Young Blood Seeking Advice, page-16

  1. 4,600 Posts.
    Well as an accountant you're already a step ahead of most who start off investing, you can actually read a balance.sheet. and approaching this with the correct strategy which is value growth investing. Well done.

    From my experience which is nearly 30 years trading. investing the best advice I can give is (no matter what the value of capital) keep to a well disciplined capital management plan,stay clear of penny stocks and CFDs, stick to high quality mid cap plus companies and diversify yourself not only across different industries but also different markets around the world and investment products.

    ASX is good market but there are a far larger number of high quality stocks in overseas markets, don't focus on just one market. ASX doesn't require much research for a long term investor, basically there are about 6-10 quality stocks which make good long term investments, that's all you need to invest in. You don't really need to go spending months researching the top 300.

    Also something which has helped me over the years is sticking to industries that you actually have an interest in, for example Healthcare,Agriculture,Insurance and Banking bore me to tears to research. Also there is nothing worse than a 100+ financial report from a bank to try and decipher even for an accountant.

    Capital Management maintain 1/3 of your capital in cash, if you want to trade stocks on a more frequent basis by all means do so but for example don't expose more than 10% of your capital to higher volume trading,

    As for some of the methods you outlined,

    Charting - Yes it's good to have a basic understanding at least of technical indicators and patterns. But you certainly don't need to spend 1000's on a charting package or stock screeners. Stockcharts and FinViz are free and all that you really need for US markets.

    Fundamentals - Yes it's important to keep a grasp of fundamentals from what's going on in the world right down to the industry and companies you are invested in. How much weight you place on that towards your investment decision is up to you. Personally at moment starting off I wouldn't touch equities until the Central Banks stop the QE and the dust settles in the Bond and Equities market. Bond market volatility at the moment is a red flag for equities.

    Investing - Spend a lot of time studying/researching what best works for you. I belong to small investor group and we have guys who only invest in commodities and ETFs never touch equities, others are experienced in only one industry or venture capital. Again just take the time even if it's years to make up your own investment plan.

    Shorting - You have to learn to sell before you can short, your probably some years away from shorts as part of your investment plan, however really anyone who is trading should trade long or short. If not your are effectively trying to play the game with one hand behind your back. Might be ok for when the market is in bull run like last few years, but you'll lose and or be left on sidelines when volatility kicks in and the market turns bearish. You don't need to research and short stocks, you can short entire index via reverse ETFs quite comfortably.

    Algorithms - Don't touch them, anyone selling a black box is a fraud. Fine to set up a basic API application if your broker supports it, but that's about the limit you should explore without some serious expertise on the subject.

    Forex - Some can do well but by far vast majority don't, Forex is way too liquid,too volatile, open 24/7 and mainly dominated by the large banks and brokers. For the individual it's a ruthless market and thousands can be lost in seconds.

    Commodities - Sure invest in commodities, I have done for years via ETFs long or short. especially Oil,Copper, Gold, Sliver,Cocoa and coffee. But if you prefer Pigs by all means choose Lean Hogs, again choose what your interested in it really helps.

    Above all else though never take tips, don't give tips and keep to basics when trading, never average down only up if going long and vice versa for shorts, always keep stop/loss or trailing/stop loss,, learn to hedge your trades, never invest/trade with capital you can't afford to lose and never on credit.

    Strong disciplined capital management is key to being successful especially when move up to trading/investing as your main source of income.


    Good Luck.

    Kat.
 
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