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The Intelligent Investor

Discussion in 'Shares' started by dynasty007, 1st Feb, 2010.

  1. dynasty007

    dynasty007 Member

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    Hi All,

    I am looking to draw some equity (approx 20k to begin with) out of my IP and directly invest in shares. I am new to shares and have not traded before.

    To get up to speed I am reading the Intelligent Investor by Benjamin Graham (revised edition with commetnary) with a hope of developing the right mindset for picking companies and evaluating markets.

    So far I am loving the book, just wondering will it give me enough know how to start buying on the asx or are there other books / courses etc I should review before I start buyings stocks??

    Cheers,

    Mike.
     
  2. Tropo

    Tropo Well-Known Member

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    Ask yourself one question...
    What chances do you have to survive on the road after reading instruction written for blind drivers? :confused:
    Intelligent Investor written by B.G is addressed to those who still believe in fundamental/value investing only.
    There are more entertaining books around, but if you are serious about making money in the Stock Market, check book recommendations on this forum.
     
  3. Chris C

    Chris C Well-Known Member

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    When you say "buying" you mean investing for the long term right?

    If you are talking about using it as a guide to begin your buy to hold stock investing career then I'd say it's a reasonable starting point, and probably will make you more informed than most people when they first decdided to dabble in buying shares, though I think you should still be expecting to do a lot of learning along the way and as tropo mentioned there are loads of other resources to read, and you can't expect one book to make you an expert.

    The only thing that concerns me a little is your plan to use "equity" from your IP to obtain the funds to invest. Whilst you are borrowing against an asset you are still essentially using debt to invest, and this probably isn't the ideal way to go about starting your stock investment, but that is just the conservative in me talking.

    Best of luck with it all.
     
  4. Tropo

    Tropo Well-Known Member

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    ".... Whilst you are borrowing against an asset you are still essentially using debt to invest, and this probably isn't the ideal way to go about starting your stock investment,.."

    Good point !!!
     
  5. dynasty007

    dynasty007 Member

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    Thanks for your replies guys. As you have no doubt guessed I am a young investor (25yo) trying to make a conservative start in the share market.

    Yes, I am looking at a buy & hold strategy & will definitely consult this forum for other usefull books & posts.

    I make reference to using equity because I currently have all of my savings/income on my loan to minimise interest. I am well ahead of my repayments (in excess of 65k) and want to start investing some of that money into shares to maximise my return instead of just placing it on my loan.

    My intention is to directly invest cautiously in shares but be more aggressive with property (I am currently close to putting a small deposit down on a block of land to build a spec home as my 2nd IP).
     
  6. Tropo

    Tropo Well-Known Member

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    "As you have no doubt guessed I am a young investor (25yo) trying to make a conservative start in the share market".

    Being as old as you are and knowing what I know today I would learn how to trade financial markets from my early days.
    You are too young to be a conservative.
    In Stock Market game it all comes down to a risk.
    If do not learn from day one how to manage the risk, the most conservative approach is not going to work for you.
    So...Happy Learning...:p
     
  7. younginvestor

    younginvestor Member

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    If your in the frame of mind to read books as an educational source make sure to keep it varied - read internet articles, read magazines, read at least a new book every quarter, tune into skybusiness if you have foxtel. Some information you'll be fed will be junky mom-and-dad stuff, just remember not to trust ONE source, like investment itself, be diverse and balanced.
     
  8. dynasty007

    dynasty007 Member

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    Thanks for the tips guys. I am young enough to be aggresive and the only way to learn is to have a go and learn from your mistakes. I will make sure I keep my sources varied and try to digest as much credible information as possible!

    Cheers,

    Mike.
     
  9. reefer

    reefer New Member

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    I cannot help myself but what does blind drivers have to do with it "I must say i'll keep in mind next time I get a dividend check". and still believe in fundamental/valve investing only, is there any other.
    Stop looking for guru's is the best advice I ever had.
    That book of yours is probalby all you need by the way was ben graham blind I didnt know that.
     
    Last edited by a moderator: 21st Mar, 2010
  10. Tropo

    Tropo Well-Known Member

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    You see... fundamentals are like an ocean liner - they do not change direction quickly.
    However, markets often anticipate changes in fundamentals so you can trade/invest on them as long as the market is trading on them but watch the price action if it starts to diverge and anticipate a change.
    Markets also often discount fundamental news in advance.
    If you want to be a fundamental trader/investor, you have to be a hybrid, which means use fundamentals to establish a view and use technicals to confirm your view and provide a frame work for disciplined trading/investing.

    Investment should not be based on amount of dividends you receive, which are only bonus.
    If intelligence has anything to do with a successful share trading/investing why statistically the worst traders/investors are lawyers and doctors?

    Ah yes...It was a blind man being led by a blind man across a road – he asks if he’s crossing the road but doesn’t realise he too is blind.
    “If there’s something worse than not being informed, it’s being led to believe you are.” ;)
     
  11. Saskatoon

    Saskatoon Well-Known Member

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    Hi,
    if you are thinking about investing in shares you could read "Shares Super Simple" by Mark Hoyle. I borrowed it from the local library. The "Rivkin Guide to Getting Started in Shares" by Jordan Rivkin has more detail. Also the Australian Securities Exchange website has online courses which you can study.
     
  12. reefer

    reefer New Member

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    Yeah thats right the fundamentals changed slowly but I'm using an airliner not a ocean liner as we book 8 weeks in Europe.
    Dividends little quick quiz, when does the bell start ringing at the bottom of the market? maybe when the dividends are high or maybe when they are really low. at a guess I would say when they are high.
    is that hybrid enough.
    intelligence you have got to have some.
    “If there’s something worse than not being informed, it’s being led to believe you are.” this you are quite correct.

    Do your sums its not rocket science.

    all the best
     
  13. Tropo

    Tropo Well-Known Member

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    Soft landing...
     
  14. wdongli

    wdongli Well-Known Member

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    Chances, risks, and likelihood

    In the market, actually it is matter to get the winning chances in high likelihood or better get a sure winning, and medicate the risks or better avoid the risks, for anyone who really want to be a intelligent investor. Simply saying it is matter we want the money as much as possible with the affordable risks.

    Buying and holding needs some basic mental qualification to identify the chances, use expertise in your own circle to get the vision, hire the capable partners(the management team)to run the business you share in, and actually you have to think as a financial allocator and trust the operational management team of the business.

    It needs the skills to identify the value, the team to run the underlying business, risk management to avoid disasters, and then known when to hold'em and fold'em.

    Otherwise it would not make us to be intelligent investors but the traps to suck our bloods until we die. Any great words to guide us to get what we want, as any houses need the ground, the structure to context each parts, and then provide the way to enjoy, need the application contexts and some sufficient conditions.

    Intelligent investors are the humans who get the correct personal characters, good enough mind to overcome the inherent psychological limitation, have a system to buy the chance and never lose significant amount of capital.

    The core of the intelligent investment is:
    1. Buy discount of value for margin of safety. No loss, never get loss, and never forget no loss are all what it should be wanted.
    2. Buy when the wall street are full of blood.

    Buying is the key. It is the key to reduce your profit production cost, it is the key to see the market down but your share hold up at least, it is the key to magnify your return when the blood is dried.

    If we could buy right, the selling would not risk your capital but could greatly affect your profit. The market is voting machine in short term and you have to find the best time or good enough time to sell.

    Intelligent investors seems always think about to sell for enough but enoughness is a very subjective matter which could be different just because our view and personality are different.

    Money is not easy to make. It seems not easy to be a intelligent investor as it is not easy to be a good Engineer, lawyer...and so on. Charlie Monger said all of sensible market actions are investment in the market. How to make us always act sensibly rather than irrationally?

    We are interested in intelligent investment since we don't think we could get quick and easy money. Money could be made quickly but we have to make the decision right at the right time for right reasons.

    Before we could buy and hold for big money could we cut the intelligent investment into a lot of pieces to update our minds and get the profit to reward ourselves, and wait until we are intelligent enough.

    In my case I try to buy the cigar butts for some puffs since 2004 since I really don't know how to pick up the great manager to run the business...