Strategy question: Undervalued Blue Chips as portfolio basis?

Julia said:

Gee whiz, Tyson. That's a brave call. I'm more with Alter Ego at this stage.

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It's might be a brave call. but thats how I am playing at the moment. I not expecting a fast recovery, and certain sectors may have a bit more unwinding to do, But I feel the areas that I am investing in are now extremly good value and I feel slowly between now and the end of the year the tide will be slowly turning.

I am happy to make selected investments against the general sentiment.

Hi all!

I just wanted to thank everyone for their help here. In case anyone ever wonders, this has genuinely had a big impact on what I'm planning to do, and has possibly saved me a lot of money - so thanks. Just to give a little back, if anyone who has helped me out here thusfar would like advice or info on the writing/publishing industry (which is my own area of expertise) please PM me and I'll do what I can. I'd offer to mow yer lawns, but I'd do a ****e job.

Anyway, after hearing all this what I'm thinking is:

Abandon my initial strategy.
Set up a watchlist for some of the stocks I was already interested in, and research some others.
Place one or two low-quantity conditional buys here and there on stocks I'd be happy to hold for 5 years or so (say, BHP at $38 just as an example), and be prepared for falls on whatever I place now.
Drip feed the 25k in slowly over the next year or so (with maybe one 2k buy a month for the next couple of months while taking the temperature and then some larger buys on a more ad-hoc basis if things seem good), with that 'year' to be altered if the market tanks or rallies.

I'm pretty happy with that.

Technically BHP can go to 34-36, read the BHP thread on this forum. Not saying 38 is not a good value long term.

Sane decision anyway.

I am new to stock so just listen to advise of pro's here.

Paladin said:

Set up a watchlist for some of the stocks I was already interested in, and research some others.
Place one or two low-quantity conditional buys here and there on stocks I'd be happy to hold for 5 years or so (say, BHP at $38 just as an example), and be prepared for falls on whatever I place now.
Drip feed the 25k in slowly over the next year or so (with maybe one 2k buy a month for the next couple of months while taking the temperature and then some larger buys on a more ad-hoc basis if things seem good), with that 'year' to be altered if the market tanks or rallies.

.

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sounds pretty good

Tysonboss1 said:

sounds pretty good

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yeh does sound good but id bump it up to 2.5 k per stock or else brokerage will be too high a percentage of your outlay...

but yeh i wish i had seen this site before i started last year... and yeh i could easily see BHP going mid to low 30's

white_goodman said:

yeh does sound good but id bump it up to 2.5 k per stock or else brokerage will be too high a percentage of your outlay...

but yeh i wish i had seen this site before i started last year... and yeh i could easily see BHP going mid to low 30's

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Thanks Mr Goodman Love the icon by the way. 2.5 is pretty do-able, and I'll definately both avidly read the relevant threads here on whatever stocks I've got an eye on and not buy if something is clearly in a downward swing. Still, I do take the point about being able to pick bottoms. I like to keep my fingernails clean

It's been so helpful to run this strategy past everyone here BEFORE starting to trade.

Good on you for taking time to consider your strategy before diving in, Paladin.

One thing that struck me though, in reading your posts, is the number of times you mentioned that you felt ok losing money, e.g.

"I can afford to lose all this seed money if I make horrid mistakes"

I'm comfortable putting that money into something that might go backward for a while."

"I'm happy to lose some while learning, but not all. In fact, I kinda expect that to happen"

I would question the use of this philosophy in being able to trade successfully. What you are describing is more like the sort of attitude many take before walking into a casino.

Regardless of whether you perceive that you can 'afford' to lose this 25k, this money took work to earn. And this money has the potential to earn you a lot more if invested in the right way. So, in a way, you owe this money the respect of holding it, even if it might be burning a hole in your pocket, until you can back yourself on an educated investment.

If you are saying that you feel comfortable parting with some money, then why not invest it in educating yourself by buying some books/subscriptions/taking some courses etc?

Paladin said:

Regardless of whether you perceive that you can 'afford' to lose this 25k, this money took work to earn. And this money has the potential to earn you a lot more if invested in the right way. So, in a way, you owe this money the respect of holding it, even if it might be burning a hole in your pocket, until you can back yourself on an educated investment.

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Paladin - I'm similar to you and started in just recently. Which was too early. I'm waiting now for a bit more sideways movement in some watchlisted stocks before buying. With a longer term view like yours I feel that what I may lose in a month or three will be covered in the longer term.

An earlier post mentioned beware of purchases like BNB. I got a very small parcel after they dropped a lot but got caught (and it was before finding ASF), which would have kept me away from them. So whilst having some financials I am waiting before going for any more.

I agree with the above. The money took work to earn, why be prepared to lose it.

There's a lot of support for books like Adaptive Analysis by Nick Radge. Local library doesn't have it anywhere so I may have to buy it. Have purchased 3 books so far and have a couple of others to read. Between these and ASF, a stop loss is a fundamental of a strategy (guess who didn't have one with BNB!!!).

If you want some software - try Incrediblecharts.com or HUBB2. We have HUBB2 but I think Incredible is better. Roger Kinsky's "Online Investing on the Australian Sharemarket" contains lots of useful info - and our library does have it.

Last thing. I will go Blue Chip - it's just a question of when and then what.

Cheers

ernesto said:

Good on you for taking time to consider your strategy before diving in, Paladin.

One thing that struck me though, in reading your posts, is the number of times you mentioned that you felt ok losing money, e.g.

"I can afford to lose all this seed money if I make horrid mistakes"

I'm comfortable putting that money into something that might go backward for a while."

"I'm happy to lose some while learning, but not all. In fact, I kinda expect that to happen"

I would question the use of this philosophy in being able to trade successfully. What you are describing is more like the sort of attitude many take before walking into a casino.

Regardless of whether you perceive that you can 'afford' to lose this 25k, this money took work to earn. And this money has the potential to earn you a lot more if invested in the right way. So, in a way, you owe this money the respect of holding it, even if it might be burning a hole in your pocket, until you can back yourself on an educated investment.

If you are saying that you feel comfortable parting with some money, then why not invest it in educating yourself by buying some books/subscriptions/taking some courses etc?

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Hi Ernesto!

Thanks very much for the thought, and of course you make an excellent point. As for eductation - I'm a massive believer in it. I have several bits of parchment on the wall, work in research, and my natural inclination is to try and think things through before acting. I'm buying LOTS of books etc on the subject at the moment as well as trying to educate myself via chats like this and whatever other online resources I can eat. My inital 'strategy' that started this post arose from trying to work out what my natural investment temperament would be - which in turn led me to reading lots about fundamental and value investing

I guess where I'm coming from is that I know, from knowing myself, that any mistakes I make on the market itself (even if playing with small amounts) will be cemented in my mind forever. Theories I find easier to discount or simply forget.

I assure you I am NOT comfortable with consistently losing money in the market. I do think I've come off as viewing the market as a slot machine - which is something I clearly need to be mindful of. I am trying to tell myself, however, that it's OK for me to lose a bit while learning the ropes. So maybe the little mantra you've astutely picked up on is just me reassuring *myself* that it's OK to make some mistakes at this point so long as it means that over the longer term I'll make less of them. And of course it's a problematic time to be trying to learn the ropes, but them's the breaks - and if nothing else, now seems like a very good learning environment.

You're absolutely right though that life has a way of rising or lowering itself to our expectations of it. Thanks for reminding me of that.

johenmo said:

There's a lot of support for books like Adaptive Analysis by Nick Radge. Local library doesn't have it anywhere so I may have to buy it. Have purchased 3 books so far and have a couple of others to read. Between these and ASF, a stop loss is a fundamental of a strategy (guess who didn't have one with BNB!!!).

If you want some software - try Incrediblecharts.com or HUBB2. We have HUBB2 but I think Incredible is better. Roger Kinsky's "Online Investing on the Australian Sharemarket" contains lots of useful info - and our library does have it.

Last thing. I will go Blue Chip - it's just a question of when and then what.

Cheers

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Hi Johenmo. Thanks heaps for the book tips. One of the first things I did on this site was see what books people were recomending, and I've already gotten through a few of them. I'll put yours on the list!

Yeah - this forum has been invaluable for me too. I'm amazed how much nicer this community seems to be than other Aussie online stock forums. I've really noticed a difference, just from reading them all.

Paladin said:

Hi Johenmo. Thanks heaps for the book tips. One of the first things I did on this site was see what books people were recomending, and I've already gotten through a few of them. I'll put yours on the list!

Yeah - this forum has been invaluable for me too. I've only made one poor purchase thusfar (MRE), but if I'd come here first would have been spared that too

I'm amazed how much nicer this community seems to be than other Aussie online stock forums. I've really noticed a difference.

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Glad to hear you are liking ASF Paladin.

In order to support it, please purchase your books from the ASF bookstore, as this sight relies soley on advertising and the bookstore to keep up and running.

Prawn

prawn_86 said:

Glad to hear you are liking ASF Paladin.

In order to support it, please purchase your books from the ASF bookstore, as this sight relies soley on advertising and the bookstore to keep up and running.

Prawn

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Oh! Cheers mate. Will do. Oooops. As an aside, would be more than happy to donate to keep the forums running (say via paypal) if that were ever an option you guys implemented or needed. This has very much been of real worth to me.

Paladin said:

Oh! Cheers mate. Will do. Oooops. As an aside, would be more than happy to donate to keep the forums running (say via paypal) if that were ever an option you guys implemented or needed. This has very much been of real worth to me.

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If you do wish to donate i suggest you conact (Private Message) the site owner and supervisor, Joe Blow. I am a mere volunteer lackey