g’day Aaaaajrvud.
when asked, I’ve given the same advice for 20 years or so; DYOR (Do Your Own Research). You’ll see DYOR on some other posts too. Great advice, but I was stunned to find out years ago that many did little or no research at all! I couldn’t imagine anyone (other than T/A people), ever investing a single $ in anything they didn’t understand completely. It’s not that hard. Just takes some time and a bit of effort.
everything I posted about above can be found in their presentations and announcements. I read every single one. I also read all reports, including annual. Yes all 100+ pages.
some people say I’ve been lucky. Interesting to note that the harder I worked (both in business and shares), the luckier I became.
I search for new leads all the time. When I find one, the first thing I do is read the most recent presentation. That gives a great snapshot and is enough for me to either drop it, or decide it’s a maybe and continue with my research. Next I read the most recent quarterly, paying particular attention to the cash statement. I’m looking to see how much the directors are taking out. If it’s a big number and they have no income, I pass immediately. The best wins I’ve had have been where directors took little or nothing until they had decent cash flow. Basin minerals they took nothing. Oxiana and Arrow they took minimal amounts. Always a great sign, as directors know what they have.
i then generally go back 2, maybe 3 years and read every announcement and presentation. If I run into any potential issues/problems, then I work hard to decide if they’re ok or not. Yes, I made some mistakes. But I had many more successes to well and truly pay for the mistakes.
One key thing, once you’re well invested into a company, is to keep updated, particularly if there’s any big/major change. One of my mistakes was not fully understanding Oxina’s take over of Pasminco. I blindly accepted managements view. BIG mistake. OXR went from >$4.50 to 67c. Fortunately, I have a squirrel policy and I’d sold much of my holding on the way up. We started at 7c, my average sell price was over $3, even after the 67c stuff at the end. It was a dumb move by over confident directors who had been spectacularly right for many years, until they were spectacularly wrong. Expensive lesson.
so learn everything you can about the share market; the ASX have some great educational stuff. I’d highly recommend it. Everything from explaining what a share is, through PE etc, right up to complex stuff.
you NEVER stop learning. I still am. You should learn how to read a balance sheet and profit and loss statement. You MUST understand how the financials of a company work to fully understand them.
the good thing about these boards, is that if you come across anything you don’t understand, then ask on the public boards. They can be very helpful.
I’d say it took me 5 years to become proficient; 10 years before I really had most of the tools needed under my belt. You’ll get out as much as you put in.
at your age, you’ll see at least 3 great bull markets and at least 2 major bear markets. Don’t ever leverage (borrow) unless in the middle of a full blown major bull. I wouldn’t borrow anything in this climate.
i see a major crash coming as the 08/09 crash was artificially stopped and all the dead wood/crap people are still there, making the same mistakes. The spin doctors in the USA do a great job of pumping up the market. Aided by the biggest money printing program (QE), the world has ever seen. we’re approaching US$20 Trillion of QE. Global debt is now well over $1 Quadrillion (that’s one thousand trillion$!!). Madness. But it could drag on for years, like this. Who knows.
personally, I think everyone should first get some real estate under their belts and fully paid off before getting too serious in shares ( I realise that’s tough in current market & may not be best option atm). But some in shares is good, for the learning process. Next, hopefully comes a family and kids through school. The best time to invest hard (& leverage if the time is right), is after mortgage is paid off and kids done with school. 10-15 years or so should do it & hopefully coincide with one of those bull markets.
the other thing is, once you have enough to retire on, stop speculating. Move mainly into the bond/secure first mortgage markets (as I am now), with only a small amount (5% for me) in shares. If you don’t need any more, why risk it in shares? But I enjoy the research, so I’m happy with my modest amounts at play atm.
I realise most will ignore my advice. But if just one person takes it to heart and learns how to invest properly, I’ll be happy,
good luck to you.
Cheers,
ned.
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