strategy...the fundamentals do not support this view.

6 months comparison chart below.
~

Click to expand...

Oh my, so harsh with the criticism.

Stefal, it's reasonable to point out that brokerage is chewing into your purchases, but imo your desire to try four quite different stocks to get the feel of being in the market seems reasonable.

Certainly these stocks have gone up strongly, but they are all (from my quick glance at the charts) still trading above their EMA and, except for MFG, still in an uptrend. The market is still well below its pre-GFC highs.

If someone is going to rubbish buying in now on the basis that the fundamentals don't support this, you can pretty well apply that to all markets, here and overseas. There are still many problems unsolved and much of the current uptrend is imho cash which is no longer earning enough in the bank seeking a more profitable home in the market.

You're aware of the need to watch MFG carefully.

At least you've thought about why you wanted to buy your stocks and been prepared to put your choices up here for comment.
I wish you all the best.

Thank you all of your comments, both positive and negative.

One thing I neglected to mention but should have included in my initial post is that I created a Commsec account in December - this gave me $600-worth of free trades so my four purchases haven't cost me a penny in terms of brokerage. Of course, they might cost substantially more if they all go south!

I went with Commsec because a friend who invests (he's the one who sparked my interest) uses it. I checked out the website, which seemed straightforward, so joined up. I did consider other online brokerage site, so I am prepared to move around to take advantage of various offers and better service. I should mention, though, that I have been very impressed by Commsec's customer service to date - my $600 of free brokerage was not applied, but a quick phone call addressed the problem. The staff also followed up an email inquiry very promptly so I have no complaints.

As for what kind of approach suits me, it's definitely long-term investing as I have neither the time nor the nerve for day-trading. At the moment, I plan to limit myself to a small number of companies - four, perhaps five - and invest for the long-term, take the dividends, small though they are, and hope for capital gains.

I do have more to invest (around another $30k potentially), but as I still have a great deal to learn, I am definitely keeping that in reserve for the moment. I will, of course, add to this sum as I continue to save, but I feel that $4k is enough to spend as a way to familiarise myself with the markets. All going well, however, I do intend to invest more in the future through private investments, funds, and government bonds.

Hopefully my timing won't prove to be terrible! I am prepared to hold on to these stocks for the long term, so hopefully that will help me ride out any fluctuations. Regarding MFG and TOL, I know both are a bit of a risk, but I'd counter that by arguing that all investing is, and that I am reasonably confident in their long-term trajectories for the reasons I outlined in my opening post. That said, I would be lying if I said that it hasn't crossed my mind that both may have peaked. In the defence of TOL, at least, I'm comforted by the fact that it has historically been higher (around the $10 mark). I do intend to watch my stocks closely and my 'getting out at -20%' rule should insulate me from massive losses, unless the stocks collapse within a day.

As for the numbers, I ended the week up by a little over $10. A paltry sum, no doubt, but a profit is a profit! Long may it continue.

Anyway, I hope I've answered your questions, Thraxier, and thanks to everyone else for their comments. It's great to get a broad range of comments; it certainly gives me something to think about.

Good luck for the coming week everyone. I assume that the U.S. sequester will have a negative impact when the markets open on Monday, but hopefully it won't be too drastic and the recovery will continue.

Have a squiz at this thread, its a good read for those wanting to start out regarding small parcels, i started with 10k so it can be done. Take note i lost a fair bit when i started though as i was green as grass, first shares i bought were babcock and brown after a friend who was working for them recommended me to buy them. Me being a sucker beleived her too!

https://www.aussiestockforums.com/forums/showthread.php?t=19955&highlight=1500

I beleive in a hand on learning while others tend to like to sit back and take a more careful approach, use what ever method you are comfortable with. Also another thing to remember is you haven't made a profit/loss until you sell the shares. My portfolio is down 31% at the moment on my current holdings but im not too fussed because they are companies i beleive in and have just copped a beating from the market in general. Do your research, have fun and listen but don't beleive a word anyone says about a company, make your own decisions. You'll win some and you will lose some, enjoy the ride, investing can be addicting but in a good way. Also welcome to the forum

TMC93 said:

Have a squiz at this thread, its a good read for those wanting to start out regarding small parcels, i started with 10k so it can be done. Take note i lost a fair bit when i started though as i was green as grass, first shares i bought were babcock and brown after a friend who was working for them recommended me to buy them. Me being a sucker beleived her too!

https://www.aussiestockforums.com/forums/showthread.php?t=19955&highlight=1500

I beleive in a hand on learning while others tend to like to sit back and take a more careful approach, use what ever method you are comfortable with. Also another thing to remember is you haven't made a profit/loss until you sell the shares. My portfolio is down 31% at the moment on my current holdings but im not too fussed because they are companies i beleive in and have just copped a beating from the market in general. Do your research, have fun and listen but don't beleive a word anyone says about a company, make your own decisions. You'll win some and you will lose some, enjoy the ride, investing can be addicting but in a good way. Also welcome to the forum

Click to expand...

Aren't you rather contradicting yourself? You lament your investment in BNB, yet go on to advise that "you haven't made a profit/loss until you sell".
I wouldn't be having any 31% down and find it difficult to comprehend, given the strength of the rally recently.
Might be time to re-evaluate what you are doing.

Julia said:

Aren't you rather contradicting yourself? You lament your investment in BNB, yet go on to advise that "you haven't made a profit/loss until you sell".
I wouldn't be having any 31% down and find it difficult to comprehend, given the strength of the rally recently.
Might be time to re-evaluate what you are doing.

Click to expand...

No not really, i only have 3 holdings left worth $7k all up. Over the last few weeks i sold the majority of my holdings from GXL to TLS. Mainly because i was working in an area where i wouldnt get internet consitantly and i needed the cash for another property.

In regads to the BNB, that was in regards to be cautious when taking advice from people who dont know what they are talking about. I did and i payed for it, by my money. I'll re-word my previous post just for you Julia, "you haven't made any money until you sell."