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Young aspiring investor in need of education (not tips!!)
jasper mowatt
Posted: 28 December 2012 16:27:25(UTC)
#1

Joined: 18/06/2012(UTC)
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Hello.

Well to cut straight to the point, I am 18, I've got some shares of my own however I am not very good at making money from them.
So I am looking for someone who is experienced, and can teach me the ways - I am not looking for tips on what to buy etc I would just like someone who knows what they're doing and is willing to share some of their expertise with me.
I would like to learn how to trade, things to look out for, spot things that I wouldn't necessarily see if I have not been taught to look for them and so forth.
To reiterate, I am not asking and I wont ask for any dealing tips, I am just looking for someone who can 'take me under their wing' and teach me the ways of investing.
I am not in a position where I can pay for this, so it's purely just you seeing me progress and develop into something better than what I am now.

I understand this is a long shot, and most people who read this will not be willing to invest a little bit of their free time in educating me, however if you read this and like the idea of sharing your knowledge with me, I would be very grateful to hear from you and we can sort out emails/numbers to converse over.

Thank you for taking time to read this and hopefully you can spend a little bit of time speaking to me about what you do and how you do it.

Jasper Mowatt
Roydo
Posted: 28 December 2012 19:30:38(UTC)
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Joined: 10/02/2012(UTC)
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Jasper,

good on you for taking an interest. My view, for what it is worth, is that investment, especially of your own cash, is YOUR opinion. There are no rights or wrongs concerning your opinion of whether a share or a commodity is the right one to buy or sell.

One, painful, lesson I will pass on is that there is a world of difference between investing, and speculating. Investing is long term, (boring I know, but true), speculating is a mugs game.

And if you do not understand what you are buying, dont buy it. Thats two.
2 users thanked Roydo for this post.
jasper mowatt on 28/12/2012(UTC), Clive B on 30/12/2012(UTC)
jasper mowatt
Posted: 28 December 2012 20:55:00(UTC)
#3

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Thank you,
However I disagree, there is a right and wrong; you can make money - Right, lose money - Wrong.
And I want to learn how to make the right choice. I understand its not simple or easy, but I am interested enough to commit to the complexities and difficulties (plus risk) in order to try and get an understanding of both investing and speculating.

The only way for one to understand is to learn and practice.

Can I just ask why you say speculating is a mugs game? Is it purely due to the greater risk involved?

I must comment that my original post showed my naivety with categorizing investing and speculating together. I now am aware of the large contrast between them so thank you.
jeffian
Posted: 28 December 2012 23:24:59(UTC)
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Jasper,

The alarm bells ring when you say "I would like to learn how to trade". Many people start out with the idea that they can start with a little capital and "trade" their way to a fortune. It's most unlikely to happen. All the stats show that the vast majority of daytraders/short term traders lose money. You are only 18 and the fact that you are even interested in this subject is a huge plus; time is the friend of investors and the earlier you start the more you are likely to make, but it is a long haul which requires patience. You are most likely to learn from experience but the two bits of advice I would give you are
1) don't be afraid to do nothing! My Old Mum (89) says to me that she regrets not being "cleverer" about her investments but whenever she has had any spare cash she's bought something, tucked it away and never sold it and, as a result, has a portfolio to die for with an income to match. If you buy shares in solid companies that are profitable and pay dividends, Masterly Inactivity can be a perfectly valid investment strategy. If you can afford not to take them, reinvesting dividends into more shares in each company (most offer a DRIP plan) has historically proved to provide the best returns of all.
2) If you can't resist the lure and excitement of trading (and you probably won't - you're 18!), run a dummy portfolio until you're absolutely sure you have a strategy that works for you and certainly don't cash in your existing investments to 'play the market'. The odds on that ending in tears are very high. When/if you do start trading for real, never commit more than you are prepared to lose.

All the best to you.
Roydo
Posted: 29 December 2012 17:47:51(UTC)
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jasper mowatt;17321 wrote:
Thank you,
However I disagree, there is a right and wrong; you can make money - Right, lose money - Wrong.
And I want to learn how to make the right choice. I understand its not simple or easy, but I am interested enough to commit to the complexities and difficulties (plus risk) in order to try and get an understanding of both investing and speculating.

The only way for one to understand is to learn and practice.

Can I just ask why you say speculating is a mugs game? Is it purely due to the greater risk involved?

I must comment that my original post showed my naivety with categorizing investing and speculating together. I now am aware of the large contrast between them so thank you.


What I mean by no right or wrong relates to why YOU think a share is worth buying. For example, your youth will probably mean you are far more up to speed with some companies than you might think, so if a "seasoned" pro tells you not to buy because of some technical aspect, your knowledge as a consumer of their products might be a better indicator.

UK consumers are a pretty sophisticated lot you know. When the economy started going downhill a few years back, any housewife could have told you that more people were shopping in Lidl & Aldi, months before the professional analysts cottoned on!

Remember, one definition of an economist is someone who sees something happening in reality, then proves it via theory.

Speculating is, I feel a mugs game because it is a short term bet based on the movement of a particular asset. Now if your knowledge is such that you can predict, with some certainty that your information is spot on, then fine, but, IMO, most speculators do not. If this is not the case, why do you think that these same experts invest in huge insurance policies to insure against them getting their punts wrong? A bookie calls it "laying off a bet", a speculator calls it a "derivative". Same thing really.

Good luck.
Jeremy Bosk
Posted: 29 December 2012 20:22:48(UTC)
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Visit Motley Fool UK, iii.co.uk, advfn.co.uk and of course Citywire and look for articles on investing for beginners. If you don't understand or disagree ask for comments here or elsewhere. Be prepared for occasional stupidity. Read and think. Try to apply the lessons to real companies in a dummy portfolio.

Visit the public library, preferably a large one, glance through a few of the books there and thoroughly read one or two that seem sensible.

Read a paper which has decent business coverage. Visit the library for the FT, Investors Chronicle, Economist. Read the business pages of the Telegraph, Guardian, Scotsman or of course the newspaper summaries on Citywire. You do not have to agree with the politics of any of those publications to benefit from the actual reportage.

The London Stock Exchange has an enormous amount of information free of charge including the ability to download company reports. You should read one or two annual and interim reports of companies in different sectors to get a feel for the sector and the quality of historical information available. You can usually download these from company web sites and get a feel for the company and its management by what is available and how accessible it is. The accounts may seem impenetrable: so look up the terms used on Google or similar. The investment books in the library will help. If this all seems too time consuming or difficult, at least read the statements by the chairman and managing director.

Check what is said by the company against what is said by the media and against your own observation. Anybody looking at Woolworth's stores over the last twenty years could have seen a company on the slide.

When you buy a share write down, in detail, why you do so.
When you come to sell write down why.

Keep the records - for decades - and review them at least once a year to see if any of your actions seems particularly well or ill judged.

Don't try and be too clever in all areas at once. Learn one way to pick stocks and sectors before you try to learn all about spread betting, CFDs, covered warrants, commodities, futures and all the rest of it. Then learn another way to pick stocks, experiment and compare the results.

Remember that if it seems too good to be true, it very likely is too good to be true.

Do not buy and sell too often because the costs destroy your profits.

Do not deal in penny packets because of the cost issues. Work out the percentage of the deal taken up in dealing spreads and brokerage. Investing via one of the regular investment plans offered by brokers and fund managers gets around this but has drawbacks - usually cost and timing. Look up articles on regular investing / investment plans.

Do not over diversify. If you hold 20 stocks and one doubles while the rest do nothing, you have made 2.5 per cent. You get almost all the benefits of diversification with just ten stocks. The smaller your portfolio in numbers of stocks, the more essential it is to have stop losses.

There are two ways to build diversity. One is to make your first investments in generalist investment trusts. The other is to pick your first investment very carefully and watch it like a hawk. Repeat until you have a more balanced portfolio.

Run your winners and cut your losers. If you sell a stock after it has fallen 20 per cent then put the proceeds into another stock, that new stock needs to rise 25 per cent to leave you at break even. Wait to sell until the first stock falls 50 per cent, then the new stock needs to rise 100 per cent to leave you back where you started.

Loss aversion is the investor's worst enemy. I have a friend who repeatedly buys speculative shares. A great many go down and down and down. He refuses to sell them until they "come back up". Most never do. He then sells his few winners and buys more speculative shares in the hope of restoring his fortunes. He has been doing this for thirty odd years and does not learn - despite telling me that he has read the articles on loss aversion and investor psychology that I send him. It is just like those who lose money at the casino and then double their bets to make it back.

Doing fundamental research on companies, sectors and markets is time consuming. You should use some sort of mechanical sieve to narrow your selection. The portfolio selection tools on Digitallook.com are as good as most. I am no longer employed so have plenty of time to research but find keeping track of my actual portfolio, a short list of instant replacements and a longer list of replacements for the short list keeps me quite busy.

I use charts as an indicator of changing sentiment, nothing more.

Talk to people who might know things in real life (not on line). Let them know what interests you. They may give you pointers to ideas or to other people. At the very least you will gain confidence from the general level of ignorance :-)

Read and think all the time.



3 users thanked Jeremy Bosk for this post.
s webster on 02/01/2013(UTC), Guest on 02/01/2013(UTC), banjofred on 03/01/2013(UTC)
Income Investor
Posted: 30 December 2012 17:57:07(UTC)
#7

Joined: 18/09/2012(UTC)
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Jasper

A lot of good advice here - but probably too much to absorb?

If you want a simple income-based approach, look at my website - but don't be deceived by the fact that my portfolio being up a third this year: this is quite unusual and won't be repeated (sometimes it's just luck). My approach is a bit more holistic - and involved thinking about your expenditure as much as your investment income.

Good luck

http://www.the-diy-income-investor.com/

gggggg hjhjkl;'
Posted: 31 December 2012 19:56:35(UTC)
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Jasper

As an investor of some 15 years standing I have suffered my share of LOSSES (some quite big) and I have read many of the standard texts on the subject of investing.

I celebrate your wish to invest. My road has been a bumpy one littered with mistakes, as well as enhanced by some outstanding successes. the successes outweigh the losses.

I will not share the strategy I have developed but I will share the key points I have learned. I suggest:-

1) listen to others and absorb the information you read, but act on advice and information slowly and with great care.

2) learn by your mistakes (you will make them) and never, never repeat them.

3) Do not gamble (speculate), get rich slowly (act in haste, repent at leisure). Never, never borrow to invest, there in lies the way to disaster.

4) keep your costs to a minimum (avoid OEICs and Unit Trusts like the plague), this will be a key factor in the success you achieve.

5) Develop your own investment strategy. DO NOT follow the herd ( probably one of the most difficult elements of all).

6) never, never listen to experts (IFAs), if they are so good why are they commenting/advising at all? Why are they not millionaires already.

7) DO NOT use theoretical portfolios, there is no substitute for experience, real losses CANNOT be simulated!!

8) I have learned that buying is EASY, SELLING is very, very difficult.

9) Always listen to the comments of the people you violently disagree with. Sounds silly but I have learned by bitter experience that more often than not their comments are worthy of a great deal more thought than those of the people you agree with.

10) KEEP PROPER RECORDS of your exploits, too often I see people who have no real idea of what they have achieved (if anything), purely because they have no knowledge of what they have done.

Good Luck and may your efforts by justly rewarded.




wydffart
Posted: 01 January 2013 10:58:42(UTC)
#9

Joined: 02/12/2012(UTC)
Posts: 1

My experience: about 20 years ago, after reading all of the tips and advice from the magazines/newspapers, I ended up with 10 investments that actually ended up worthless. Now I stick to Investment Trusts. The most boring investment I made from decades ago ended up being the best- Invesco Perpetual High Income.
jeffian
Posted: 01 January 2013 18:47:18(UTC)
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Plenty of good advice here and I only see one comment with which I would strongly disagree -

"7) DO NOT use theoretical portfolios, there is no substitute for experience, real losses CANNOT be simulated!!"

I previously advocated using a dummy portfolio to practice trading strategies and I certainly don't see why one needs to lose real money to learn a lesson. The shock of seeing what you could have lost is just as salutary. A lesson it took me a long time to learn - and I still slip occasionally - is that the preservation of capital is paramount; a significant or total loss can take years of overperformance to recover (a 50% loss requires a subsequent 100% gain just to put you back where you started).
Matthew Charles Flinders
Posted: 02 January 2013 10:24:51(UTC)
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Hi Jasper,

I'm 25 years old and i have roughly 2 years investing/trading/speculating experience.

Long story short, dont waste your time and money trading/speculating. Focus purely on investing for the long term in shares. You ideally want to invest a min of £1k each time (to minimise the impact of the dealing charges). if you can't front that money straight away, invest in either funds/investment trusts and build up to that amount.

You're starting early so you can take maximum advantage of cumulative interest. the returns may seem small at first, and they will be, however that snowball will grow with time...

'Rome wasn't built in a day'
snoekie
Posted: 02 January 2013 16:50:54(UTC)
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Joined: 26/08/2008(UTC)
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Jasper, may you prosper, BUT DO take note of what Jeremy Bosk and gggggg have said.

I do not endorse all that Jeremy has said, above my head, but his basics are sound and solid.

A lesson. Previously I bought L & G and Old Mutual, and when their prices collapsed I bought more (as did my brother, I suspect on my coat tails).

Initially they were bought on tips seen (I do not rely on tips and I do research, perhaps not as much as Jeremy) but I also consider the sector they are in and does the tip make sense me. That is a very personal assessment.

By the time I started investing, with the benefit of capital from a surprise inheritance 20 years ago, I had been around more than a few years and had absorbed, almost by osmosis, a lot of news that I had not deliberately set out to gain.

Old Mutual was a name I had known since my youth and Legal & General was another that had been around for years, so I bought in, after looking at their history of prices etc. I do not really understand the balance sheets, but debt is also an important factor, the higher the debt the more wary I am.

Over the years OM rose (and fell) and L & G rose, but oh so slowly, but both paid divis.

In the crash they fell heavily, and I bought in more on the falls, even when they were at their nadir.

Then they rose, showing decent profits on the original investment, and with a prospect of further biggish fluctuations, so I sold with the intention of taking advantage of the fluctuations. It didn't happen. So now I do not hold either of the shares, but would have been 60+% better off if I had continued to hold.

However, I now do hold other quite good shares (from that money) also yielding decent divis.

So, I lost (but didn't lose because I made a decent profit on selling) because I got greedy when I tried to speculate. The loss is on the ongoing rise. I sold L & G @ £0.80 and OM @ £1.15. Today they stand at £1.49 and £1.81 respectively.

As one of the indicators as to investment also look at the shares on http://uk.reuters.com/business/markets, typing in the name of the share and looking at the analysts consensus, as a guide (never the be all and end all). I have the site bookmarked for easy reference.

I hold some fifty different holdings of shares, a number of which I will be selling to consolidate the number of holdings, the vast majority of which I got on tips from papers, and the bulk of which have made decent progress, but are smallish, £4-8k. Even with my dogs, Vodafone, RBS, Lloyds, Cookson, Invensys etc (holdings of long standing on which I have, still, losses) I am quids in, 50% up on money put in. Taking into account profits made on takeovers of investments, disregarding the original input, I am something like 2-300% better off, e. g. starting with say £10k, I am at £30+k, as an example, not actual figures.

I do have some quite speculative holdings, largish amounts, bought on falls, with 2 likely to come good, when the % profit ratio will increase sharply in the next few years, I am taking the long view.

At your age, I would go for shares paying divis, because that provides more money for more investments. In decent companies, take advantage of shares in lieu of dividends (no charges). I did this with HSBC & Prudential (etc) with decent results. NEVER listen to the registrars who invite you to buy with the dividends, they charge for this and do it merely to add to THEIR profits.

I suggest do not trade, most investments are a speculation, and of the 1p shares, I am better than break even, by sheer luck, but in terms of shares, I have lost. Do watch their track record, are they moving forward on profits, i.e. earning money, as opposed to spending (losing) money digging/drilling for it.

Boring, perhaps, but quite profitable.
Graham Barlow
Posted: 03 January 2013 10:09:34(UTC)
#13

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After a life time of experience investing for familiy savings ,Self invested Pensions and the like. I have one profound piece of advise, and that is get out as soon as the Politicians start to stick their busibody noses in to any investment. Where they interfere losses loom large. If you dont believe me look at their track record of interference over the last few decades you will see endless portfolios ruined by them from Pensions to Banks from interest rates to to Railways. It is endless . Always avoid like the plague. Mind you every now and then is an un noticed Government Gem to be seized like SERPS for example. The canny few who spotted the real hidden benefits here got away with the loot, it didnt last long but pays to examine everything closely before dismissing. Good Luck, and Happy Hunting Grounds.
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