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things every retail investor/trader should know
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Livermore
Master |
23-Nov-2008 11:50
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I am not on anyone side on issue of trading. However I can understand that certain people are just not "tuned" to shorting. So we have to understand their point of view. Just like I am comfortable with margin but others may not be. We just throw in ideas and it is up to individual to analyse and decide. | ||
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cashiertan
Elite |
23-Nov-2008 01:56
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in good time and bad time hantam blindly will also win money. in good time just hantam any stocks to go up. bad times hantam stocks go down.. now just wanna ask why ppl dun short when they should? is buying the only way to trading profitably?
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iPunter
Supreme |
22-Nov-2008 20:19
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How can trading short lose a lot of money in the recent and current circumstances??? If one has shorted and stayed put, ie. invest by selling, one would have made a lot of money... hehehe...
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CWQuah
Master |
22-Nov-2008 15:58
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Trading is reserved more for those with the TA skills to do that. Those who hantam blindly will get hantamed in the long run. And I'm quite sure there are still some happy shortists around here. It's important to note that both uptrends and downtrends can be traded, although most of the stock mkt participants would probably rather have uptrends to play with. It's psychological. We all prefer owned assets to go UP in price. In the end it is up to individual players to think carefully about which style suits them most. Warren Buffett investing style, or rapidfiring trading. Every one touches the mkt solely for one purpose: to profit from it. Doesn't matter what sexy investment stories get spun, what personal philosophy/belief one has, what BB/SB action is in play etc. If your mtd works then keep it up. If it doesn't then it's time to think thru what you're doing, especially if you just don't have a clear way to read or interpret the mkt OBJECTIVELY. |
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stupidfool
Senior |
22-Nov-2008 15:00
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All these talk of trading and trying to get a little bit ahead.Consider 3 factors. one,the risk profile of differnt ppl. two,ppl may not have the time to trade actively. three,ppl may prefer to hold long term and collect divvy like FD style. Under the present crisis,trading can make u lose all ur $$$. |
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investsgx
Member |
22-Nov-2008 13:50
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Well, I think we need to add that dividend play is not a good buy in bear market. http://investsgx.blogspot.com/2008/11/poisonous-investment-dividend-yield.html Here. |
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Livermore
Master |
22-Nov-2008 11:20
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Let's say we are in the next bull phase of the market Well there is nothing wrong with trading. Just note that when the next bull phase of the market comes around, one way is just buy, close your eyes and don't look at the stock until 5 years later or alternatively you keep focus on a stock for long term and keep buying and selling where the main purpose for my case would be to increase my lots in the stock along the way for 5 years. The problem sometimes when you trade too much and you don't focus on those stocks with long term potential and they run away, you have lost hold of them. To put it simply if you bought a stock at 40c and you keep trading you need to ensure you make more than the person who bought at 40c and just buy and hold, and sell it at say $3 many years later with a buy and hold strategy. If you make less than the person who just buys and hold, then your trading strategy may not be quite justified. If for some reason you sell a stock and it runs away, you need to chase it in a bull market. Otherwise you won't have the same capital to buy back the original 40 lots you started off with
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HLJHLJ
Veteran |
22-Nov-2008 08:00
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Cheem.... I think what you are referring to is momentum investing. It is about trend and normally go long during bull and short during bear. Stop/loss discipline is important for this. Identifying trends are no easy task in this. Another method of investing, esp for long termers, are contrarian investing. In long bear, contrarians will feel poorer as they have to hold on longer. They buy during bear and out during bull. Timings are no easy task in this. Both have their pros & cons. It depends on each personality. For shorter patience, trading is better. For longer patience, contrarian is better. |
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iPunter
Supreme |
21-Nov-2008 19:37
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You are spot on... One mustn't assume anything in the market. Assuming it is a late bear stage is as bad as assuming it is in a mid-bear stage, etc. Thus assuming is not recommended approach to playing the stock market. One can bet on a chosen probability, but not assume one is right in the bet. Simply because the market has proved many assumptions are wrong. The best approach is to watch the price action itself. And by this is meant the technical action. But then even technical patterns are only guides for good bets. One should also not assume the present technical pattern must always be followed by what we expect, only sometimes, maybe a lot of times, but not always. Trend still rules But trend can be discerned only after the event...  |
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waverly
Member |
21-Nov-2008 15:36
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which blue chip counters do you think will recover the fastsest? talking abt sector rotation i find it very vague firstly becaue the definitions of the sectors can be ambiguous and we never know wher we are in the cycle. eg now if we assume we are in late bear, the ideal is technology, utilities, financials? but what if we are only in middle bear..
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waverly
Member |
21-Nov-2008 15:16
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thanks all for your contribution!! elfin, I am still not sure how you differentiate first liner and 2nd liner. why do u consider sembmar and kepland 2nd liner but the parent company as 1st liner? how can sia be first liner when they are hardly ever profitable. ie gd times fuel/labor cost cuts into margins, bad times fall in travel dd
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iPunter
Supreme |
20-Nov-2008 17:10
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In a uptrend, just whacking on any stock will make one money, |
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elfinchilde
Elite |
20-Nov-2008 15:08
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SPC: hm. yea. maybe so; cos it has fallen a lot. parent co = kep corp. so by right if you buy the parent, you shdn't be buying the daughter...on the other hand, it does have temasek backing tho. and more privileged than the others in its sector. yea, good idea to buy on dip if you're lkg long term. no hurry to buy now though. when i say to fish at lowest i meant min the sti 1478 prices....watch HSI: critical support 11,000. it's currently abt 11,999. will have massive reaction on the STI if that level breaks. (i like to think of the HSI as a divaesque lady of tremendous fainting and euphoric episodes. lol.) off now! |
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learningtheropes
Member |
20-Nov-2008 14:54
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Umm i dun think u can consider SPC 1st liner of the blues..dun think it's in the STI components..it's a mid-cap stock if i'm not wrong..
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coolbreeze
Member |
20-Nov-2008 13:30
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agree...but tink commit a little 1st..cos mite go lower...then all when signs are clearer 
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knightbridge
Veteran |
20-Nov-2008 13:23
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I am taking all my bullets to buy equities with good cash hoard and sound management companies. Will be 100% by next year, must wait for very long than got a bear crisis like today. (Biggest stock sales of the century). When analysts talking about prolong slump, companies will definite survive better than individual. The government economic stability rest on all these companies, if they all fail as good as the country is going to fail. Buy on every big dips, =D..... (eat less, spend less and buy more equities for long term) Prolong slump and decline consumption... Populations of the world are still growing, unless there is a big virus that is going to kill half of the world population. Still will have to eat, travel, work, shit and sleep... |
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elfinchilde
Elite |
20-Nov-2008 12:14
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edit: remember even after weeding out the first liners: to check their forward earnings outlook. CWquah's last pt should not be overlooked: the qualification of which sector is likely to do well. Or if you cannot id them, then a simpler method would be to id the sectors that will likely NOT do well. ie, right now, given the shape of loans and the US auto industry (which when fallen, will lead to a massive fallout in terms of jobs, suppliers etc going bust along with them, hence more foreclosures etcetc): you may like to avoid the banks for this period of time. Same thing for travel/retail/tourism industry: no money, no job, will people travel? Common sense will let you id what will not likely do well. first liners of the blues (whether their earnings outlook is good or bad): pls feel free to add in, not conclusive here as i'm just naming off the cuff: OCBC, UOB. DBS. sembcorp, kepcorp. SGX. SMRT. Singpost. SPH. (these 3 are considered defensive---so check their ranges in uptrend and downtrend). SIA. Singtel. St engg. SPC. --i consider sembmar, kepland, NOL, sia engg as 2nd liners actually, tho they're probably on a midway between 1st and 2nd. caveat applies as usual pls. just sharing info here. Jardine CC and MH. CDL. Capland. Wilmar. (very volatile tho). |
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elfinchilde
Elite |
20-Nov-2008 12:04
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everything CW and AK francis said below. good post, CW. :) note that blue chips are divided as well: some are traders' counters, some are 2nd liners. For market recovery, try to stick as best as you can to the 1st liners of the blue chips: since these are the same ones that will recover the fastest. (market pattern: 1st liners up first, then 2nd liners, then pennies. Which is why, when pennies chiong, it's your sign to get out of the market). To note that all these are for longer term players (defined as > 6 mths, even 3-5 yrs). Which right now, the odds favour long term plays more than short term plays as a lot of counters have gaps in their prices. CW's criteria are from pure FA criteria: strong div, positive and consistent cash flow, forward earnings outlook (based on something TANGIBLE pls, not just a *belief* or *promise* or some speculation of contract deals). Look esp at their debts: you do not want a company that pledges everything for a loan, since when bad earnings hit, they may not have enough cash to survive--like GM in the US. note quirk of the market here: cos our market is so small, trying to apply sector rotation theory wholesale may not work: SPH and SMRT for eg are known defensive plays: but if you look at them technically, they trade over the years in a very narrow range, ie likely upside limited in a recovery. anyway: 1st liner of the blues: check via sector: those with 20-30 year history on the STI. sound mgmt, large market cap. Not necessarily just in the STI 30, though better yet if they fulfill all the criteria. They are usually above $2 even at this pt in time. Note the STI 30 (or is it 28??) components are NOT necessarily all first liners: some are included out of political reasons, others are new entrants yet to prove themselves. Some others, like SIA engg, are more considered as 2nd liners. caveat applies as usual. |
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AK_Francis
Supreme |
20-Nov-2008 11:51
Yells: "Happy go lucky, cheers." |
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CW, power, tks for the efforts to give the very detailed n insight analysis. Can ctrl c n v somewhere else for ref loh. Cheers.
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CWQuah
Master |
20-Nov-2008 11:32
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I'd like to look at the STI components which fulfill these criteria: 1. Consistent positive significant cash flow even during recessionary period (look at 1997, 2001 results). Better still if its current cash warchest is heavily loaded now. 2. Low liabilities for next 2-4 yrs if possible (i.e. no major outstanding loans/high interest payment) 3. Reasonable, consistent dividend policy with previous payments since last 5-10yrs. 4. Temasek ownership (preferable, but not a necessary condition). 5. Good potential business prospects in the next few yrs (this is a bit tricky - one needs to actually see what are the potential future sexy industries). Do note that when we talk abt blue chip accumulation, odds are we look at a longer investment time frame (>6mths to say, >3yrs). This is why although I'm TA inclined personally, the criteria I set out here for stockpicking are more FA oriented. My reasons are as follows: STI component - tendency to move with the index itself. So if recovery arrives, odds are, the stock will move up in the same direction. STI components are considered first liners and tend to move first (AND VICE VERSA). Cash flow/liabilities - more to evaluate the 'survivability' of a company should tight credit conditions continue to persist. I want to invest in a company only if there is a reasonable assurance that it won't go bankrupt just trying to survive the recession. Also, cash-rich companies have far more options in terms of growth, i.e they can choose to invest/buy back own shares/buy other companies etc. Low liabilities over next 2-4 yrs is preferred more to guard against a protracted downturn. Watch the cash burn rate carefully. As for dividends, it's more of a hallmark for stable, cash generating companies. Do note however, if the source of cash is more from financing measures (bank borrowings) rather than profits, it might not be a good sign. I prefer a track record of dividend generation as it shows the sustainability of their business model. Temasek ownership - enough said abt implicit guarantee. Then again, be aware that Temasek is a higher-risk investor type of fund (long-term growth oriented, rather than a run of the mill investor). One needs a comparable investment time horizon as Temasek to generate the same or better kind of return. Anyway, not the most critical factor. Potential business prospects - this deals more with sector identification. 3 yrs down the road, what kind of industry will thrive well? As investors it's necessary to get your odds as much on your side as possible. Do a clinical review of the global business trends. Will telecoms pick up rapidly? Will oil chiong? What will the population demographics look like? What will be in great demand in future? Which are the companies most poised to take advantage of such trends? Think critically abt it. |
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