What are your Investment Rules?

[Leftfield]

Hi OldTech and others, herewith my input FWIW.

Left Field's Share Market strategies

1. Take time to write down your own personal investment goals and strategies

2. Patient Money. The money you invest in the share market must be prepared to wait patiently without pressure of repayment or penalty interest rates. When investing in any company you should be prepared to ‘ride’ that investment for 5 years or more. Thus it is best to avoid borrowing to invest and to avoid ‘margin lending’. Ideally you will have no debt. Your mortgage will be paid and you will have freehold property assets providing you with a spread of investments of real estate and shares.

3. Embrace risk. Appreciate that without risk there is no gain, but a prudent investor can reduce risk and can make sure that mistakes (when they do happen) are only small mistakes. A prudent investor will see mistakes as learning opportunities.

4. Do not ignore the small cap’s for opportunities. As Jim Slater points out in his excellent investment book, “The Zulu Principle,” the small investor has significant advantages over the institutional investors (including banks).

“The institutions prefer leading stocks because their marketability is better…..most leading brokers cannot spare the time and money to research smaller stocks…. you are therefore more likely to find a bargain…. in this relatively under-exploited area.”

5. Look for;

a) Sound Coys (Focus on what the company is doing – not what the share price is doing)

b) Sound management.

c) Sound financials (not likely to need to raise cash) (eg the P/E ratio is key.

d) Dividends a help (but not essential if opting for high growth.) Steady growth in EPS etc.

e) Diversified, eg not soley reliant on the NZ economy. Prefer a concept or product that is sets the ‘world’ as it’s market eg ATM, XRO, FPH, MFT, etc.

f) Leader in sector or potential to be, or strong, strong growth potential.

6. I choose to avoid Mining/Petroleum/Gold and unethical investments such as tobacco, guns, gambling etc.

7. Use TA to time purchases. Look for a positive price trend above either 90 day or 120 day moving av. Buy only on a confirmed uptrend. Use the ‘golden cross’ and ‘death cross’ signals as buy and sell signals.

8. Stalk a share that you like and over time observe and buy on dips, nibble at a share you have faith in over time. In generally it is not wise to purchase large tranches all at once.

9. Learn to set rules over feelings and sell if the SP goes below 100 MA or a death cross appears on the TA.

10. Aim always for Long term trades to take advantage of NZ's tax free capital gains.

11. Recognise that too much diversification may not be such a great idea, indeed the more diversified you are, the more 'average' your returns will be. If you want to beat 'average' returns, you may be better to concentrate on fewer 'winners.' (Example, since 2014 ATM has been over 60% of my portfolio (by value), and has provided my small portfolio (of only 5 to 8 companies,) outstanding returns, much better than the NZX 50 yardstick.)



As always DYOR and take responsibility for your own investment decisions. Good luck out there!!