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Good article

Discussion in 'Investing Strategies' started by Mark Laszczuk, 25th Jan, 2006.

  1. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Saw this and thought it was good enough to post. Some people really need to take note of some of the things said here.

    Investing myths

    Some choice quotes (which some people really really really need to read very carefully):

     
  2. Nigel Ward

    Nigel Ward Team InvestEd

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    Yeah Mark I agree it's a thought provoking article.

    To pick up another point, both Kerr Neilson (head of Platinum Asset Mgmt) and Nick Renton (prolific writer of often interminably boring but eminently sensible investment books) both say Dollar Cost Averaging makes no sense.

    This aligns with my thinking. One of the aspects that really appealed to me with the NavTRaDE approach which lies at the heart of the NI funds was the dollar cost trading approach.

    After all, if you're shopping for say shoes (just cause you like to collect them like my wife :D ) and you only want and don't actually need more shoes (like my wife :rolleyes: ) then why for goodness sake would you buy one pair every month without fail :eek: Wouldn't it make sense instead to just buy 5 pairs when they're on sale?

    People do this all the time with their groceries...stocking up when things are on special...but don't do it with their investing. Why is that? :confused:
     
  3. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Couldn't agree with you more there Nigel. Dollar cost averaging is a farce. Buying good businesses cheap - which is what you do when you buy good shares cheaply makes a great deal of sense. Why would you not want to do that? Most of the people out there in the market panic when business values drop, taking the good with the bad. This creates opportunity. Telling people not to buy when the market is falling is like telling people not to buy IP's when the pirces are falling. Does that makes sense to anyone else? Cause it doesn't to me.

    Mark
     
  4. Tropo

    Tropo Well-Known Member

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    Yep. Dollar cost averaging it's a losers strategy.
    Buying shares when market is falling is a bit risky. You just do not know if shares will bounce back and when.
    There is one problem with fundamental analysis.
    Market often does not respond to new information.
    If fundamental analysis were correct then every piece of information would cause the market to move in a given direction.
    A piece of information may cause the market to go up, down or simply do nothing and this depends on the mood of the market players.
    "Who here thinks they can invest better than Warren Buffett?".
    Do not forget that W. Buffett when he started he was kind of speculator and he made big money trading stocks based on the inside information - would you belive it ?.
    From quite some time he does not need to do anything but to buy companies.
    I wonder what could happen if he could start trading/investing today ?.
    :cool: