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The Cycle of Stock Market Emotions
Rank: Member Joined: 9/14/2011 Posts: 869 Location: nairobi
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Fyatu 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 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? i like this. i have never thought of Unga in this way
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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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 That is speculation. An investor shouldn't really care about how high and how low the stock will be tomorrow as long as the fundamentals are right. Infact low points are times to load more. "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
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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murchr wrote: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. BTW, when one talks/discusses 'speculation/trading' vs 'buy & hold' ... the latter is not forever but can change based on circumstances. 1) If the firm is under-performing and the (long-term) investor cannot see a future e.g. TESCO or even Berkshire Hathaway [the Mill] as WB reminds us. 2) There is a better opportunity and WB has done this many times. He will sell out a stake in a listed firm [less so unlisted firms] if the prospects of the 'replacement' are much better in the LONG-TERM. Think airlines & his investment in US Airways. 3) If he is not happy with the management or industry. Divesting from underperforming unlisted firms is something WB doesn't do often & that he agrees it is a weakness but even his under-performers are generally profitable! Ultimately, WB wants to meet or beat the 15% annual return but this is not getting any easier as the total portfolio grows. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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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 There's a village in Muranga that is in (or almost) the same league but in KES. Which entity do you think made them wealthy? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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VituVingiSana 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 There's a village in Muranga that is in (or almost) the same league but in KES. Which entity do you think made them wealthy? Equity Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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Any guideline of the ideal number of stocks/sectors to hold The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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Aguytrying wrote:Any guideline of the ideal number of stocks/sectors to hold That depends if you have a float(continuous supply of cash to invest) like Buffet.
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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mkonomtupu wrote:Aguytrying wrote:Any guideline of the ideal number of stocks/sectors to hold That depends if you have a float(continuous supply of cash to invest) like Buffet. No continuous float, just monthly savings to fund portfolio. what Ben graham described as an aggressive stocks investor. on another note, why leave wazua? u have many apprentices The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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Aguytrying wrote:Any guideline of the ideal number of stocks/sectors to hold I think WB believes 10 are more than enough for retail investors. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 9/11/2014 Posts: 228 Location: Nairobi
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VituVingiSana wrote:Aguytrying wrote:Any guideline of the ideal number of stocks/sectors to hold I think WB believes 10 are more than enough for retail investors. Since WB is USA-centric, do the proportions remain the same for the Kenyan market?
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