The times are changing...and the market dynamic and associated landscape is an entirely new beast.
In a market sense...and particularly on a retail market level with reference to the forums...we are facing an Aldous Huxley type of "Brave New World".
Previous "systems" are failing, yet many appear slow on the uptake. Against this backdrop, we can sense many of the forum bottom dwellers are no longer achieving the results they once did...they try, but generating point swings via forum "noise" is just not happening these days.
But still we see the same less than tasteful tactics being employed...by the same putrid players preying on the less informed amongst the forums, like old men in raincoats with a bag of boiled lollies at a primary school.
lol
Fortunately KEY is in a "safe-house" zone in my view...plenty of diligent neighbours watching out. Some of the other stocks are less safe however and still see the odd "effort" thrown at generating swings...CVI and FMS come to mind.
Traders must change their approach according to market conditions...if one's trading is not achieving the results they once did...then change them!
I wonder how many have traded...in and out...over and over in the last 6 months or so with various stocks...then look back at the stocks they held all that time ago and realise had they done absolutely nothing, they would have significantly more money?
Sometimes though, such lessons can only be learnt first hand!
My approach at the moment is to find your favourite few stocks...4-5 is enough...where I have put 70% of my money. I have left the other 30% free for trading opportunities when they come.
I DO NOT TRADE EVERYDAY FOR THE SAKE OF IT!
By adopting the above approach...a sort of "battening down the hatches"...people will be surprised how much better off they will be at the end of it all...when ever that might be?
By the way...when I suggest finding your "favourite stocks"...given it will be an investment to sit and hold, use some intelligence in selecting them...they need...
1. Cash available for at least 12 -18 months of life (if explorer/developer related), or indeed an income of sorts if not.
2. Quality of management is extremely important...but we must not be too critical. We can forgive timelines being missed and/or share-price falls in the current climate...after all, this is happening across the board...but we cannot forgive lack of direction and or an unclear path to growth.
3. Avoid companies where directors earn huge sums relative to their "achievements" from year to year.
4. On the same basis...avoid companies constantly giving out placements to mates, which poor management tends to do in bad times to placate supporters and/or generate funds for themselves. Placements for growth deriving acquisitions, be they internal or externally focussed, are not the same however as placements for cash simply to pay for "working capital", etc.
All placements must point to eventual value add.
5. Smaller registers...but not too small...usually provide the better investment potential. Stocks with more than a billion shares on issue really need assets or a clear growth path to justify it...or at the very least, a cornerstone investor. Nothing wrong with large registers...just look at BHP, FMG, etc...but in a minnow still looking to earn an income, or make a discovery...they are already behind the eight-ball before they start! Larger registers can kill off future growth, rendering your investments permanently tied to a downwards spiral.
6. Pick the right sector...commodities are driven by demand and whilst short term cycles can be driven by "players" they will always return to the true demand/supply line. Copper in particular will see significant rises in the next 5-10 years and beyond due to macro changes in its market...on both the supply and demand side of the ledger. Most base metal Co's will also hold reasonably well over time however, especially in Australia where the AUD$ tends to regulate commodity swings against the US$...for example, copper prices now have not changed much since their recent highs in AUD$ terms, thanks to exchange rate adjustments.
Coal, oil, iron...the staples of most economies, will continue to provide strength even in a poor market...albeit with less growth than boom times...likewise food based stocks.
Gambling and entertainment stocks always perform well in bad times...lol
A standout however, in my opinion, will be the gas sector. With the commodity currently underpriced compared to liquid equivalents, the same pure energy value in gas fetches as little as a quarter of that from traditional oil based products...this difference will be closed once the gas sector improves their global and/or local infrastructure networks.
This process is well underway now.
7. Once you pick an investment, do not watch it every day...certainly not every hour or less! Different of course for our traders, which should NOT be mistaken for investments.
8. Communication is important...this does not mean every week mind you. Pick a company who communicates unambiguously, with detailed announcements when required...if they seem to announce far too often, with overly pushy rhetoric, basically saying the same thing over and over, this is usually a sign of a stock who's price is based on spruiking and vulnerable to a correction once it stops...or loses its impact.
9. Contact management. Not to find out juicy stuff about your stock (I would sell out if they did this)...but to gain a feel for the people you are entrusting your money with. Do they sound professional...knowledgeable in the field they are in, or position they are holding...would they do a good job selling the company to the people that matter?
10. Do not use debt funding in any way, be it margin...whatever...all this does is lead to pressure to sell when you don't want to (usually at the bottom of each cycle)...to pay margin calls, loan repayments, etc.
Unless of course you also borrow the interest required to meet loan commitments without selling down stock...which can be a reasonable tax effective approach.
11. Finally, allow yourself some trading funds...if you are this way inclined...but as I said above, no more than say 30% of your portfolio...but with a strict rule you will NOT put in more when it goes! If however it doesn't, then every time the trading funds pass 50% of the portfolio, re-correct it back to 30% by investing the excess trading funds into your other favourite investments.
12. Go fishing and spend more time with family and friends...maybe even pursue your other interests?
We are in for some interesting times over the next few years...self control will see us emerge prepared for the next upwards cycle...the reality of course, sadly, is many will not.
As or me...I have my investments mostly sorted and will keep trading the swings trades that come along, be they small/mid caps or blue chips. But I am also thinking of heading off to Cloncurry for a while...could be an interesting period for the region?
Cheers!
KEY Price at posting:
20.4¢ Sentiment: Buy Disclosure: Held
(20min delay)