suckers rally bouncing cat rip, page-6

I posted this on "Is 7882 the bottom" post in response to Sparkler and reiterate it here... the crux is you need to have a plan of attack, a fixed point in time that a decision needs to be made otherwise you will never make one and opportunities will pass you by. Further if your a Trader/Speculator, it shouldn't matter whether the market is up or down, you will have a 50/50 chance of success and the more you do it... the more likely you will come a duster.

My comment above is not shallow... I used to own a major shareholding in this forum 'HotCopper' and watched as some very talented and sophisticated traders (I prefer to call them gamblers) made so much money in various trades but each and every one of them blew it... They blew it on that one wrong call. Some of them are wrapped up in the Opes Prime mess now in fact.

The basis of good money management and the Stock Market is time, patience and research. Know your stocks (spread your risk), know your limits (how much you can afford to lose if the price by some chance goes to zero)and feel comfortable with the shares you own.

Know when to buy the share and know when to get out (this is important on the upside, not on the downside - I'll explain... if you know the stock and have budgeted to lose all money on that stock and have spread your risk and have infinate time, then fundamentally unless something structurally has changed in the company the stock will come back greater than the price at which you paid for it, if you have a stop loss... you will always make a loss and didn't really analyse the stock right in the first place).

Another thing... understand the taxation consequences of your actions. For example... it's often a good time when a stock is down to Cross the stock. This means to trigger a sale and buy it back at the same price... that way a Capital loss has been created and you are in no worse position on the share itself with the benefit of a Tax Loss to offset against Capital Gains. Another basic Tax benefit is that if you hold a stock for >12 months in a Personal or Discretionary Trust vehicle then you can gain a 50% CGT benefit on the personal Marginal Rate of Tax, there are obviously more benefits relating to individuals... consult your accountant for your specific circumstances.

Don't chase unrealistic plays, the market is too smart and will catch you out... not every time.... but that one time...

Anyway on to the post...

I entered the market today becuase of the following reasons and I will refer to the posts specifically here on HC in reverse order:

1. My call was a bottom for the ASX at 4023 (a tad either side of 4,000) as you can see the ASX on Friday closed at 3939 (Ref: "Crash is around the corner" Post#248177).

2. In same post (#248177) I refer to Dow bottom at 8,000 we hit that refer post "7888 is the it?" #4199663

3. Also I alerted the forum see post #419973 that "I will be buying on Monday". My rational to buying is that all of this Governemnt intervention might work and it might not (simple as that). I only invested 40% because, I wanted to leave room if I needed to average in... I wanted 50% but nevertheless missed the boat with RIO.

RIO, my 5th 10%'r was a minimg stock and for me BHP is on too higher multiples 11x. I really like RIO but once I had completed my research I thought that the GBP/AUD arbitrage should open RIO at $66. I was wrong... so I will wait for it to come back. In my stock picks I wanted exposure to Asia, little/no exposure to US and as little USD/EUR v AUD currency exposure as possible.

Now a very much more interesting question Spakler, is where to from here? I personally believe that we are about to tramp around in the woods with the Bears for nearly 2 years. We need to see investors get really scared. This will happen when unemploymnet rises, Buget deficits blow out or Surpluses contract significantly, inflation creeps in, infrastructure work programs are introduced by Governments etc etc.

If and when I see this, I will exit the market and wait for the broad markets to fall. Not this time at any magical number as per the prior posts but I will analyise on pure fundamentals (Forward PE Ratios). Anyone on who does not to pay attention to PE's may as well head to the casino, because what else pays the dividends and carries the profit? (same type of people who would leverage mortgages at 40x - it's exactly the same thing RISK)

Anyway... so I will be looking for Index based ASX200 and Dow PE's to be <10X. When this is close I will then hunt out those stocks that are <7X are solid performers and have good potential. I will spread across Infrastructure, Financials, Transport, Consumer Discretionary spending etc anything that goes up when an economy rises. I will stay away from staples.

On that note... any Analysts following ASX 200, Net based, good credentials, that you know of?

Chris...