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So...who's been shopping?

Discussion in 'Shares' started by Nigel Ward, 1st Mar, 2007.

  1. Nigel Ward

    Nigel Ward Team InvestEd

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    Well I've spent more on direct shares in the last couple of days than I have for a long time...

    Who else has been bingeing on discount stocks? :D

    N.
     
  2. Simon

    Simon Well-Known Member

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    What did you buy?
     
  3. Insight

    Insight Brisbane Buyers Agent

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    Discount to?

    The most over stretched market in the last 3 years perhaps? :)

    The XJO was trading at a record premium (2000-07) to the 200 day MA, very similar levels to the last 2 corrections surprisingly enough (around the 10-11% premium level)

    My crystal ball is in storage as I move so I will just have to wing it here. My experience is that a whack like this generates a lot of hurt, and the market has to press through pain barriers to get back to previous highs (participants looking to exit on strength with short term rises), so I will guess more wallowing around and testing of lows and I would be having a look at the cost of puts around the 200 day MA (which is all the way down at 5330 odd interestingly enough) as everyone seems to believe that it's still a bull market (I believe this too) and the market is good at hurting the most people. So a month or two of wallowing or just enough so that most players get discouraged and shaken out and then onwards and upwards..... But we have had a glimpse of what will happen when the euphoria really does end... Commsec servers down in the morning for some time...... Don't underestimate the risk to your financial well being of speculation please.

    Certainly not financial advice, enuff from me.
     
  4. iiinvestor

    iiinvestor Well-Known Member

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    I must admit I'm letting the dust settle for now. Most stocks are back to levels of only a few weeks ago. BHP, WPL, etc were at these levels only a few days ago.

    Who really knows what will happen, but these things usually play-out over a few days, weeks or months. With that said, the initial pain doesn't seem as severe as the May 06 correction, although last year there was a 120 point test before it dropped 400 odd points. Then in June it dropped almost as much again.

    But for all we know it will rebound next week.

    However, my money is on a further drop. SSE Composite is down about 3% overnight, the US (DJIA and S&P 500) was fairly volatile with a 0.3% fall at close, FTSE down another 1%, DAX 1.3%, etc.

    Suffice to say my Asian funds aren't having much fun. :(

    Kohler put out a report that he called his 'Correction Survival Guide" :D For anyone subscribed to Eureka, it's worth a read.
     
  5. Nigel Ward

    Nigel Ward Team InvestEd

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    Yes, Insightful observation :D

    Of course the market as a whole has been fully priced (query whether overpriced but that's a matter of opinion)...but there's always the odd bargain amongst the overpriced shares...and if those bargains get marked down even further by crazy crazy Mr Market...well they just become compelling value...

    Simon I'd rather not mention specific shares as I don't want to be seen to be ramping :eek: . Shares came from sectors including mining (base metals and yellowcake :cool: ), waste management, healthcare, internet, fin services.

    As always, time will tell.

    N.
     
  6. transit

    transit Well-Known Member

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    I just noticed the DOW is down a bit so looks like there may be some more buying opportunities on Monday if you've got any funds left. I like the look of FGL (fosters) at their current sp.
     
  7. MrDarcy

    MrDarcy Well-Known Member

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    Listed property trusts have done a nice retreat recently. I'm considering some MIF such as CFS Property Securities. They seem a little better value this week than last week. Anyone else looking in this area ?
     
  8. Insight

    Insight Brisbane Buyers Agent

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    Just a thought based on the content of this thread.

    I have found from my time in the markets with my own hard earned that I profit when I buy strength with stocks, ideally when the stock has been basing and just breaking out to relatively important new high. I'm always looking for the market to demonstrate at least something in terms of movement by hitting a buy stop above a set up price.

    I wouldn't touch this market with the proverbial 10 foot pole at the moment, I would be (actually am whilst renovating a house) 100% cash and looking for an extended shake out, followed by some wallowing and them I'm starting to get interested (because I think it's still full bull ahead). Just buying because something is falling is not an action I have made money from.

    I was reading sentiment off the scale in terms of buy the dip based on all the forums I frequent (too many) and blogs I read (too much garbage amongst the gems probably), which has me thinking the downside is poorly appreciated in this market still.

    The 200 day MA for the XJO is all the way down at 5330 odd, which might give some food for thought to leveraged punters.

    Anyway take what you do, test, refine, get better and make more money. Just be careful :)
     
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I've found much the same works with funds too.

    I certainly don't have much experience with trading, nor extensive experience with managed funds (2-3 years is not enough - especially with the boringly good markets we've had !!).

    But my strategy for my funds is a bit of a mixture - I have two phases for each fund, accumulation and then consolidation.

    For each fund I select (I currently have 6 I hold), I set a target value. Until I reach this value, I am in accumulation mode - and I put money into the fund that is currently performing the strongest (like you - I have found the best profits come from funds that are already doing well and showing strength). I measure "strength" as a numerical comparison measure based on a set of criteria for each fund. I know benchmark values for what score a fund should get when it is doing well, and I put my focus into the fund that gets the best score. The score is recalculated daily.

    Once a fund reaches my target, it then moves into consolidation mode - where the strategy changes to taking profits as value goes up, and buying more as value goes down. Based on my preferred minimum transaction size and the size of the target value, I currently work on a 5% consolidation range. That is - when the price goes 5% above my target value, I'll sell enough to bring it back to the target. This is usually then reinvested into a fund still in accumulation mode - or once all funds reach their target - will be used to lower LVR and also build up cash buffers.

    When the price drops 5% below my target, I'll buy more. At least that's the theory ... I've discovered in the last few days that my best laid plans went out the window as my LVR shot through my personal maximum (I was pushing the limits by gearing up - with low cash reserves) - leaving me with no capacity to buy more even if I wanted to. However, none of my funds are near the 5% below the target (most were 2-3% above target before the correction) ... so I haven't been in a position to buy yet anyway. I've got plenty of margin buffer available, so I'm not concerned about margin calls ... yet! I have cash elsewhere that can be used if really necessary - but will probably sell down some of the badly performing funds to cover margin calls rather than eat into my personal (non-investment) cash reserves. If it gets that bad, I would most likely have sold out of something by then anyway.

    I also watch the longer term moving averages ... if a fund crosses through the 100 day moving average I start to watch it very carefully, and if it crosses the 200 day moving average for more than 5 days, I'll sell out of the fund completely - it gets put in the "too volatile" basket. The CFS Global Resources fund was put in this basket back in January - and although it has done well since then, it has still been far too volatile for my liking (blame the seemingly random movements in commodity prices for that). I'm glad I don't hold it at the moment. It is still on my watch list though - and I may add it to my holdings in the future if I decide to expand beyond 6 funds.

    If a fund is down sharply, but nowhere near the 100 or 200 day moving averages, I'll just sit on it ... most high growth funds I've been watching show a degree of volatility at times, but rarely break through the 100 day moving average and even more rarely through the 200 day moving average. If they do cross the 200 day moving average, it's usually a sign of a longer term down period, which can take up to 12 months to recover from (sometimes longer).

    So, right now, I'm just sitting and watching. I don't have the cash available to buy right now, and none of my funds are even close to the point where I would consider selling down or selling out.

    My funds are mostly still in profit situation (even the ones I bought into during Jan/Feb this year), and the only one currently in a loss situation is the most recent aquisition - CFS W/S Colliers International Property Securities - which I bought into in only the last week or so. Bad move in retrospect ... but there's no easy way to monitor the international listed property market sentiment that I'm aware of yet ... something I need to look into I guess. I'm surprised it has performed so badly with the correction ... but then I don't have a good understanding of how the fund behaves yet - that only comes once I've held a fund for a while.
     
  10. AndrewG

    AndrewG Well-Known Member

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    Hi Sim,
    How does one monitor this average rate you are speaking of?

    Andrew.
     
  11. handyandy

    handyandy Well-Known Member

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    Hi Sim

    Whats the possibility of having a get together where you could present your concepts as outlined?

    I personally am very interested and maybe some other would also be.


    Cheers
     
  12. Nigel Ward

    Nigel Ward Team InvestEd

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    I guess that would make it a "Siminar" :D

    Perhaps you could record a podcast with some accompanying charts to illustrate your method?

    N.
     
  13. Smartypants

    Smartypants Well-Known Member

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    And please keep it SIMple for us thickheads :)
     
  14. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I first did it using a huge spreadsheet, but it was huge for just one fund, let alone 6+ !!!

    So I wrote a computer program to do it - I have a database with all the historic unit prices, and I calculate a running value based on having invested $x at inception (the actual amount doesn't matter - you deal with percentages). The tricky thing is you need to calculate it having reinvested distributions - that's the only accurate way to chart more than a quarter at a time.

    Then for each day, I just calculate the average value of the past 20/50/100/200 trading days (you can do the same for any value - depends on how much detail you want). Excel can actually do this for you easily on a chart (see trendlines) ... but it's a bit ugly to look at. The main problem with Excel is that it isn't as easy to get a variety of views of the data without creating multiple charts, which can get a bit cumersome (especially with multiple funds to track) ... but you can do it.

    When I get a chance - and some reliable clean data, I'll look at putting my charting online (it's all web based). May just have to pay for the data - will need to research how much it costs.
     
  15. Glebe

    Glebe Well-Known Member

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    Simsational.