Young fullah on board

[born2invest]

Say I buy at todays price of $3.61. I can therefore expect a return of 5.4% p/a if the EPS grows at 15% and I sell it for a P/E of 25 after 7 years.

						25
	1.054
	1.15
year	eps	div	price+div	price	sum div	compounding
0	7.34	2.50	186.00	183.50	2.50	361.00	FALSE	49.18
1	8.44	2.87	216.39	211.03	5.37	380.49	FALSE
2	9.71	3.30	251.34	242.68	8.67	401.04	FALSE
3	11.16	3.80	291.54	279.08	12.46	422.70	FALSE
4	12.84	4.36	337.77	320.94	16.83	445.52	FALSE
5	14.76	5.02	390.93	369.08	21.85	469.58	FALSE
6	16.98	5.77	452.06	424.45	27.62	494.94	FALSE
7	19.52	6.64	522.37	488.11	34.26	521.66	1
8	22.45	7.63	603.22	561.33	41.89	549.83	1
9	25.82	8.78	696.20	645.53	50.67	579.53	1
10	29.69	10.10	803.13	742.36	60.77	610.82	1
	Buy below
	$0.00
	00.00 PE

[samdaman]

hmmmm really interesting born, that spreadsheet seems really handy. would you ever pick stocks like PEB? based on their products and customer base with an expectation of growth? If so do you have research methods to delve into their company and feel more comfortable about putting money on them? Also would you have any comments on post #18 of mine? In my current situation I feel as if a more risky investment would be my best plan of action, would you agree with this or continue to hold onto my cash?

[Harvey Specter]

Makes sense. Starting out with a small amount of capital would I not be better looking to try research into one of these companies at a hope for a better return rather than a longer confident return?

You misinterpreted. They are all great shares, I hold all three with DIL and PEB being overweight. They are just difficult to value using 'traditional' methods.

I do less research than I should. I look at the company story, what their financials are like, and what their growth potential is. I dont calculate a 'target price' as such. The downfall with my method is I dont have an exit strategy so have read up a bit on this these holidays.

[born2invest]

hmmmm really interesting born, that spreadsheet seems really handy. would you ever pick stocks like PEB? based on their products and customer base with an expectation of growth? If so do you have research methods to delve into their company and feel more comfortable about putting money on them? Also would you have any comments on post #18 of mine? In my current situation I feel as if a more risky investment would be my best plan of action, would you agree with this or continue to hold onto my cash?

No I wouldn't pick a stock like PEB. Firstly it doesn't make and profit. Secondly I have no idea what the future for cancer research will look like in 10 years time. I can't pick with even a little bit of certainty if the company will even be around in 10 years time. It might be broke. Compare this to a company like MFT, POT or ANZ. Trucks or ships will still need to transport goods across the world in 10 years time. More people want to live in NZ and our exports should grow to meet international demand so more goods transported. ANZ will be around because people are always going to borrow money for houses, businesses and use bank accounts for the next 10 years time.

I would read all their annual reports from cover to cover. Talk to anyone who works there or customers who have seen or used their products and services. Anyone in the research industry that has an opinion on the company, etc.

You say "hope for a better return" in your post. Is that what you want to base your investments on? I might as well buy lotto tickets because I hope I can win. Come on buddy, you have read The Intelligent Investor, it explains the difference between and investor and a speculator. I suggest you read that chapter again.

I would hold onto your cash and do more research on what makes a good investment. Investing in stocks is not a 100m sprint it is a marathon. So pace yourself and get your head sorted out so you can make rational decisions rather than getting too excited because you see the squiggly line of DIL, PEB, SUM go up so it must be a good investment. Read all you can on investments, get a clear head, put together a good plan and stick to it.

When I first started I got extremely excited with stocks. I watched the prices every day and got all these big ideas in my head about how I was going to make my millions. Now that I have a plan, I stick to it. I don't let emotions rule my thinking and stick closely to my strategy to the point that investing has become emotionless and I'm following a process.

Your posts look very familiar because I used to say exactly the same things on a different forum Aussie Stock Forums under a different username with all these exciting plans. I soon learned the ones that harped on about the likes of DIL, PEB made lots of money on those stocks, but because they were the speculative type, they also lost lots of money on other stocks, but they never talked about them. The people I take advice from on this forum are the likes of level headed people such as Sparkytheclown, Snoopy, KW, etc who follow a process and don't let emotions rule their thinking.

[samdaman]

You misinterpreted. They are all great shares, I hold all three with DIL and PEB being overweight. They are just difficult to value using 'traditional' methods.

I do less research than I should. I look at the company story, what their financials are like, and what their growth potential is. I dont calculate a 'target price' as such. The downfall with my method is I dont have an exit strategy so have read up a bit on this these holidays.

I may have misconveyed rather than misinterpreted, I understand they are difficult and inaccurate to value, my question lies more around what one may look at to get a better idea about a company in the pursuit to get a better idea of how a starting up company will grow

No I wouldn't pick a stock like PEB. Firstly it doesn't make and profit. Secondly I have no idea what the future for cancer research will look like in 10 years time. I can't pick with even a little bit of certainty if the company will even be around in 10 years time. It might be broke. Compare this to a company like MFT, POT or ANZ. Trucks or ships will still need to transport goods across the world in 10 years time. More people want to live in NZ and our exports should grow to meet international demand so more goods transported. ANZ will be around because people are always going to borrow money for houses, businesses and use bank accounts for the next 10 years time.

I would read all their annual reports from cover to cover. Talk to anyone who works there or customers who have seen or used their products and services. Anyone in the research industry that has an opinion on the company, etc.

You say "hope for a better return" in your post. Is that what you want to base your investments on? I might as well buy lotto tickets because I hope I can win. Come on buddy, you have read The Intelligent Investor, it explains the difference between and investor and a speculator. I suggest you read that chapter again.

I would hold onto your cash and do more research on what makes a good investment. Investing in stocks is not a 100m sprint it is a marathon. So pace yourself and get your head sorted out so you can make rational decisions rather than getting too excited because you see the squiggly line of DIL, PEB, SUM go up so it must be a good investment. Read all you can on investments, get a clear head, put together a good plan and stick to it.

When I first started I got extremely excited with stocks. I watched the prices every day and got all these big ideas in my head about how I was going to make my millions. Now that I have a plan, I stick to it. I don't let emotions rule my thinking and stick closely to my strategy to the point that investing has become emotionless and I'm following a process.

Your posts look very familiar because I used to say exactly the same things on a different forum Aussie Stock Forums under a different username with all these exciting plans. I soon learned the ones that harped on about the likes of DIL, PEB made lots of money on those stocks, but because they were the speculative type, they also lost lots of money on other stocks, but they never talked about them. The people I take advice from on this forum are the likes of level headed people such as Sparkytheclown, Snoopy, KW, etc who follow a process and don't let emotions rule their thinking.

I haven't finished the intelligent investor yet, it's going along pleasantly though. I do understand the difference between being speculative and making informed decisions. I also agree a decision made on the stocks mentioned above right now would be speculative however this is why I asked how one would go about making that informed decision. I don't see my self as an excited youngster trying to base my decisions off vigour and adrenaline, I'm simply weighing up my options on companies which are growing against more established companies which could give more reliable returns. Even on 15% p.a on $2000 I'm only looking at a couple 100 absolute max profit which is nearly not worth keeping my free cash locked up in and 15% would be a great pick for a stock no?

I want the skills to be able to make that informed decisions on these risky growing companies just as much as the established ones. So in response I wanna say I'm staying level headed, not trying to rush into anything. DIL, SUM and PEB are just companies of interest, so no I don't want to base my investments off squiggly lines, new or rumours. But I do wanna take risks while I'm young and the amount of money I'm investing is relatively low

[Schrodinger]

If you are investing for the long haul build a portfolio then add to it. I started with banks then moved into Tech. If you are looking for excitement go to the casino. The less excitement at the start while you build teaches you good lessons and you can properly balance with more risky stocks as you gain experience. I dont recommend starting with risky tech stocks. Remove your emotions and trade on facts not hype.

[Harvey Specter]

I may have misconveyed rather than misinterpreted, I understand they are difficult and inaccurate to value, my question lies more around what one may look at to get a better idea about a company in the pursuit to get a better idea of how a starting up company will grow

They are all growth stocks so you need to understand what growth the market is factoring in and determine whether that is reasonable.

One reason why I dont prepare my own spreadsheets is that it is highly unlikely that mine will be more accurate than the guys/girls who do it for a job who have access to more info and better spreadsheets.

[samdaman]

If you are investing for the long haul build a portfolio then add to it. I started with banks then moved into Tech. If you are looking for excitement go to the casino. The less excitement at the start while you build teaches you good lessons and you can properly balance with more risky stocks as you gain experience. I dont recommend starting with risky tech stocks. Remove your emotions and trade on facts not hype.

My current situation is I'm starting small, very small. I've got 2k from my summer job and probably won't be able to add to that through the year. I'm well aware against trading the hype but do you even think it's worth it then to try starting a portfolio with 2 grand?

[Schrodinger]

Yep I did.

[samdaman]

Yep I did.

brokerage will kill it a bit, but if I've only got a little I can only expect to bring in a little. looks like its time to start building up a nice list of companies to watch