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17-05-2020, 11:52 AM
#101
Member
Been an interesting read on a wet sunday morning.I agree that a background in accounting or at least a basic understanding of it is invaluable but i think some knowledge of those running the company and pulling the strings can give a great indication to its possible success or failure.Easily researched in this modern world.Good luck.
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26-05-2020, 01:55 PM
#102
Member
Not sure if this is the right thread for my question but here goes....
I invested small amounts a couple of years ago in the sharemarket to basically test the waters without worrying about losing my life savings - don't put in what you can't afford to lose, right?
I've noticed a few comments on various threads about traders vs investors and it seems like the investors look down on the traders or am I missing something here?
How do you even define a trader? ie hold something for a month, 6 months, a year?
My first share of POT I kept for 2 years before selling with a 20% gain recently while a purchase of shares in ABA during lockdown got me a 110% gain in a little over a month.
It may very well climb further but I'm more than happy with that, as should most people.
Investors who may hold for a very long time may never see that gain so is one better than the other? I mean, it's as simple as making money as far as I can see. Don't investors see it that way?
Curious to see if any long term investors here have thoughts to share
Thanks
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26-05-2020, 03:08 PM
#103
![Quote](images/misc/quote_icon.png) Originally Posted by Not The Chosen One
My first share of POT I kept for 2 years before selling with a 20% gain recently
Possibly an investors behaviour depending on your thoughts at the time of purchase
![Quote](images/misc/quote_icon.png) Originally Posted by Not The Chosen One
while a purchase of shares in ABA during lockdown got me a 110% gain in a little over a month.
Definitely a trade , even if you bought with the best of longer intentions. Although weirdly enough you might get away with this to the tax department (once or twice only) if you were somehow able to demonstrate your intentions.
But I think you're asking more about sentiment and why some people hold for ever. The best answer would be that its the way to get stupendous gains (in some cases) and that one or two huge winners could change your life. The downside to selling even when you make a good profit is that you might miss out on those 10,000% gains that some talk about with shares like XRO or Netflix or ATM etc etc. And the reason I say this is because I did it today, taking a good profit with a company that I strongly suspect will go ballistic! Haha but of course it might not - who knows.
For clarity, nothing I say is advice....
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26-05-2020, 04:35 PM
#104
Member
Thanks for the reply.
Yes, it was probably more about the investors holding for as long as they do. It certainly makes sense when you get those massive gains from the likes of XRO which I did hear from a couple of people who invested in them and did bloody well - an element of luck must come into play in some of those instances I would have thought.
I guess the one's I researched and looked at to see how they performed over the last 5 years got me thinking why invest for that long when in some cases, they were basically flat or losing money the whole time.
There's probably a lot of novices like myself who saw some big drops in mid March and decided to buy like I did with ABA, for example. The harder test may be to come when I can't simply look for someone that's had a huge drop in the space of a few weeks or few days to jump on to.
This site definitely helps when you can get so many perspectives from everyone that makes you think a little bit more.
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26-05-2020, 05:29 PM
#105
I typically invest because
1)I don't want to be taxed on gains
2)I don't wish to be a hypochondriac worrying about about osculations in daily/minute share price movements
3) traders need to be on their game all the time with fancy graphs to tell them when to buy/sell ie I'm a lazy investor ![Smile_2](images/smilies/001_smile.gif)
4) I find if you don't own a particular share on 12 days/365 days you tend to miss the gains
5) Trends are your friend.Over the last xxxx years the market has always gone up over the long term
6) I'm happy to gear up the portfolio when the time is right to maximize the return on capital in what I perceive a low risk/reward company( pays a dividend,low/well managed gearing,growing profitability)
7) I don't wish for a full time job trading,more set & forget
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26-05-2020, 09:01 PM
#106
Plus
8)Interest on borrowing for dividend paying shares is tax deductible for investors
9)The difficulty of being an investor is that there is only less than 10 companies listed in NZ that I would invest in & put in the bottom drawer
10)The management team of the company is top priority.Are they aligned with investors?.Is there good succession planning?Has the company got a long history of lifting turnover while maintaining margins? Any doubt ,stay out.
11)Investors benefit from compounding returns
12)Conversely a trader should be seeking volatility.Any share/company could do.
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26-05-2020, 09:49 PM
#107
I may of mentioned this before on a different thread but the facts are clear about traders and day traders back when I was studying Finance at uni as they are relevant today.
Day traders are those on average that trade everyday and follow purely on 'technical analysis (charting)'. In the US the SEC has plentiful of data on every brokerage account of individuals that trade (this is to maintain regulations so no particular individual gets away with insider trading etc.). Anyways the data shows 2/3rds of the day traders lose money. Of the 1/3rd that can show a profit, maybe 1% can show a decent level of profit over the year. That's a high turnover. The traders that are less hyperactive say once a week or month, again, fall into a less extreme category. However, this group tends to lose the most in 'potential loss gains' ; that is thinking they sold at the high but the share price goes higher, so they're stuck buying at a higher price to get back in. Yet they're still on some profit, they could of made far more by not trying to buy and sell. From the NZ perspective, frequent trades = taxing of the gains. I highly doubt on a net basis, a person with peculiar stock picking or luck would maintain a higher gain than the long term investment approach that could go tax free. I mean right off the bat the tax rate of 10% - 33% + ACC tremendously eats into the gains on an annual basis.
Those that invest, look to 'fundamental analysis' which is the looking of the company's financial statements and business outlook. If you follow Warren Buffet's advice, he says no one can 'consistently' pick stocks well enough to know they will beat the avg index market return ; consistently over a multi-year decade. That is why after his death, what ever is left after he's gifted most of his wealth away, the remainder will go into an index ETF like the Vanguard S&P500. Because to be able to pick individual stocks is really no different than gambling at the roulette table. Just look at all the Kiwi Saver actively managed fund trying to do the same gamble. They market themselves as having privy knowledge or inside info that gets them the better bet but at the end, the biggest losers are the clients.
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27-05-2020, 10:14 AM
#108
Plus
13)Inheritance:What share portfolio will be in your inheritance?
An investment portfolio with set & forget companies
OR a trading portfolio.Good luck with something only you can manage
14)Diversity in a portfolio is the antithesis of returns.The more "spreading the risk" there is, the lower the expected return long term .The averaging out effect on returns
Having cash,bonds TD in a portfolio over the long term(which is expected for retirement savings to lower volatility) lowers the returns by a considerable margin and increase the risk of lower returns long term
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27-05-2020, 11:50 AM
#109
Thought provoking posts SBQ.
Thanks for taking the time.
![Quote](images/misc/quote_icon.png) Originally Posted by SBQ
Canada's choice of pension is a many but TFSA and RRSPs are not mandatory. I recall some years ago the Finance Minister of NZ wanted to make it compulsory for ALL workers in NZ to go into Kiwi Saver. In Canada RRSP is entirely up to you but most choose so because of the ability to defer tax and REDUCES the person's taxable income. I'm not sure if this is done for Kiwi Saver because the small 3% employer matching would make much difference to the person in NZ. I question, if the wage earner were to contribute 8% of their pay into Kiwi Saver, does THAT 8% lower their taxable income? Does IRD recognise you earned say $100K and can take $8,000 off that so your actual taxable income would be $92,000? In Canada they have RRSP contribution limits that you can carry forward if not used so you can have situations where 1 year a person pays so little income tax as they keep lowering their taxable income. I know the carry forword and back for contributions is not allowed in NZ.
....... etc
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28-05-2020, 02:06 AM
#110
I would like to suggest to any "newbies" (I´ve been one for 25 years in this game) reading this thread, that they read Percy´s post 726 on the PAZ thread on the "Unlisted" section. It describes how millionaires are made in this game.
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