Newbie and some questions

[Wolf]

Hello all i'm pretty new to share investing and i guess you could say money in general.

A little about me.

I am currently 16 in my last year of college.
I've owned shares for the last couple of years but have only recently gotten pretty serious about it since late 2013.

My first investment was in 2010 when i had $2000 saved up from summer jobs and decided that i could get a better return than the bank interest rate.
I bought $2000 worth of FBU around $9.60 in 2010 just before it plunged to around $6 :). Bought $3000 more at $6.3 in 2012 and recently sold a couple of months ago at $8.2 and $9.4.

I could give some reasoning to why i bought each share but in all honesty i had no clue what i was doing. No one in my family invests and all the beginner investing books i read were pretty crap. If only i started off with reading Intelligent investor or etc. I really just went off broker reports and where i though each industry was heading.

Only after finding this forum did i realize there was more to investing and learnt alot about market cycles, valuation techniques, TA etc and that i could Do my own research. Thanks especially to KW, Sparkytheclown, Mac, Moosie etc i have learnt alot from some of you're posts

Since then i have made some nice paper profit gains thanks to PEB, SUM etc.

I would call myself a very new value investor and am getting into learning about Technical analysis.

I've had a pretty rocky start into investing and have made alot of mistakes and would put alot of my gains down to luck and a bull market. It's been pretty hard with brokerage killing me when i started, but it's a bit better now that i am with ASB securities and i have more cash. It's also pretty hard because i can't legally own anything until im 18 or what not and all the laws making it hard for someone of my age to invest.

My portfolio is now worth roughly 20k
*10k Summerset
*5k PEB
*3K ZEL
*2K MRP

I could ask questions for days but i'll try and resist.

Has anyone started at around my age?

Any advice/tips etc would be greatly appreciated. I read alot about not investing what you can't afford to lose. Well in my situation i would basically be fine if i lost everything. Not that i'm planing on it! So i'm tossing up between going all into high risk-high return companies and staying conservative with a long term outlook.

Valuation. I currently use an eps forecast and pe forecast to value company.The biggest problem for me is the pe ratio and whether to use a fair pe and how to find a fair pe or to link the pe to market conditions in which i have to forecast market conditions.

The next bear market? What's everyone's views on where the share market is going?

Thanks

[stoploss]

Hi Wolf welcome,
I started investing young as well. But had varying results , until I took this seriously a couple of years back.
The best thing is you obviously have a savings ethic.
In regards to your thoughts on going all high risk and it doesn't really matter because you are young ..... By all means have some of your portfolio in higher risk stocks.
However you don't have to be that high risk to make some very good returns. You have the benefit of starting early , treat every cent as precious your net worth will continue to grow.
Protect your capital in a downturn. Read as many books as you can . I would recommend "Market Wizards" ( ,J Schwager 1988) "How to make money in stocks " William O'neil,and "One up on wall street " Peter Lynch.
I keep these close by and read a chapter now and again,there is always something in there you forget. The most important thing I have taken from reading trading books is all the successful traders have some
simple rules they STICK to .It is this discipline that puts them above the rest...basically when it goes wrong they get the F out .....If they don't understand a movement against them , they get out.
So basically when the party is over these guys are already in a taxi on the way home , the rest of the market is still partying like it's 1999 ......then the dotcom bubble hit them .........
You can get those books pretty cheap on ukbookdepositry....( free postage ) .Could be your best investment ever IMO . I see you are in Wellington I would be happy to lend you some if you wanted.
Cheers... Stoploss

[samdaman]

Hey Wolf,

I'm pretty young as well only started looking into investing late last year. I'm 20 and currently studying in auckland, I'm saving my pennies and waiting till I can confidently get a good feel for a stocks value before I put some money on it. I'm in the same situation as you if I lost all my money it wouldn't be the end of the world as I'm living with my parents while I study and I'm not supporting anyone (aside from my girlfriend who if she was an investment would be a large amount of cash in the red :D ). Just wanna say good job on your portfolio, I wasn't aware of anyone at 16 who had the motivation to invest money even at 20 I'm the only one in my friend group I know actively trying to wise myself up to get in the game. If you wanna chat about anything I'm happy to listen, learn and have a yarn about stuff bearing in mind my limited knowledge haha.

Cheers
Sam

[Wolf]

Cheers Stoploss i'll check out those books.

I have no exit plan which has been worrying me for a while and am definitely looking at setting some simple rules. I always just get stuck on what to set as everyone has different rules and everyone could be right or wrong. I have the basic one's e.g price falling through 200ma and the death cross etc, but am looking at setting trailing stop's below support points possibly at a strategy to get out in a turning market. What are some good rules to be out when it goes wrong?

I think my biggest weakness is profit taking. I've jumped the gun in taking profits before and although it is impossible to pick the top it would be nice to take profits close to the top of a rise in PEB for example.

What are your rules?

I'll probably just buy the books but thanks for the offer, i like having books around to check things and catch up on chapters to haha. Reading some of these books once isn't enough to give me the full picture!

It seem's alot of investors hold more stable stocks for dividends as an income, which i don't really need so i'm thinking of only buying growth stocks?

Thanks.

[Wolf]

Thanks Sam, what are you studying in auckland?

Cheer's i know what you mean, i don't know anyone that invests or trades. Personally i think colleges should give an overview of finance which would give students an idea of equities,property etc. I've got a few people interested who ask me what to buy, but who lose interest when i say there's no such thing as a sure winner, or else everyone would be doing it!

Although generally i think its all the barriers to investing that may put some people off. I found extremely daunting to buy my first shares through my parents through a broker. Now i have a joint account with ASB which is easier but i'm pretty much going to have to wait until i'm 18 to get a commsec account or IB etc.

Sounds good, thanks.

[samdaman]

I'm studying engineering at UOA. I agree they should teach more compelling finance courses at college. I never found what was offered to be appealing and who knows maybe if they offered more interesting courses I may have chosen to go down a business based degree rather than engineering (although I do love what I'm doing with engineering). I know what you mean personally the stock market before I became a little more educated was just an entity where people put and money and became rich and I feel thats still the overall delusion shared by a lot of young people. Which in turn keeps a lot of people out of it when they find out its not so easy or they lose their money in an uneducated decision and are stared away. I'm with ASB atm, as I was saying I'm still learning so I just opened one to tamper around with.

[stoploss]

Cheers Stoploss i'll check out those books.

I have no exit plan which has been worrying me for a while and am definitely looking at setting some simple rules. I always just get stuck on what to set as everyone has different rules and everyone could be right or wrong. I have the basic one's e.g price falling through 200ma and the death cross etc, but am looking at setting trailing stop's below support points possibly at a strategy to get out in a turning market. What are some good rules to be out when it goes wrong?

I think my biggest weakness is profit taking. I've jumped the gun in taking profits before and although it is impossible to pick the top it would be nice to take profits close to the top of a rise in PEB for example.

What are your rules?

I'll probably just buy the books but thanks for the offer, i like having books around to check things and catch up on chapters to haha. Reading some of these books once isn't enough to give me the full picture!

It seem's alot of investors hold more stable stocks for dividends as an income, which i don't really need so i'm thinking of only buying growth stocks?

Thanks.

Don't entirely rule out income stocks they can also provide good capital gains. Re the rules William O , uses a strict 7 % S/L however for the smaller cap stocks in NZ and Aussie I find this way too close. If a stock I have goes up plenty I take some profit , so I can buy some back on any pullback . When up 100 % I look to liquidate enough so I have a free carry so to speak ....I do all this through a company pay tax etc .....
Re the education front I always maintained at school you never learnt about ( arguably ) the 2 biggest things you do in life , have kids and buying a house. I have an interest in Financial literacy and believe it should be compulsory at school from an early age .... somewhere along the line we have to stop the rorts and boom and bust mentality in NZ ...Kiwisaver is a great start , but we have a long way to go .
Everyone is different as you will see from those books so I will let you come up with your own rules ....The best thing is you have started early and will have plenty of time to develop sound strategies that will see you through " any market conditions " ......

[Wolf]

First off, good on you for taking such an interest in your future. Most kids your age are probably more concerned with getting drunk/stoned and hanging out at the mall. Getting involved in self directed learning is rare for most adults (too hard, too lazy?), so even more admirable in one so young.

If you wish to pursue studying Finance at Uni, then I recommend you combine it with Economics - its the one subject I wish I had studied further at Uni (did Stage 1, but didnt carry on). In an era where markets are so heavily influenced by international monetary policies, banking policy, credit cycles, and such like, a good grasp of economics helps you understand the world in which you are trading.

There are some very good archives of "trading ebooks" available online with hundreds of books included if you know where to look (ahoy me hearty, if you catch my drift :-) Will save you a few pennies to put towards your shares.

Cheers KW,

I decided instead of working in a supermarket or what ever on minimum wage - minus tax to get into shares, which while it hasn't returned as great of an income i see the experience and learning as invaluable for when i have much more capital. I'm thinking about trying to apply for an internship somewhere at maybe a brokering firm or bank to get into the environment and learn. Although i doubt i'll get one, i'll never know if i don't try :)

I will pursue Finance at Uni, i'm loving what i'm doing at the moment and i'll have a look at combining it with Economics. Cheers for the recommendation. I'm tossing up between going all into Finance and doing a double degree mixing Finance with biochemistry. Although i've still got a year to decide.

Ahoy haha, i'll go aboard and have a look.

I've enjoyed reading you're post's around timing entry/exit with TA and your 3 portfolio approach.
Recently topped up SUM.NZ when the price dropped below the 50MA, RSI broke 50 and MACD turned postive at 3.25 :) Cheers

I'm shaping my portfolio into a growth stocks portfolio with 1-2 spec's.

Do you have any rules for profit taking? I guess you're rule about selling if the share breaks its long term up trend would get you out of a turning market.

My main goal at the moment is to try and get more into buying dips and selling tops trying to build the amount of shares i have in each company. I was in a interesting position this year where at one point i was up about 10% nearing my goal of 15% pa in the first month.. Now it's fallen back a bit more but i want to trade my shares a bit more. I'm happy with SUM, PEB, HNZ but would like to increase those holding slowly by trading them a bit more.

If i'm right you mostly invest in Australia? I'm looking at buying some shares on the ASX and possible in the USA with the high NZD but am thinking of waiting a bit longer for if interest rates rise in NZ then the Dollar would too? From Oversea's investors/institutes taking advantage of it.


Thanks KW

[Wolf]

Don't entirely rule out income stocks they can also provide good capital gains. Re the rules William O , uses a strict 7 % S/L however for the smaller cap stocks in NZ and Aussie I find this way too close. If a stock I have goes up plenty I take some profit , so I can buy some back on any pullback . When up 100 % I look to liquidate enough so I have a free carry so to speak ....I do all this through a company pay tax etc .....
Re the education front I always maintained at school you never learnt about ( arguably ) the 2 biggest things you do in life , have kids and buying a house. I have an interest in Financial literacy and believe it should be compulsory at school from an early age .... somewhere along the line we have to stop the rorts and boom and bust mentality in NZ ...Kiwisaver is a great start , but we have a long way to go .
Everyone is different as you will see from those books so I will let you come up with your own rules ....The best thing is you have started early and will have plenty of time to develop sound strategies that will see you through " any market conditions " ......

Cheer's stoploss,

I came across wrong. Im not ruling out income stocks I just won't buy stocks for the div. For example before i got serious, i was stupid enough to pick up some MRP shares in the IPO. I'll probably hold them until National is re-elected or if not put them in the bottom draw until they are re-elected :) When i got them at $2.5 they were pretty fairly valued and the only income would be from div's.

ZEL.NZ i picked up for a good div company too but in all fairness it's earnings aren't going to grow alot over the next decade or so and neither will it's share price. I'm going to hold ZEL.NZ for a while longer as i feel they could be undervalued depending on how they go. I went nuts trying to figure out a EPS% growth rate over the next few years as i have no clue and brokers range from 3%-15%. Now i wouldn't have bought ZEL because i couldn't forecast its growth.

Do you do all you're investing through a company? I do my own tax.

Definitely agree with you around financial literacy and kids etc haha.

Thanks stoploss.

[Wolf]

Cheer's KW, Tumeric

[Fred114]

Cheers KW,

...and possible in the USA with the high NZD ......



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