• Australian (ASX) Stock Market Forum

Hello and welcome to Aussie Stock Forums!

To gain full access you must register. Registration is free and takes only a few seconds to complete.

Already a member? Log in here.

Newcomer to this shares thing

Discussion in 'Beginner's Lounge' started by cabanna, Jul 3, 2019.

  1. cabanna

    cabanna

    Posts:
    4
    Likes Received:
    0
    Joined:
    Jul 3, 2019
    Hi All, I have just started this trading thing with an investment in Hylea Metals (HCO). I've never done this trading thing before but figured what the hell. I can't invest thousands so have invested a little over $500. It's a big risk for a relatively small amount so i'm going to see how it goes over a year. Does anyone have any advice on this thought process. I look forward to your responses.
     
  2. willoneau

    willoneau

    Posts:
    1,020
    Likes Received:
    374
    Joined:
    Aug 27, 2017
    Hi cabanna , what thought process?
     
    cynic and galumay like this.
  3. galumay

    galumay learner

    Posts:
    2,013
    Likes Received:
    562
    Joined:
    Sep 17, 2011
    Welcome to ASF, there are many members here, and many approaches to trading and investing, so you will likely get a range of responses. My response to your questions is more questions!

    Are you trading or investing? Why did you buy a resources company? Why did you by HCO specifically? What do you expect to happen? What will you do if something else happens?
     
    cynic and willoneau like this.
  4. willoneau

    willoneau

    Posts:
    1,020
    Likes Received:
    374
    Joined:
    Aug 27, 2017
    Hi galumay , my thoughts exactly, my response was as short as his thought process he used to buy HCO.
    sorry if seems so blunt, i think he needs to read a few of the threads before asking such an open ended question.
     
    galumay likes this.
  5. kennas

    kennas Searching

    Posts:
    13,191
    Likes Received:
    58
    Joined:
    Apr 21, 2006
    Have you bought them because they went up after the Kayelekara buy-in? It looks to be on care and maintenance. Is it going to ramp up again? I would be interested if I knew that mine was going to restart, for whatever reason. Is that your reason to buy?
     
  6. Smurf1976

    Smurf1976

    Posts:
    9,234
    Likes Received:
    2,539
    Joined:
    Feb 14, 2005
    Firstly, welcome to ASF! :xyxthumbs

    Where to start?

    The first concept to grasp is that people buying shares can broadly be divided into a few categories. In all cases the transaction itself is exactly the same, what differs is the reasoning behind the decision to buy and what they expect to do next.

    1. Investors who consider that they are buying a share in a business. They've done their research into the company and it's activities and concluded that it ought to be a wise investment. Such people are generally not worried about short term movements in the value of their shares, expecting to profit from dividends and/or growth in the value of their shares over an extended period.

    2. Traders who are using some sort of system based purely on the price of the shares and volumes being sold without considering the company's actual business, indeed they may not even know what the company does so far as its actual business is concerned unless it's an extremely well known one. They're looking at charts or numbers in some other form, applying some sort of systematic approach which has been tested and proven, and that's the basis for the decision. Profit comes from an expected increase in the share price then selling to someone else which, depending on the trader's approach, could be anything from a year or two through to selling on the same day they bought.

    3. Passive investors who simply buy into the top 10, 20 or however many companies or invest in a fund which does. There's no attempt to do further research but the thinking is that the likes of the big 4 banks, BHP, Telstra, Woolworths, Wesfarmers etc aren't going to go broke so it's a safe but unexciting investment which will plod along slowly but surely. Some may modify this slightly by excluding specific companies for ideological reasons, that is they won't invest in company x because they disagree with its business activities but that's an ideological decision not a financial one. If two of the top 20 companies are out for such reasons then they just invest in the 21st and 22nd largest instead. etc.

    4. Those who are focused on a sector far more than any particular company. Eg their research tells them to invest in oil companies and so they buy shares in every company they can find which produces oil. Or they conclude that Japan's going to perform better than elsewhere so they buy into the top 50 companies listed in Japan. They've done far more research into oil or countries than into any of the companies, the thinking being that if oil or Japan is going up then most of the companies should also do well.

    5. Those who intentionally gamble buying shares in things like highly speculative mineral exploration companies on the chance that the company's exploration does find something major or medical research companies who might make a breakthrough. The chance of losing their entire investment is high, many such companies fail and the shares become worthless or close to it, but the potential profit is huge in the event that the company does succeed at whatever they're trying to do. Remember in that context that the reason the company has issued shares is to fund, with investors money, whatever they're trying to do be that finding gold or curing cancer or whatever.

    6. Those who are gambling due to randomly throwing money at the market with no systematic approach. Whether or not they make a profit comes down to pure luck although the odds could be somewhat skewed in your favour by at least sticking to companies with an actual, profitable business or which are in the top 200 (but that's by no means any guarantee).

    Personally I've primarily done (1) and (4) in the past but am taking more interest in the (2) approach since very clearly there are many others doing that successfully. Like most I have superannuation in a fund which relies largely on the (3) approach. I have no interest in gambling.

    Note that all companies, countries, commodities etc I've mentioned here are purely examples to illustrate the point being made and are not a recommendation to invest in that company, country or commodity.:2twocents
     
  7. Zaxon

    Zaxon The voice of reason

    Posts:
    652
    Likes Received:
    567
    Joined:
    Aug 5, 2011
    What you've described is a fundamental investor. And there's nothing wrong with that. But it's a limited definition. You can also have long-term investors who are technical, not fundamental. I looked up a definition, and sure enough, it a broader definition than what you're proposing.

    upload_2019-7-3_19-15-59.png
    https://www.investopedia.com/terms/i/investor.asp

    Now, perhaps your point 1 was deliberately narrow. But, in your other points, you've labelled everyone else as traders or gamblers.
     
  8. Smurf1976

    Smurf1976

    Posts:
    9,234
    Likes Received:
    2,539
    Joined:
    Feb 14, 2005
    Agreed - my list's imperfect and probably should have covered that one. :)

    I think it would be fair to say though that broadly speaking, those using technical analysis would hold shares for a shorter period typically than those basing decisions on fundamentals which change far more slowly.

    Agreed though it's a valid point. :xyxthumbs
     
    Last edited: Jul 3, 2019
    Zaxon likes this.
  9. sptrawler

    sptrawler

    Posts:
    11,657
    Likes Received:
    2,256
    Joined:
    Jul 3, 2009
    Hi cabanna what I would say is, if you are serious about trading and want to make money out of it, as with anything you have to learn how to do it well.
    To do that you have to be really interested in it, it has to be a passion a hobby, because there is a lot to learn.
    So a lot depends on what you want from shares, a passive income eg dividends, or capital gain flipping shares for profit.
    Once you work out what outcome you're after, there is heaps of info on the forums to cover both avenues.
    Anyway best of luck on your journey, hope you enjoy it, as most on here do.
     
  10. cabanna

    cabanna

    Posts:
    4
    Likes Received:
    0
    Joined:
    Jul 3, 2019
    Many thanks for your insight. I've done a bit of research into this company and there cobalt site in Western NSW seems to have big potential based on drilling samples, they have also recently acquired another site in Malawi that is a going concern. I'm thinking i'll see how it goes for 5yrs or so.
     
  11. cabanna

    cabanna

    Posts:
    4
    Likes Received:
    0
    Joined:
    Jul 3, 2019
    Hi kennas, The research i've done seems to point to a re start in production but the exciting possibilitiy is in Western NSW where samples are showing excellent results for cobalt which is used in batteries (solar, and battery cars) that are becoming more popular by the week.
     
  12. cabanna

    cabanna

    Posts:
    4
    Likes Received:
    0
    Joined:
    Jul 3, 2019
    Hi Smurf1976, I'm definitely in it long term and have done some research into this company and the exploration results in Western NSW is very promising.
     
Loading...

Share This Page