Sign of the Times

Discussion in 'Share Investing Strategies, Theories & Education' started by MTR, 23rd Feb, 2017.

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  1. Bayview

    Bayview Well-Known Member

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    Wow!..this sorta makes me think of that saying accredited to Warren Buffett; "Buy your straw hats in the winter".
    Sorta like buying shares after a massive drop; a strong solid Company with a low share price is still a strong Company most times, so usually signifies a good time to buy (assuming the property is a good quality one).
    Do you think there is still a lot more dropping left to go? Maybe it's getting close to a decent time to buy over there?
     
  2. Gockie

    Gockie Life is good ☺️ Premium Member

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    I guess the question is, what's there to make it turn around? Eventually it has to, but what drivers are there now? I don't monitor Perth but I think the vacancy situation hasn't gone away.
    Maybe just better to buy Tassie right now.
     
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  3. MTR

    MTR Well-Known Member

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    don't know?

    the economy in WA worst in Oz, same as jobs, until this improves we won't see a recovery

    I know some investors like to buy in these conditions, but I cant personnally understand the logic, what is a bargain today could be too expensive tomorrow
     
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  4. Bayview

    Bayview Well-Known Member

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    Agree. Do you think there might be any sort of recovery any time soon? Is there any sign that the mining sector may rebound?
    I guess the same would apply to SA....currently; from my understanding - there doesn't seem to be much enthusiasm for economic growth over there either.
     
  5. MTR

    MTR Well-Known Member

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    I live in Perth most of the time and I just don't see a recovery in Perth anytime soon and the yields are not attractive because they have also be hammered. Holding property while interest rates are rising and no signs of growth is IMO not an ideal scenario.

    SA, plenty of posts on this State, but you must do your own homework, I think sadly the economy in this State is not in great either from what I have read. I don't see the drivers as to why this market will move, other than it is cheap housing, but you can say the same for parts of Brissy as well. Check with @Xenia on this as she is an expert on SA, she may have some suggestions?

    There are threads on Tassie and also mention of a strong economy, I think the thread is "Lets hype Tassie", its already started to move, so you may want to research this.

    I think that ACT/Canberra may also be a possibility for growth from what I have read about their economy. Once again do your homework.

    All the best

    MTR:)
     
    Last edited: 7th May, 2017
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  6. Xenia

    Xenia Well-Known Member

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    I've seen better economic times in SA.
    Saying that, the state is still growing and lots of money being spent everywhere. I would invest in the higher owner occupier areas that are less prone to market conditions. Have a look at my post on ADELAIDE Western suburbs.

    Here: SA - Adelaide Western Suburbs - City to Sea
     
  7. Phase2

    Phase2 Well-Known Member

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    The problem with falling markets is that you're leveraging a big purchase. Usually not a big deal if you're hunting for a PPOR, but not good if you're trying to build a portfolio..
    Also, when property prices fall, rents tend to follow. Whereas with fundamentally good companies this is less of an issue.
     
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  8. Phase2

    Phase2 Well-Known Member

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    Whoops! GFL.ax (Global Masters Fund Ltd)
     
  9. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Im focusing on channeling the max contribution to my SMSF and investing in LIC/ETFs.

    I can see the share market getting an injection over the next few years as a result of people moving away from property and bringing the equity increases with them assuming banks will still be allowed to do so, equity "cash out" lends that is.
     
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  10. MTR

    MTR Well-Known Member

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    Good points

    Also why buy in a falling market when you can make money in rising markets, I know which I prefer
     
  11. MTR

    MTR Well-Known Member

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    Has anyone noticed we are now seeing many new/more threads regarding concerns about the property markets changing??

    This could be the turning point where market sentiment is changing, this is powerful stuff, especially when we start to see more negativity in the media, which is what is currently happening.

    Batten the helms folks we may be in for a rough ride..... but I am no expert, I could be wrong, you be the judge of it

    MTR:)
     
  12. Perthguy

    Perthguy Well-Known Member

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    It's that a normal part of the property cycle though? Not sure why people are upset about it.
     
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  13. sash

    sash Well-Known Member

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    Or some god like worship of Peter Thornhill......the constant awe and surprise that quality dividend paying industrial companies are a investment...

    Hello..what rock have these people been under....

     
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  14. Wiz of Aus

    Wiz of Aus Active Member

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    Agree, the bias seen here at times is extraordinary (I'm a retired stockbroker). Not trying to be a smartie pants but some people's psychology is so far off track I actually feel sorry for them.
     
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  15. Piston_Broke

    Piston_Broke Well-Known Member

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    I am the king.
    Cashflow is either the Queen or the Servant.
     
  16. sash

    sash Well-Known Member

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    Yep...what can I say...:p
     
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  17. MWI

    MWI Well-Known Member

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    I also think if structured properly property investing can be quite boring, hence share trading seems much more exciting to some?
    Many friends from finance sector are constantly checking even at informal functions we attend...perhaps they are setting up their stop losses daily, who knows?
     
  18. MTR

    MTR Well-Known Member

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    I find property investing anything but boring, but I am not a passive investor.

    Many investors can not get decent returns/yields from property today, in particular Sydney, Melb and Perth markets, this combined with current financial changes means many investors may no longer be able to source finance, easiest option to continue investing is buying shares. My guess is most share investors on PC now going down this route as their options are now limited.

    Next question? Is share market in Australia close to peak? I have no idea
    The mantra here is buy and hold forever, lets see who has the nerves for this one when the share market tanks.

    Its happy days when its a bull market, but most probably never experienced share crash of 2008.
     
  19. MWI

    MWI Well-Known Member

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    Exactly, a while back an IPO made us 30 times the floating share value, we had realised the gains, however it was a friends' company on ASX that we invested in... That's what we do now, only invest as sophisticated investors which is not available to the masses....but it does carry heavy risk!
    I will post an interesting article I read on ASX recently about the myths (or 10 Commandments) of stock market we have been indoctrinated with...it made me think a bit!

    Ten Commandments that point to a better path to wealth

    upload_2017-7-24_20-18-58.jpg By Marcus Padley, Marcus Today
    July 2017
    7min read

    Beginners, thou shalt not covet the investment clichés.

    If heaven had been a stockmarket, Moses might have come down from the Mount bearing two, entirely different, stone tablets. The Ten Commandments of equity investment perhaps, a philosophy designed to sell investment products and keep the clients in them with as little hassle as possible.
    They might have read something like this:
    The market always goes up.
    1. Buy and hold.
    2. Invest for the long term.
    3. Diversification.
    4. Rely on the miracle of compounding returns.
    5. Invest in businesses not stocks.
    6. You can’t time the market.
    7. If you aren’t willing to own a stock for 10 years don’t think about owning it for 10 minutes.
    8. Our favourite holding period is forever.
    9. In the short term the market is a popularity contest. In the long term, it is a weighing machine.
    And much like the real Ten Commandments, most beginners in the stockmarket adopt these subliminal directives without really arguing them through or asking “Do they make us money?” I’m not sure they do. These are philosophies designed by product sellers to keep us invested; philosophies that serve the financial industry’s purposes first and ours second.
    So, beginners can start with a blank canvas, not with a brain befuddled with stockmarket cliches.
    The stockmarket is not easy. Approach it without a business-like structure and you might as well shake a bag of money off the top of a mountain. Would you give $10,000 to a stranger to invest if they didn’t have a convincing framework that worked?
    Treat it like you were running a business: have systems, records, rules, a budget, goals, risk management, attrition and constant improvement. Without method and reporting, without structure, nothing will improve. The alternative is what most new investors do, make it up as you go along.
    Pride and prejudice
    Making money is not about predicting the future, nor about setting stocks in stone on the back of faultless long-term analysis. And it is not about being right and having faith. It is about entering stocks with a high probability of them going up over your chosen timescale.
    That’s the best you can do. It doesn’t involve predicting the future. It doesn’t require your judgement to persist beyond the moment of purchase. It involves playing the odds, and it is done on the understanding that things change.
    Professional traders know this. They are not proud. They know that things will change, that they will get things wrong. The difference is they do something about errors rather than stand by some grand but flawed declaration through thick and thin.
    There is no room for pride and prejudice in investment, or for liking or hating. Those emotional responses have no value in a market devoid of emotion. Understand that investing in share prices rising is not about black or white, but about probability and your game is to narrow the odds.
    If you can understand that anything is possible and that no one knows the future, you are half way to being ready.
    Let’s face it, if all the kings and queens, presidents, central bankers, brokers, financial advisers, accountants, doctors and taxi drivers didn’t know there was going to be a global financial crisis, how can you possibly know what’s going to happen next?
    The best you can do is invest in the likely, based on your research, but be watching when it goes wrong and be decisive in doing something about it. Things change. This is not a job for someone who has “faith” in stocks or the market.
    Not selling
    The often subconscious suggestion that you should never sell comes from years of indoctrination that the market only ever goes up, that doing anything short term is rash, and that because intelligent investors like Warren Buffett ignore the short term, others should too. But not selling is the Achilles heel of any investor.
    Hopefully you will find out very quickly that selling puts you back in control, with cash and all the options in front of you. The emotion, fear, greed and sleeplessness disappears and suddenly you are waking up hoping the stock that was upsetting you goes down, having spent a month ripping your hair out because it wasn’t going up.
    Holding cash is a powerful position. Do it often as a beginner because you learn more from selling. Selling invites analysis of what happened and through that experience comes improvement. Hold a stock until it goes bust and you learn nothing.
    Two sidenotes: 1. The financial industry is here to get you in, not let you out. They almost never sell. The decision to sell should be yours and if you use a broker or adviser, you will have to be assertive to get it executed. 2. If anyone tells you “If you never sell you never take a loss”, they’re an idiot.
    Being short term
    But anyone who plays the market in the short term goes nowhere in the long term. How many people have to say this before investors learn. Does every investor have to lose money first? Experience will teach you that you will not make money if you focus on today’s stories and ideas. You will make money picking stocks you expect to go up forever, not today.
    Investing is not for the impatient. If you are impatient you have unrealistic expectations. If you want to be a successful investor, lower your expectations. Investment is about consistent returns over a long period of time, not about making a killing.
    What to do
    Let me propose an alternative Ten Commandments for any new investor:
    1. Focus on just a few stocks. You cannot transform yourself with 20-plus. If you want extraordinary returns find one to five stocks that you get to know very well.
    2. Do the hard work. Spend one hour doing work on a stock and you will end up in the top 1 per cent of people who know anything about it. Do 10 hours work and you end up in the top 0.00001 per cent who know anything about it. Someone who has followed and traded the same stock for a year has an even bigger edge. Get to know a few stocks. Find some favourites.
    3. Be contrarian. There is no transformation in playing with the herd. Learn to identify extremes. Armageddon is opportunity. I doubled my money in Elders one year and could have tripled it. Doing the work and spotting the turn is where the money is, in what the market doesn’t expect, not what it knows.
    4. Develop a technical discipline. Technical analysis alone will not make you rich but it is a tremendous risk management system. A share price is not a line on a chart but that line represents thousands of people saying, “You’re right” or “You’re wrong”. That’s a useful piece of information. When they start saying you’re wrong, don’t be smart.
    5. Network. Ten ears are better than two. Expand your group of investing friends. You only need one or two ideas a year, so what if you do waste a few hours over a bottle of wine and strike out?
    6. Use everything. Use fundamental research and technical trading skills. It’s all contributory information. Too many value investors and traders are blinkered. Pride? There’s no place for that.
    7. Don’t make mistakes. You cannot transform yourself with good stocks if bad stocks are constantly chopping you down. Controlling losses is easy because they are right there in front of you on your spreadsheet. Sort them out first.
    8. It’s about stock prices, not businesses. It’s an arrogant investor who thinks their money is invested in a business when the herd controls the share price. Share prices are half psychology, half value, not 100 per cent of one or the other.
    9. No ego. No one is that good at investing and cannot learn something new. You will change your methods many times so be flexible, respectful and open-minded.
    10. Enjoy it. No one does anything well when they must.
     
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  20. MTR

    MTR Well-Known Member

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    Some great points here

    Though my guess is most will prefer to follow the gurus who are making the easy money by promoting the usual rant.... shares always go up.
    I guess everyone is a hero in a bull market.

    Taking control/action and doing the hard work.... (point 2), key IMO



    MTR:)
     
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