Wazua
»
Investor
»
Stocks
»
The Cycle of Stock Market Emotions
Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
|
ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments  True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds
|
|
|
Rank: Member Joined: 3/26/2012 Posts: 830
|
mkonomtupu wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds Easier said than done. A successful man is not he who gets the best, it is he who makes the best from what he gets.
|
|
|
Rank: Elder Joined: 10/11/2006 Posts: 2,304
|
S.Mutaga III wrote:mkonomtupu wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds Easier said than done. And when both the stock market and the bond market fall in value what do you do????!!! Conventional thinkers waste time building shelters when they are unnecessary and then have no shelters when they need them the most. Socionomists do the opposite.
|
|
|
Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
|
Quote:And when both the stock market and the bond market fall in value what do you do????!!! Then we call it the perfect storm
|
|
|
Rank: Elder Joined: 9/23/2010 Posts: 2,221 Location: Sundowner,Amboseli
|
Bond values falling is good for the bulls because then your yields soar. @SufficientlyP
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
|
ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments Most buyers of tech stocks did not buy on fundamentals. Ben Graham would have probably avoided most of these firms. That said, if one had bought Apple during the 2003-2007 period... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Member Joined: 1/31/2007 Posts: 304
|
ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases
|
|
|
Rank: New-farer Joined: 5/19/2015 Posts: 15
|
VituVingiSana wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments Most buyers of tech stocks did not buy on fundamentals. Ben Graham would have probably avoided most of these firms. That said, if one had bought Apple during the 2003-2007 period... @VVS Took the words right out of my mouth. Anyone who lost money in the tech stocks did not lose because they used the buy n hold approach. They lost because of poor selection of companies to invest in. The tech companies they bought into had zero history of earnings and almost zero 'moat' or longterm competitive advantage. Some were mere domain names. So I would venture that speculators probably lost more when that bubble burst than long term investors. Secondly, even for a buy n hold approach, diversification across sectors is still advised. Invest at the point of maximum pessimism.
|
|
|
Rank: Elder Joined: 7/11/2010 Posts: 5,040
|
moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. The investor's chief problem - and even his worst enemy - is likely to be himself
|
|
|
Rank: Elder Joined: 7/11/2010 Posts: 5,040
|
mkonomtupu wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds True that was Ben grahams teaching. however Buffet perfected his masters philosophy, modified it to buy and hold forever. The investor's chief problem - and even his worst enemy - is likely to be himself
|
|
|
Rank: Elder Joined: 2/26/2012 Posts: 15,980
|
Aguytrying wrote:mkonomtupu wrote:ike wrote:bengraham wrote:Some of you may know Fidelity Investments which is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world and manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.
Recently, an internal performance review of Fidelity accounts was conducted to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the people who switched jobs and “forgot” about an old account leaving the current options in place, or the people who died and the assets were frozen while the estate handled the assets.
Perhaps there lies a lesson here for those who believe in constant boarding and disembarking of buses at every stage. It may be more exciting and may keep you very busy but you could probably do better to just sit on your hands and do nothing. Am not going to go so far as to suggest that you die for the sake of higher returns though. Laziness disguises itself in many ways and 'long term' is one of its many justifications. From their research it may be true that between 2003 and 2013 people made money but what about 2003-2007? Imagine a long termer who bought the tech stocks before the bubble and held them till the bubble burst....of course a speculator is in it long term too, only making a few adjustments True Even the original Prof. Ben Graham did not say you stay in the market and get burnt. He said an investor should be 50% bonds and 50% equity and keep re-adjusting the portfolio when either gets overheated. Quote:"We recommend that the investor divide his holdings between high-grade bonds and leading common stocks; that the proportion held in bonds be never less than 25% or more than 75% with the converse being necessarily true for the common-stock component."
(1) When the stock market is low and undervalued, hold 25% bonds and 75% stocks.
(2) When the stock market is high and overvalued, hold 75% bonds and 25% stocks. When the stock market begins to go from being undervalued to overvalued, gradually reduce your stock portion and buy more bonds or bond funds True that was Ben grahams teaching. however Buffet perfected his masters philosophy, modified it to buy and hold forever. He doesn't hold all stocks forever. He sells when the fundamentals change. He sold the petrochina when oil was at its peak. He sold Exon Mobil when oil slumped. He sold TESCO which he claimed was a big mistake. "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
|
|
|
Rank: Elder Joined: 7/11/2010 Posts: 5,040
|
@murchur. agreed. there are some exceptions to the rule The investor's chief problem - and even his worst enemy - is likely to be himself
|
|
|
Rank: Member Joined: 1/31/2007 Posts: 304
|
Aguytrying wrote:moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. I beg to differ..Am a longterm investor who is wise to the fact that shares do not always have an upward trajectory no matter how good a share is..so why not benefit from the cycles?? For instance I bought CFC at 65,sold at 130..currently it is at 103 I still think its a great share for the future, however for now, one is better watching from the sidelines.. The most successful investors are those who are able to use technical and fundamental analysis efficiently because the two feed on each other
|
|
|
Rank: New-farer Joined: 5/19/2015 Posts: 15
|
moneydust wrote:Aguytrying wrote:moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. I beg to differ..Am a longterm investor who is wise to the fact that shares do not always have an upward trajectory no matter how good a share is..so why not benefit from the cycles?? For instance I bought CFC at 65,sold at 130..currently it is at 103 I still think its a great share for the future, however for now, one is better watching from the sidelines.. The most successful investors are those who are able to use technical and fundamental analysis efficiently because the two feed on each other @moneydust. No doubt one can make a tidy sum every so often by timing the market. But anyone quoting how well they did on one stock may need to be careful not to suffer from survivorship bias where one is happy to quote the winners and conveniently forget the losers. But back to original point of the post, a new investor coming to wazua may think investing is an arcane art known only to a few who know how to time exactly the points of embarkation and disembarking popularly known here as boarding the bus. It is these investors who need to be assured that buying shares in a solid company (one that has a good product, good earnings history, good future prospects and a competitive advantage in the market) and holding for a long long time (even through severe dips) is a time tested way of succeeding in the stock markets. I think this would be a great time to introduce long termers to the wonderful story of Quincy, the town of Coca Cola millionares. A valid case for buy and hold investing. Rink below Quincy, Florida, a Town of Coca-Cola MillionairesInvest at the point of maximum pessimism.
|
|
|
Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
|
@ bengraham, this is a good the explanation on the bond yields and equities. I was expecting you to give the new investors this kind of knowledge instead of telling to stay in the casino when everyone is heading the exits. Given my pending retirement from wazua you will pick up the mantle and help newbies understand the market cycle better Quote:I would like to shed light on the implications of an increase and/or decrease in long-term interest rates — as represented by the benchmark 10-year Treasury bond — and how equity investors can use it as a leading signal for their equity investments.
Before we begin, let me lay the foundation on how bonds work. When the economy begins to strengthen, bond yields tend to rise. This is partly because bondholders sell, causing weaker demand which pushes bond prices lower.
If investors believe the economy is improving, they may be inclined to move money into equities in anticipation of an improvement in corporate profits which could propel stocks higher.
When investors are fearful, they always tend to move out of stocks and into bonds but sometimes this is not the case. http://www.businessdaily...8/-/nvpqj3z/-/index.html
|
|
|
Rank: New-farer Joined: 5/19/2015 Posts: 15
|
[quote=mkonomtupu]@ bengraham, this is a good the explanation on the bond yields and equities. I was expecting you to give the new investors this kind of knowledge instead of telling to stay in the casino when everyone is heading the exits. Given my pending retirement from wazua you will pick up the mantle and help newbies understand the market cycle better Quote:I would like to shed light on the implications of an increase and/or decrease in long-term interest rates — as represented by the benchmark 10-year Treasury bond — and how equity investors can use it as a leading signal for their equity investments.
Before we begin, let me lay the foundation on how bonds work. When the economy begins to strengthen, bond yields tend to rise. This is partly because bondholders sell, causing weaker demand which pushes bond prices lower.
If investors believe the economy is improving, they may be inclined to move money into equities in anticipation of an improvement in corporate profits which could propel stocks higher.
When investors are fearful, they always tend to move out of stocks and into bonds but sometimes this is not the case. http://www.businessdaily.../-/nvpqj3z/-/index.html[/quote] @mkonomtupu. I read the article by Rufus and there is no denying the inverse relationship between the market and bond yields. But taking advantage of such movements is not stock investing 101. Which is what am trying to reinforce for the wazuan who is unschooled in such things and am not sure this was the demographic that the article was targeted at. It still entails boarding and getting off buses. So i will emphasise the Keep It Simple school where ITS ABOUT TIME IN THE MARKET AND NOT TIMING THE MARKET. Now for some more anti-timing facts (sorry about the US stats but markets are markets). Look at the table below showing the impact of market timing on a portfolio invested between 1991-2011.  Just missing the 10 best days in this 20-year investment time-frame slashes the annualized returns by 40% per year. Think about it, just 10 days in 20 years. Miss the 20 best days and the annual returns drop by 70%. And the wealth impact shown below.  A 50% reduction in wealth by missing just the 10 best days in this 20-year time-frame and 70% loss in wealth by missing the 20 best days. Invest at the point of maximum pessimism.
|
|
|
Rank: Member Joined: 1/31/2007 Posts: 304
|
bengraham wrote:moneydust wrote:Aguytrying wrote:moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. I beg to differ..Am a longterm investor who is wise to the fact that shares do not always have an upward trajectory no matter how good a share is..so why not benefit from the cycles?? For instance I bought CFC at 65,sold at 130..currently it is at 103 I still think its a great share for the future, however for now, one is better watching from the sidelines.. The most successful investors are those who are able to use technical and fundamental analysis efficiently because the two feed on each other @moneydust. No doubt one can make a tidy sum every so often by timing the market. But anyone quoting how well they did on one stock may need to be careful not to suffer from survivorship bias where one is happy to quote the winners and conveniently forget the losers. But back to original point of the post, a new investor coming to wazua may think investing is an arcane art known only to a few who know how to time exactly the points of embarkation and disembarking popularly known here as boarding the bus. It is these investors who need to be assured that buying shares in a solid company (one that has a good product, good earnings history, good future prospects and a competitive advantage in the market) and holding for a long long time (even through severe dips) is a time tested way of succeeding in the stock markets. I think this would be a great time to introduce long termers to the wonderful story of Quincy, the town of Coca Cola millionares. A valid case for buy and hold investing. Rink below Quincy, Florida, a Town of Coca-Cola Millionaires I only mentioned one share for illustration purposes..the success stories are many.I have been in this market since 1999 and therefore have seen the best and worst of this market which brings me to my next point. Stock market investing for a beginner is like going to school,you start in baby class and progress, as you learn more.Every beginner should aspire to learn how the market works to minimize on the disappointments.If one is not ready for this he should probably consider alternative investments.Many are the times I have met people who are disappointed in shares because they invested in Kenya airways,Mumias,Cables,etc way back in 2006-2007 during the stock market boom and have held on to date,and therefore have nothing to show for their investment since they are 'long term investors'.In the same period there are counters that have tripled and quadrupled in value.That's why I hold strongly to the use of both fundamental and technical analysis in share investment. At the end of it all any return on an investment is better than no return or losses.Therefore if I take my gains at 30-50% of an investment and someone else who holds on makes 100%, am still good.One thing I have learnt to tame is greed. You mention cocacola,which is good because it lends credence to my argument of continuous evaluation of a share's potential.Besides its good to note that many beginners are investing for themselves with meagre savings and therefore expect maximum returns in the shortest period.They dont have the shocks for massive disappointments. Lets not remain in baby class lets move to the primary school, then secondary,then University of share investing.Though I add the caveat:even with all the learning no one can truly predict the market.
|
|
|
Rank: New-farer Joined: 5/19/2015 Posts: 15
|
moneydust wrote:bengraham wrote:moneydust wrote:Aguytrying wrote:moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. I beg to differ..Am a longterm investor who is wise to the fact that shares do not always have an upward trajectory no matter how good a share is..so why not benefit from the cycles?? For instance I bought CFC at 65,sold at 130..currently it is at 103 I still think its a great share for the future, however for now, one is better watching from the sidelines.. The most successful investors are those who are able to use technical and fundamental analysis efficiently because the two feed on each other @moneydust. No doubt one can make a tidy sum every so often by timing the market. But anyone quoting how well they did on one stock may need to be careful not to suffer from survivorship bias where one is happy to quote the winners and conveniently forget the losers. But back to original point of the post, a new investor coming to wazua may think investing is an arcane art known only to a few who know how to time exactly the points of embarkation and disembarking popularly known here as boarding the bus. It is these investors who need to be assured that buying shares in a solid company (one that has a good product, good earnings history, good future prospects and a competitive advantage in the market) and holding for a long long time (even through severe dips) is a time tested way of succeeding in the stock markets. I think this would be a great time to introduce long termers to the wonderful story of Quincy, the town of Coca Cola millionares. A valid case for buy and hold investing. Rink below Quincy, Florida, a Town of Coca-Cola Millionaires I only mentioned one share for illustration purposes..the success stories are many.I have been in this market since 1999 and therefore have seen the best and worst of this market which brings me to my next point. Stock market investing for a beginner is like going to school,you start in baby class and progress, as you learn more.Every beginner should aspire to learn how the market works to minimize on the disappointments.If one is not ready for this he should probably consider alternative investments.Many are the times I have met people who are disappointed in shares because they invested in Kenya airways,Mumias,Cables,etc way back in 2006-2007 during the stock market boom and have held on to date,and therefore have nothing to show for their investment since they are 'long term investors'.In the same period there are counters that have tripled and quadrupled in value.That's why I hold strongly to the use of both fundamental and technical analysis in share investment. At the end of it all any return on an investment is better than no return or losses.Therefore if I take my gains at 30-50% of an investment and someone else who holds on makes 100%, am still good.One thing I have learnt to tame is greed. You mention cocacola,which is good because it lends credence to my argument of continuous evaluation of a share's potential.Besides its good to note that many beginners are investing for themselves with meagre savings and therefore expect maximum returns in the shortest period.They dont have the shocks for massive disappointments. Lets not remain in baby class lets move to the primary school, then secondary,then University of share investing.Though I add the caveat:even with all the learning no one can truly predict the market. @moneydust. I think the point is conceded from the outset that money can be made either way. And perhaps the money managers who made billions using stock picking and market timing get too much of the coverage and the buy n hold millionare gets mentioned rarely, almost as an aberration. But i do not agree that stock market investment is like mathematics that must progress from the 1+1 of baby class to complex unsolvable theorems of PhD mathematicians. Indeed, to the contrary, data has consistently shown that baby class knowledge applied consistently over many years trounces complex theorems and charts. And what is the baby class knowledge? Refer to my post on solid companies and strong earnings above. Invest at the point of maximum pessimism.
|
|
|
Rank: Veteran Joined: 1/20/2011 Posts: 1,820 Location: Nakuru
|
bengraham wrote:moneydust wrote:Aguytrying wrote:moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. I beg to differ..Am a longterm investor who is wise to the fact that shares do not always have an upward trajectory no matter how good a share is..so why not benefit from the cycles?? For instance I bought CFC at 65,sold at 130..currently it is at 103 I still think its a great share for the future, however for now, one is better watching from the sidelines.. The most successful investors are those who are able to use technical and fundamental analysis efficiently because the two feed on each other @moneydust. No doubt one can make a tidy sum every so often by timing the market. But anyone quoting how well they did on one stock may need to be careful not to suffer from survivorship bias where one is happy to quote the winners and conveniently forget the losers. But back to original point of the post, a new investor coming to wazua may think investing is an arcane art known only to a few who know how to time exactly the points of embarkation and disembarking popularly known here as boarding the bus. It is these investors who need to be assured that buying shares in a solid company (one that has a good product, good earnings history, good future prospects and a competitive advantage in the market) and holding for a long long time (even through severe dips) is a time tested way of succeeding in the stock markets. I think this would be a great time to introduce long termers to the wonderful story of Quincy, the town of Coca Cola millionares. A valid case for buy and hold investing. Rink below Quincy, Florida, a Town of Coca-Cola Millionaires The Quincy case study is the right jab for my malaria (remember the chlorine jab for malaria of yester years...it was one on the nyungu and the nurse told you to lala kidogo zishuke shuke...but i digress). I'm scratching my head trying to contextualize the quincy case to the current NSE. The only companys i can equate coca cola of the 20's and 30's is Safcom, Unga, and technically Centum (i'm not pitching just trying to be factual). No matter how hard life is, a Kenyan will still spare 10 bob for that bamba ten or even Okoa jahazi for 20 bob etc.....people will still Ugali no matter what and chapos during festive etc). What can you equate coca cola to in Kenya 2015 @bengraham? Dumb money becomes dumb only when it listens to smart money
|
|
|
Rank: Member Joined: 1/31/2007 Posts: 304
|
bengraham wrote:moneydust wrote:bengraham wrote:moneydust wrote:Aguytrying wrote:moneydust wrote:ike wrote:Boris Boyka wrote:@bengraham...Very Many wazuans are just SPECULATORS disguised in the mouth skin of "am a long term investor". Buree kabisa. I don't think it really matters which label one chooses to wear when investing... because one calls himself a long term investor and makes loses, another is called a speculator and makes profit.... its all about being on the money. Well put ...no point in holding a share ad infinitum and see it rise and fall back to its initial position in a number of years in the name of long term investing.What would be the benefit in that?? Unless you have a controlling interest..there can be no upside to such a strategy.. In my case I take my longterm to be a series of shortterms.I therefore evaluate a share's peformance and outlook within 6months to one and half year period and invest accordingly. This has worked well for me ensuring that year on year my networth increases What you do has a name. its called speculating. I beg to differ..Am a longterm investor who is wise to the fact that shares do not always have an upward trajectory no matter how good a share is..so why not benefit from the cycles?? For instance I bought CFC at 65,sold at 130..currently it is at 103 I still think its a great share for the future, however for now, one is better watching from the sidelines.. The most successful investors are those who are able to use technical and fundamental analysis efficiently because the two feed on each other @moneydust. No doubt one can make a tidy sum every so often by timing the market. But anyone quoting how well they did on one stock may need to be careful not to suffer from survivorship bias where one is happy to quote the winners and conveniently forget the losers. But back to original point of the post, a new investor coming to wazua may think investing is an arcane art known only to a few who know how to time exactly the points of embarkation and disembarking popularly known here as boarding the bus. It is these investors who need to be assured that buying shares in a solid company (one that has a good product, good earnings history, good future prospects and a competitive advantage in the market) and holding for a long long time (even through severe dips) is a time tested way of succeeding in the stock markets. I think this would be a great time to introduce long termers to the wonderful story of Quincy, the town of Coca Cola millionares. A valid case for buy and hold investing. Rink below Quincy, Florida, a Town of Coca-Cola Millionaires I only mentioned one share for illustration purposes..the success stories are many.I have been in this market since 1999 and therefore have seen the best and worst of this market which brings me to my next point. Stock market investing for a beginner is like going to school,you start in baby class and progress, as you learn more.Every beginner should aspire to learn how the market works to minimize on the disappointments.If one is not ready for this he should probably consider alternative investments.Many are the times I have met people who are disappointed in shares because they invested in Kenya airways,Mumias,Cables,etc way back in 2006-2007 during the stock market boom and have held on to date,and therefore have nothing to show for their investment since they are 'long term investors'.In the same period there are counters that have tripled and quadrupled in value.That's why I hold strongly to the use of both fundamental and technical analysis in share investment. At the end of it all any return on an investment is better than no return or losses.Therefore if I take my gains at 30-50% of an investment and someone else who holds on makes 100%, am still good.One thing I have learnt to tame is greed. You mention cocacola,which is good because it lends credence to my argument of continuous evaluation of a share's potential.Besides its good to note that many beginners are investing for themselves with meagre savings and therefore expect maximum returns in the shortest period.They dont have the shocks for massive disappointments. Lets not remain in baby class lets move to the primary school, then secondary,then University of share investing.Though I add the caveat:even with all the learning no one can truly predict the market. @moneydust. I think the point is conceded from the outset that money can be made either way. And perhaps the money managers who made billions using stock picking and market timing get too much of the coverage and the buy n hold millionare gets mentioned rarely, almost as an aberration. But i do not agree that stock market investment is like mathematics that must progress from the 1+1 of baby class to complex unsolvable theorems of PhD mathematicians. Indeed, to the contrary, data has consistently shown that baby class knowledge applied consistently over many years trounces complex theorems and charts. And what is the baby class knowledge? Refer to my post on solid companies and strong earnings above. The baby class knowledge am referring is the buy and hold strategy per se.It might work if one is lucky to pick out that 'Cocacola' company,but from my observations on the stock market companies generally do tend to have their seasons,and that 'cocacola' company is more of an exception than the norm.
|
|
|
Wazua
»
Investor
»
Stocks
»
The Cycle of Stock Market Emotions
Forum Jump
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.
|