New to Trading

Hi Everyone,

I have invested in property (which isnt doing very well) and I have recently started investing in PMs. I am really enjoying it, and am in it for the long haul.

I am now looking to invest in some shares. I have been researching for a few months, but no matter how much I try and learn, it just seems so complex.

There are a few companies that I would like to buy into after a lot of research, but cannot get the jist of buying/selling myself.

I would like to find someone I could advice of what shares I would like to buy and how many and they do that side of it for me.

I am only going to start small (very small) and invest in about 5 companies, and add to it as I go along.

Does anyone have any advise on a stockbroker or similiar that doesnt charge the earth to be able to do these small transactions for me.

I know this must sound pathetic to you experienced guys, and I really tossed up about posting, but I just cannot pick the trading myself bit up, and I dont want to risk it.

Any advise would be REALLY appreciated.

Thanks

Kel

 

You are already posted in the right section of SS. Just read through the posts there and you should get some good info.

PS. I would rather buy silver and gold than stocks but if you do why don't you go for mining particularly silver and gold mining shares.

Regards Errol43

 

My advise to you coco is read plenty of good books about investing (particualry books about value investing) and follow various publications and websites for at least 2 years before investing a single penny.

When you start investing start small as you will probably lose money at the start.

Also consider listed investment companies and managed funds and etfs.

Also follow a lot of companies by reading annual reports, looking at their websites, listening to interviews with management on websites like boardroomradio (brr), etc. Slow and steady wins the race. Also its a good idea to write notes about companies that you end up investing in.

If its a smaller company you may be able to call up and talk to (or alternatively email) the management (CEO, CFO, etc) or the chairman with any questions you have about the company.
Make sure you understand what the company does, study the company, study its competitors, study the industry, and then estimate a per share intrinsic value for the company. Once the price falls well below your valuation consider buying.

Note: direct investment in shares is not suitable for most people but you can make money if you know what you are doing. I once read somebody say that "A sophisticated investor is someone who has lost money" just remember that.

Good luck.

Also don't overdiversify yourself. As a newbie 5 companies is probably more than enough as you won't be able to properly follow what the companies are up to. Only invest in as many companies as you can understand and have time to research and follow properly.

As for stockborkers I think an online broker like commsec or etrade will do just fine and are very easy to use and relatively inexpensive. I don't really think a full service or phone stockbrocker is really necessary.

 

Commsec were doing some $600 free brokerage thingy a while back (actually they still are!)

http://www.commsec.info/onlineoffer/

I joined but haven't used commsec yet lol but they look decent enough. Only joined for the debit MC card so I can get cheap tiger/jetstar flights

 

Thanks guys. I may keep reaearching and stick to my stacking for a while

 

If you're a "buy and hold" investor you'll have an easier time if you want to get into it yourself.
I'd recommend not to use leverage (credit/margin loans), because I am anti-debt and stuff.

ha ha ok, well maybe I should say that differently.....
If you use leverage you can multiply your gains but you can also multiply your losses.
If you're new to this, you probably want to stay low-risk at first.

The worst thing that can happen is that your holdings become $0.
If you use leverage, the worst thing that can happen is your holdings become $0 and you're left with a debt to pay off.

e.g.1
You buy 100 shares at $10 a share, so you spend $1000 all up.
The price crashes to $0.01 a share, so your holding is now worth $1.

e.g.2
You buy 200 shares at $10 a share, so you spend $2000 all up, $1000 in cash, $1000 with a loan.
The price crashes to $0.01 a share, so your holding is now worth $2, and you owe the lender $1000.

If you want that safety net of staying above $0, then don't get in with leverage, otherwise you'll be in the red, with interest payments too if things get hairy >_>

Personally I never ever use credit for anything
I haven't made any losses yet, only profits.
I listen to my tin foil hat and pessimism.

e.g.
"Invest in ANZ? Bullocks, banks are toast"
"Invest in BHP? No way, everyone does that, the big boys own that game"
"Invest in Qantas? As if, tourism is gonna suffer post-GFC2 and telecommuting makes more sense to business these days"
"Invest in Myer? Discretionary spending is going to take a massive hit and the lifestyle promoted by the fashion industry is unsustainable the way we're heading"

Basically, if I think they are a non-essential or go against my principals (e.g. tobacco companies, poor quality service providers like Telstra), I don't get in.
I invest in productive companies with low to no debt, low trading volumes and high dividend yields.

I will only make exceptions for Woolies and Bega Cheese (in terms of debt limits I place) because they deal with a primary need: food.

My strategy won't make me rich, but it does supplement my income and I can never owe money

 

Hi Kel

A theme helps - instead of just thinking, I want to get rich, thinking of a investing theme and having a plan will help calm your nerves when the market goes bananas like this week. If you are just chasing riches, it can lead you down every rabbit hole and that's what the big money likes - ultimately they are the winner. I should know as I've been down there. Even a rough plan is better than no plan.

Investing in stocks can be rewarding at the same time one of the most frustrating things as the market is one of the most unpredictable things.

As the other posters suggested, I would research first - some interesting books are anything from Benjamin Graham, Roger Montgomery (Australian author) is good too. You need to decide what kind of investor you are - high/low risk, long term/short term etc. I would advise to work on these and do some paper trading first - you don't lose any money!

I have moved out of blue chips at the moment as I find their stocks move too slow for my liking and that we are in a period of substantial swings up and down. I think the concept of steady buy and hold investing is eroding. I agree with the margin loans as well. I used it quite well for a while but am no debt free due to the fickle nature of the markets lately.

My themes for investing (no order):

1. World needs food no matter what and world is growing - look at companies that are involved in farming, food processing, fertilizers, distribution.

2. World needs oil, it is harder to find, it is running out! Here I would look at explorers who are into alternative oil investments.

3. Mining stocks, gold and silver stocks have lagged behind the rise in gold and silver prices due to their nature of not hedging too much. A producer will give you peace of mind.

4. Biotechnology - with more people comes more issues that need medical breakthroughs to happen, many interesting companies out there but be careful!

I'll admit the themes are a little high risk - I've changed from buy and hold blue chips to buy and hold small caps. If the stock market implodes, I would be disappointed with the money I've lost but it won't affect my ability to survive and pay bills.

Hope that helps!

 

Basically the way I go about investing in stocks is I treat it as if I am going to buy the whole business.

If you were going to buy a local coffee shop what sort of research would you do? You would probably go there and try the coffee and food, you would look at the books/financials going back as many years as possible, you would check out (i.e. eat at) the local competition in the area and think about whether the location of the coffee shop is good. Perhaps you would try to speak to suppliers if possible, etc. Then you would work out what you think the business is worth and whether the asking price is reasonable. In short you would probably approach the decision in a businesslike manner as you are investing a substantial sum of money. If you treat investing in the sharemarket in a similar businesslike manner you will minismize your risk and maximise your returns.

The famous investor Benjamin Graham once said "investing is most intelligent when it is most businesslike". Always remember that.