This post re: penny dreadfuls from pintohoo on the general thread, is one of the best posts I have ever read. No sooner than I have read it, I cant help but think of Pen and how steadily they are progressing.
..................................... re: penny dreadfuls (pintohoo) Forum: ASX - General (Back) Post: 347592 Reply to: #347543 from finch2 Views: 437 Posted: 15/08/10 15:32 From: 58.169.xxx.xxx
New Post Post Reply Thread View (+33) Back << Previous Post Next Post >> I wouldn't say penny dreadfuls - I guess you would have to define accurately what you mean.
This is my belief though -------------
there is a lot of research that shows that higher risk portfolio's far out perform low risk portfolios.
This is what I find
You can make a hell of a lot of money in lower market cap stocks - say under $150m and particularly under $100m and definitely under $50m
I am really talking about investment as opposed to trading here. Remember - almost all traders end up losing or have little to show for it - why would you be different - maybe look seriously at being an investor.
There are a number of great stocks in this area. One of the big big benefits of these stocks is that you can get direct access to high level management. In a good company - they WILL talk to you.
From this you can accurately access the honesty of the company and the culture of it -- try what with bhp and telstra etc.. I doubt if Marius Kloopers would take my call - whereas most of my companies I have a direct relationship with ceo or cfo etc..
If you are a serious investor with a reasonable amount of money - say .5m or more - you can get yourself quite comfortably up in the register in a few companies - close or into the top 20 - this gives you cred. whether this is the right thing or not - management will give you an ear and you will definitely have a better 'feel' for the stock than the average investor/punter.
I personally think that diversification is death - diversification was dreamed up for one reason - 'not to lose money' - it has absolutely zero to do with actually making money and definitely NOTHING to do with making fortunes. Diversification is the direct route to mediocrity.
Peter Lynch "One up on wall street' (a very very successful fund manager) suggests that for a small investor a good number of stocks is between 3 and 10 - this is a far cry from what most of our financial advisers suggest - and don't miss the point - they are poor and wannabes and Peter is rich.
Personally I believe you need to be very very close to your investments - intimate - and you can't do that with a list as long as your arm.
A few good ones is far far better than 20 duds or even ordinary performers.
If I were to summarise the steps to great wealth
1. Fix your head - ie. learn about psychology and how to control yourself. 2. Have a clear strategy - are you an investor or trader and why so etc. Dream like a rich person, see youself wealthy - if you have got loser and poverty in the back of your brain - FIX IT!!! 3. Research research research - once you find a target. 4. Once you find something - back yourself - bugger the opinions of others - if you ask others what they think - they WILL tell you - remember - most people are poor. Why the hell would you want to listen to them. 5. Find the reasons to buy a stock - avoid looking at why you won't buy a stock - this is the way most people and institutions work - they want to be safe - so they look at how to not lose money - this has zero relevance on how to make money and certainly not fortunes. If you continually look at avoiding loss - you will attract it like a magnet. 6. Continually hunt value rather than price - returns come in price and dividends - just jiggle the best ways depending on your tax situation. 7. Watch your timeframes and don't get scared out - what happens tomorrow has zip relevance on what is happening in your company next year mostly - stop listening to noise. 8. Get it through you head what the definitions of speculation are - and don't do it - there are plenty of low priced stocks around that are not speculative - they are just small companies - but some are growing very solidly.
There are many other things one can say - but if you do this and you do it right - you really only need one or two good investments - remember Billy Gates became the richest man in the world with one investment - so did many of the others in history.
I hope this helps a bit. Have a good day
Pinto
-------------------------------------------------------------------------------- Reality is the term that little people use as a reason to stop them becoming big. Vision is the term that is used by little people to describe big people who don't believe in reality. - Pinto ...................................................
PEN Price at posting:
3.8¢ Sentiment: None Disclosure: Held
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