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Back again
Hi Tom, it was only a few months ago when you were recovering from your back complaints, it looks like I have now been struck down with a similar debilitating problem.
I must admit I have no idea how I managed to trigger it this time but I have had a low level back irritation for the past month or so, then on the Monday it has hit me with a vengeance.
I could hardly move at work, just about managed the drive back at the end of the day.
Now I have a shooting sciatic pain down the right leg, along with numbness (seems to alternate). The doctor has given me a course of Codeine tablets but so far they are not improving things.
Maybe humans have evolved beyond their physiology, after all we don't see many other animals wandering around with backache.
I'm hoping a week off will see the worst away, ouch.
Regards
Neil
Hello Don,
I had various configuration settings that I was using on TZN, just to see what effects they had.
I usually start with a standard $10,000 portfolio with a 40% cash setting.
As TZN was a junior miner here in South Australia I decided to use use wide trading bands of 20% either side.
My email is ns_donaldson@internode.on.net
I'll try your settings to see how they compare.
I just tried it again to make sure it wasn't some temporary Yahoo data problem but got a similar result.
Settings: Buy/Sell SAFE 20% Minimum buy 20% min sell 15%, Max cash 50%. Initial Cash level 30%. $10,000 portfolio size.
Regards
Neil
Close of Smorgon Steel Account.
Well, the end of my Smorgon (SSX.AX) account as a customer bought my last stock.
I first added SSX to the warehouse on Feb 6th 2004 at a price of 91c.
Unfortunately it was all sells along the way without any chance to buy in at lower prices. My last sale was at $2.23 not a bad run and along the way the cash has been recycled into other stocks.
In this case AIM would have not beaten Mr Buy & Hold, returning just 80% whereas the buy & hold return would have been around 145%.
I'd be interested to know how many purchases would have to be made for the AIM account to beat the buy and hold. In this case I had 5 sales and no buys.
Regards
Neil
Hello Brian,
Here is a link to a useful piece of software that gives a gauge of the volatility of the stock.
http://www.automaticinvestor.com/freesoftware.html
It basically works out the amount of time a stock price spends a certain percentage away from its 26 week moving average.
So, the higher the percentage the better.
Regards
Neil
Hello Mark,
My copy A.I. Version 3, service pack 1.
I do use the function in A.I. to see if there are any updates available and it always says I have the most recent service pack.
You should be able to tell from that info I have given.
I have checked the three different areas that show the buy/sell advice and they all appear to show the same info, from the trading advice tab to the Report file.
All show these odd or repeated trading dates.
Hope this is of help
Regards
Neil
Hi Toofuzzy,
The normal operation of AI is fine, it seems to be the back-testing that is the problem and again I have not noticed it with all stocks which leads me to the conclusion that it may be something to do with the Yahoo data.
Maybe the date format from Yahoo is in American ie mm/dd/yy where as my PC is in standard dd/mm/yy format.
Could that be my problem, Mark? are you out there.
Regards
Neil
Hello Mark,
I've noticed something strange while using the backtester in A.I.
When I checked the Buy and Sell advice it seems to be repeating information and therefore giving an exaggerated performance result.
Here is a printout of the Buy/Sell advice for stock TZN.AX which is an Australian Stock.
01-Nov-04 START shares @ $0.1400 own 49,999 valued @ $6,999.86 Cash: $3,000.14 Portfolio Value: $10,000.00
10-Feb-05 SELL 8,182 shares @ $0.2200 own 41,817 valued @ $9,199.74 Cash: $4,767.23 Portfolio Value: $13,966.97
11-Feb-05 SELL 5,454 shares @ $0.2500 own 36,363 valued @ $9,090.75 Cash: $6,097.78 Portfolio Value: $15,188.53
17-May-05 SELL 7,216 shares @ $0.3200 own 29,147 valued @ $9,327.04 Cash: $8,373.95 Portfolio Value: $17,700.99
01-Jun-05 SELL 3,318 shares @ $0.3500 own 25,829 valued @ $9,040.15 Cash: $9,502.30 Portfolio Value: $18,542.45
03-Jun-05 SELL 3,997 shares @ $0.4200 own 21,832 valued @ $9,169.44 Cash: $11,148.09 Portfolio Value: $20,317.53
01-Nov-04 BUY 23,801 shares @ $0.1400 own 45,633 valued @ $6,388.62 Cash: $7,783.00 Portfolio Value: $14,171.62
02-Nov-04 BUY 17,456 shares @ $0.1200 own 63,089 valued @ $7,570.68 Cash: $5,655.33 Portfolio Value: $13,226.01
10-Feb-05 SELL 6,320 shares @ $0.2200 own 56,769 valued @ $12,489.18 Cash: $7,012.78 Portfolio Value: $19,501.96
11-Feb-05 SELL 6,562 shares @ $0.2500 own 50,207 valued @ $12,551.75 Cash: $8,620.33 Portfolio Value: $21,172.08
16-May-05 SELL 4,190 shares @ $0.2700 own 46,017 valued @ $12,424.59 Cash: $9,718.68 Portfolio Value: $22,143.27
17-May-05 SELL 6,460 shares @ $0.3200 own 39,557 valued @ $12,658.24 Cash: $11,752.93 Portfolio Value: $24,411.17
01-Jun-05 SELL 3,893 shares @ $0.3500 own 35,664 valued @ $12,482.40 Cash: $13,082.53 Portfolio Value: $25,564.93
03-Jun-05 SELL 5,404 shares @ $0.4200 own 30,260 valued @ $12,709.20 Cash: $15,319.26 Portfolio Value: $28,028.46
08-Dec-05 SELL 3,092 shares @ $0.4600 own 27,168 valued @ $12,497.28 Cash: $16,708.63 Portfolio Value: $29,205.91
17-Jan-06 SELL 1,839 shares @ $0.5500 own 25,329 valued @ $13,930.95 Cash: $17,687.13 Portfolio Value: $31,618.08
20-Jan-06 SELL 3,166 shares @ $0.6400 own 22,163 valued @ $14,184.32 Cash: $19,680.42 Portfolio Value: $33,864.74
24-Jan-06 SELL 2,913 shares @ $0.8000 own 19,250 valued @ $15,400.00 Cash: $21,977.87 Portfolio Value: $37,377.87
27-Mar-06 SELL 2,007 shares @ $0.9600 own 17,243 valued @ $16,553.28 Cash: $23,871.64 Portfolio Value: $40,424.92
19-Apr-06 SELL 2,216 shares @ $1.2700 own 15,027 valued @ $19,084.29 Cash: $26,653.01 Portfolio Value: $45,737.30
25-Apr-06 SELL 759 shares @ $1.4000 own 14,268 valued @ $19,975.20 Cash: $27,682.66 Portfolio Value: $47,657.86
27-Apr-06 SELL 1,006 shares @ $1.7500 own 13,262 valued @ $23,208.50 Cash: $29,410.21 Portfolio Value: $52,618.71
13-Jun-06 BUY 1,432 shares @ $1.0500 own 14,694 valued @ $15,428.70 Cash: $27,873.66 Portfolio Value: $43,302.36
14-Jun-06 BUY 2,331 shares @ $0.9500 own 17,025 valued @ $16,173.75 Cash: $25,626.26 Portfolio Value: $41,800.01
01-Nov-04 BUY 122,948 shares @ $0.1400 own 139,973 valued @ $19,596.22 Cash: $8,380.59 Portfolio Value: $27,976.81
03-Nov-04 BUY 52,642 shares @ $0.1300 own 192,615 valued @ $25,039.95 Cash: $1,504.18 Portfolio Value: $26,544.13
10-Feb-05 SELL 8,178 shares @ $0.2200 own 184,437 valued @ $40,576.14 Cash: $3,270.39 Portfolio Value: $43,846.53
11-Feb-05 SELL 19,146 shares @ $0.2500 own 165,291 valued @ $41,322.75 Cash: $8,023.94 Portfolio Value: $49,346.69
16-May-05 SELL 13,340 shares @ $0.2700 own 151,951 valued @ $41,026.77 Cash: $11,592.79 Portfolio Value: $52,619.56
17-May-05 SELL 21,245 shares @ $0.3200 own 130,706 valued @ $41,825.92 Cash: $18,358.24 Portfolio Value: $60,184.16
01-Jun-05 SELL 12,848 shares @ $0.3500 own 117,858 valued @ $41,250.30 Cash: $22,822.09 Portfolio Value: $64,072.39
02-Jun-05 SELL 7,527 shares @ $0.3700 own 110,331 valued @ $40,822.47 Cash: $25,574.13 Portfolio Value: $66,396.60
03-Jun-05 SELL 11,834 shares @ $0.4200 own 98,497 valued @ $41,368.74 Cash: $30,511.46 Portfolio Value: $71,880.20
06-Dec-05 SELL 5,841 shares @ $0.4400 own 92,656 valued @ $40,768.64 Cash: $33,048.55 Portfolio Value: $73,817.19
08-Dec-05 SELL 4,340 shares @ $0.4600 own 88,316 valued @ $40,625.36 Cash: $35,012.00 Portfolio Value: $75,637.36
09-Dec-05 SELL 2,353 shares @ $0.4700 own 85,963 valued @ $40,402.61 Cash: $36,084.96 Portfolio Value: $76,487.57
29-Dec-05 SELL 3,258 shares @ $0.4900 own 82,705 valued @ $40,525.45 Cash: $37,648.43 Portfolio Value: $78,173.88
16-Jan-06 SELL 8,841 shares @ $0.5600 own 73,864 valued @ $41,363.84 Cash: $42,566.44 Portfolio Value: $83,930.28
20-Jan-06 SELL 8,933 shares @ $0.6400 own 64,931 valued @ $41,555.84 Cash: $48,250.61 Portfolio Value: $89,806.45
23-Jan-06 SELL 7,360 shares @ $0.7200 own 57,571 valued @ $41,451.12 Cash: $53,516.86 Portfolio Value: $94,967.98
24-Jan-06 SELL 5,931 shares @ $0.8000 own 51,640 valued @ $41,312.00 Cash: $58,228.71 Portfolio Value: $99,540.71
01-Feb-06 SELL 2,164 shares @ $0.8200 own 49,476 valued @ $40,570.32 Cash: $59,970.24 Portfolio Value: $100,540.56
27-Mar-06 SELL 4,308 shares @ $0.9600 own 45,168 valued @ $43,361.28 Cash: $64,072.97 Portfolio Value: $107,434.25
13-Apr-06 SELL 1,317 shares @ $1.0000 own 43,851 valued @ $43,851.00 Cash: $65,357.02 Portfolio Value: $109,208.02
19-Apr-06 SELL 4,800 shares @ $1.2700 own 39,051 valued @ $49,594.77 Cash: $71,420.07 Portfolio Value: $121,014.84
25-Apr-06 SELL 1,612 shares @ $1.4000 own 37,439 valued @ $52,414.60 Cash: $73,643.92 Portfolio Value: $126,058.52
27-Apr-06 SELL 2,611 shares @ $1.7500 own 34,828 valued @ $60,949.00 Cash: $78,180.22 Portfolio Value: $139,129.22
23-May-06 BUY 926 shares @ $1.1200 own 35,754 valued @ $40,044.48 Cash: $77,110.15 Portfolio Value: $117,154.63
13-Jun-06 BUY 3,156 shares @ $1.0500 own 38,910 valued @ $40,855.50 Cash: $73,763.40 Portfolio Value: $114,618.90
14-Jun-06 BUY 5,962 shares @ $0.9500 own 44,872 valued @ $42,628.40 Cash: $68,066.55 Portfolio Value: $110,694.95
12-Jul-06 SELL 895 shares @ $1.5100 own 43,977 valued @ $66,405.27 Cash: $69,385.05 Portfolio Value: $135,790.32
05-Sep-06 SELL 861 shares @ $1.5400 own 43,116 valued @ $66,398.64 Cash: $70,678.04 Portfolio Value: $137,076.68
06-Sep-06 SELL 828 shares @ $1.5700 own 42,288 valued @ $66,392.16 Cash: $71,945.05 Portfolio Value: $138,337.21
12-Oct-06 SELL 797 shares @ $1.6000 own 41,491 valued @ $66,385.60 Cash: $73,187.30 Portfolio Value: $139,572.90
26-Oct-06 SELL 2,991 shares @ $1.7500 own 38,500 valued @ $67,375.00 Cash: $78,388.60 Portfolio Value: $145,763.60
30-Oct-06 SELL 1,273 shares @ $1.7900 own 37,227 valued @ $66,636.33 Cash: $80,634.32 Portfolio Value: $147,270.65
10-Nov-06 SELL 1,964 shares @ $1.9000 own 35,263 valued @ $66,999.70 Cash: $84,332.97 Portfolio Value: $151,332.67
27-Nov-06 SELL 825 shares @ $1.9300 own 34,438 valued @ $66,465.34 Cash: $85,892.27 Portfolio Value: $152,357.61
15-Dec-06 SELL 584 shares @ $1.9600 own 33,854 valued @ $66,353.84 Cash: $87,003.96 Portfolio Value: $153,357.80
20-Dec-06 SELL 1,915 shares @ $2.1000 own 31,939 valued @ $67,071.90 Cash: $90,992.51 Portfolio Value: $158,064.41
21-Dec-06 SELL 853 shares @ $2.1400 own 31,086 valued @ $66,524.04 Cash: $92,784.98 Portfolio Value: $159,309.02
28-Dec-06 SELL 1,378 shares @ $2.2500 own 29,708 valued @ $66,843.00 Cash: $95,852.53 Portfolio Value: $162,695.53
29-Dec-06 SELL 787 shares @ $2.3000 own 28,921 valued @ $66,518.30 Cash: $97,629.68 Portfolio Value: $164,147.98
05-Mar-07 BUY 3,999 shares @ $1.4300 own 32,920 valued @ $47,075.60 Cash: $91,878.16 Portfolio Value: $138,953.76
11-Apr-07 LAST shares @ $1.9000 own 32,920 valued @ $62,548.00 Cash: $91,878.16 Portfolio Value: $154,426.16
As you can see from those results, the dates appear to be all over the place.
Is this something to do with the Yahoo data date format or something else.
What I'm hoping to do is demonstrate to friends of mine that they would be better off letting A.I. control their stock holdings than
guessing when to buy and sell.
Regards
Neil
Hi Adam
You are basically talking about (I think) what I have been doing for quite a while now, but I've been trading much smaller positions due to the volatility of some of these mining stocks I trade.
Equinox, which I recently sold out of is not exactly a minnow, it is listed on the Toronto Exchange and the Australian Exchange.
My trades have been like the following.
Buy 961 @ $1.03
Sell 480 @ $2.16
Buy 619 @ $1.39
Sell 396 @ $2.10
Buy 580 @ $1.47
Sell 369 @ $2.25
Sell 352 @ 2.37
Sell 563 @ 2.61
As you can see I started with a very small initial stake on the assumption that it could go down first as easily as up.
So, as I buy such a small initial stake my rule is sell half if it doubles or use AIM to buy if it falls.
If it falls AIM will buy me in at lower levels and at lower risk .
I usually limit my buying to no more than five in a row as another risk management tool.
Its a great way of running lots of small volatile stocks, the cash from which I can then filter into more stable dividend paying stocks in one of the Core and satellite type arrangements.
Regards
Neil
Sell & Close of Equinox Minerals.
Thursday saw the last sale in my EQN account.
What a gem this one has been.
My maximum risk in this stock was just over $1000 when I first bought in Nov 2005.
I was interested to see what a small (and I mean small)LDAIM account could do.
There were a total of 3 buys and 5 sales.
Clear profits of $2035 were extracted.
That means that the stock price would have had to have rose by 306% to have given the equivalent Buy and hold profit. The actual rise in stock price has been 250% so, even with a stock price rising over time LD AIM did better than B/H (in this case).
It would have been nice to have this account 10 times bigger but then again you cannot guarantee that you have picked up a dog stock.
Happy Easter to all
Neil
Hello Tom,
We are a bit too far south to have crocodiles in the river, probably around 2000km too far south.
You only find crocs in the north of the Northern Territory, Queensland and Western Australia.
The worst thing you'll find in the river down here is Carp.
I think we are due some rain later in the week so it may be the first signs of a break in the drought.
Regards
Neil
Sell ON Andean Resources,
Alway time to celebrate when you get a first sell on a program.
The AND.AX program was started back at the end of April last year.
They are gold explorers in South America and have come across a good strike.
Again, as I AIM stocks, to lessen risk I put a small amount down upfront to gauge the way the stream is flowing. So, I bought a small quantity at 41c, a second batch at 31c and another batch at 27c. The company has continued to progress towards a completion of a feasibility study that will lead up to a mine or joint venture and the a after the release of some good drilling results the first customer came through the door and purchased stock at 48.5c.
The first sale of the week and a nice way to end the week.
I've posted a couple of photo's (follow the links) to show our local river the Torrens that flows through Adelaide to give you a bit of a contrast.
The first was taken a few years ago and has more water in it than normal while the next shows the result of our drought and possible global warming.
http://img218.imageshack.us/img218/9529/rivertorrens1ri0.jpg
http://img241.imageshack.us/my.php?image=rivertorrens3lw2.jpg
Regards
Neil
Hi Glennpj,
Good to see it is not just me getting the update problem.
It looks like I'll be on manual update until the problem is resolved.
Regards
Neil
Hello AIM Hier
Umm, I wonder if that is the same PME we are looking at. Don't forget to add the AX suffix after the code or you may get a different company.
I just checked my etrade info on PME and it has paid dividend from 2001
here is a list
30/6/07 - 2.5c half year only
30/6/06 - 4.0c
30/6/05 - 4.2c
30/6/04 - 3.5c
30/6/03 - 3.2c
30/6/02 - 2.5c
30/6/01 - 1.5c
Those are all in cents, I'm due a dividend from them in a few weeks.
I think if you look at the technology they have, a network that hospitals and medical practices use to store and distribute medical digital imaging, it is very scalable and they have only started to penetrate the market.
I still remember when I had x-rays of my back that I had to carry them around from the hospital to the doctors, now it is all computerised and accessable on a doctors PC.
Regards
Neil
Survivor Bias,
Hi AIMster, I was interested in a comment made some time ago at a seminar. What we tend to do is look at a company that is currently trading at say $20 then look back 5 years and see when it was trading at $2 and say wow, wouldn't it have been great to buy that stock and hold it.
But what is not mentioned is all the stocks that were around 5 years ago that are not around today, there would be plenty.
But then again just because they are not there now does not mean that they ended their lives in bankrupcy.
I looked at some of the companies that had disappeared from the bourse and it is not as bad as it looks.
Some changed their names, some got taken over by other companies and one of two went belly up.
The ones that got taken over sometimes got taken over at a great premium and would have still made good AIM stock. In fact I have had around 10 companies that have either been taken over of had their names and codes changed and I have still made money on them.
So, sometimes the theory of survivor bias can seen more daunting than it actually is.
Regards
Neil
Hello AIM Hier,
Actually you would be surprised how many companies there are out there which do have ROE's of 40%+,
I could pick pick out probably around 10 without much problem.
But, and this is a big but (so to speak) the key is to buy the stock at the correct price.
Finding a company with high ROE is not difficult, buying it is.
I'll demonstrated why. Most companies that have a high ROE also have a high price. In essence what you are doing is comparing the Market Capitalisation with the Equity in that company.
I own stock in Pro Medicus, PME.AX the ROE, since 1999 is
40.6,
99.6,
79.5
64.6
42.3
32.3
42.8
46.3
Not bad you may say, but the Equity is only $13.2 million
The market cap is $133.0 million so as you can see the Market cap is around 10 times Equity which means that if you bought at the current price you would get a return of only around 4.6%.
The main problem with this company to date is that it pays most of its earnings out as a dividend which is highly illogical to me.
A company with a high ROE should always retain the earnings rather than pay a dividend. It would then compound the returns at the rate of 40%+.
The only reason I can think of that the company doesn't retain the earning is because it cannot deploy the funds in a manner that would help expansion.
I believe that Berkshire Hathaway only paid one dividend in their history then thought better of it and retained the earnings and compounded them at a rate of around 25% per year.
Regards
Neil
Sell on Antares Energy (AZZ.AX)
What a nice AIM stock Antares is, according to my spreadsheet, it has given me a return on funds employed of 125% and it has only moved up 50% from my initial buy price.
It was a public holiday in South Australia today (for the horse race) but the markets were open as all the other states were working.
What a nice suprise to get an email saying some stock has gone flying off the shelves, sold 15% of my holding to a lucky customer.
I'd like to pick up more Antares but I need a 30% drop in price.
Regards
Neil
Hello Adam,
That is true but again that proves the point, diversification is there for people who don't know how to analyse a company properly.
I bet Warren Buffet didn't have any Enron stock
So, diversification is good at an early learning stage but once you gain confidence in your ability (I'm not saying I'm there yet)to analyse a company and work out its worth and it's returns then diversification detracts from results.
Regards
Neil
ETF Correlation,
Hello Aimster, interesting discussion about the correlation of the ETF's. I am wondering if this is because they are perceived to plain financial instruments without any distinguishing characteristics except for their sector.
They have obviously gained popularity over the last five years so they are a relatively new type of investment.
I do not have any ETF's as there are only a couple available on the markets here in Australia so I have had to diversify by still buying individual companies.
I have been trying to make better company selections by looking at the balance sheets, cash flows and other information. I believe if the fundamentals that are behind the company are good then you can quite often pick up the companies that move in a counter direction to the ETF that they may play a part in.
I have been listening to podcasts on the stock exchange website given by a fund manager who is a value investor. He actually rails against diversification saying it is only used by people who do not know what they are doing and want to protect themselves.
I can see what he means.
If you can pick up a company that has a ROE of 40%+ over a number of years, for a cheap price why would you diversify by then picking up another company if a different industry that may have a ROE of 5% and think you are better protected and will make better returns.
You are far better putting all your funds into the one company, if things do deteriorate you should get plenty of warning by the ROE starting to drop. If it eventually drops to 5% the you can look around for new opportunities for AIM.
Regards
Neil
Real Estate making hay.
Isn't it amazing, the market has a 6% fall from its high and already the newspapers and the real estate agents are out spruiking their products in an attempt to get people back into real estate speculation.
I was send two stories telling me that "mums and dads" were deserting the sharemarket and getting back into real estate due to falls in the market.
Wow, that must be some snap decision making going on out there, four days of falls and their portfolio is out of the window and they're bidding up the house prices to even higher levels.
What a shame I can't AIM real estate.
When I first came to Australia, this country had some of the cheapest houses around or at least compared with the UK. Now the prices are amongst the worlds most expensive.
The question I always ask is "What has changed"
The population has not doubled, Australia's population just passed 20 million about 6 months ago, it has a land area of maybe 75% that of the USA.
We are told there is a land shortage, that's why prices are so high. I am skeptical to say the least.
I think you need to look at the easy credit for the answer not a land shortage.
Real estate must be one of the most highly leveraged investments people make (maybe Forex compares) and so many people get involved in the game that the governments live in mortal terror of interest rate rises in case the blame falls on them and they get pulled out of their nice lifestyles and burnt at the stake.
People blame anyone but themselves when it comes to losing money. Take responsibility people.
If house prices rise again I think we'll be seeing 50 year mortgages soon, maybe even, intergenerational mortgages that get passed down the family, the banks would love that.
Regards
Neil
Market bloodbath, end of the world nigh!!
Ho ho ho, I bet the newspaper writers and TV finance reporters just love these large market falls, it allows them to get the dictionary out and use every term of hyperbole ever thought up, massacre, wipeout, devastation.
Come on guys the world has not ended, markets were overvalued and the fools who kept buying need to learn why speculation is a risk/reward game, just the risk side the coin landed face up this time.
Well, trying not to get into the area mass exaggerations all I can say is that it was a day of red figures on my scoreboard.
The market ended it's depressive phase day down around 120 points or around 2%.
I had one bright beacon of green amongst the red as a customer came through the door and bought some more Alinta Ltd (ALN.AX) as rumours of the management buyout surfaced again (no news was released). I got a better price than I'd hoped for and sold 140 at $14.81.
I'm still a long way from the first purchases and it looks like there will be few sales now for a while, but, wait, it is dividend season hooray!!!
Regards
Neil
What a night.
Isn't it amazing! I go to sleep over this side of the world and when I wake up I hear the world stock markets have just lost it.
I must admit I have been writing in my AIM diary recently how unsustainable the week on week rise of the Australian market is.
In the Financial press they keep saying it's good value and keep buying. I have been waiting for the music to stop now.
Interestingly I did some analysis on a company called Fortesque Metals Group (FMG.AX) who I thought looked like a great short as it was so overvalued.
They closed at over $18/share but I reckon the value is more like $3.50.
From my calculations even if they performed to the level of a BHP or RIO with a 40% ROE (which is a historic hight due to China) they would be well under $4.00 and at the moment they haven't dug and ounce of metal out of the ground.
It has been all about news reports pushing the price through the roof and momentum trading.
Interestingly though, the buying hasn't extended to the directors, with all this good news coming out they have been selling stock over the last 2 years.
I think the Aussie market will get a good slapping today as it has been riding on China's back now for three years.
I am preparing to see a lot of red today. I'll wake up the purchasing department, they have been a bit sleepy recently.
Regards
Neil
Sales rush!
The warehouse doors burst open as shoppers snatched up the chance to buy expensive stocks
Out of the door went 27% of Fosters Group Ltd (FGL.AX), about time to as they have been sitting on the shelf for nearly 3 years now gathering dust. The P/E, at 20, was getting a little lofty considering is is supposed to be a defensive stock, the yield has also dropped to 3.2% before tax, the ROE isn't fantastic at around 14%. They half yearly results are out this week so that should cause some volatility.
Customers also so bought some more Smorgon Steel (SSX.AX) for a price of $1.97, leaving me with only a small quantity of around 550 shares on the shelf if someone wants to stump up $2.23 they are all yours.
Good to have the two week sales drought broken.
Regards
Neil
Hi Tom,
That's interesting regarding the stalling of the market considering that there are so many bullish commentaries out there, it seems that, of late, even the bears have turned to bulls so maybe that is the signal that it is about to turn down.
I should take note as our market says "Yes, Sir" to the DOW, rarely it does it disobey.
I'm hoping for a bit of a spring up on Monday as I have some Fosters Group (FGL.AX) to sell, that is through a broker rather than my online account.
You reminded me, I should fill up the water bowl for the birds or the poor things will have their tongues out gasping for a drink,
I have to keep the colourful parrots & lorrakeets happy, check one out on this link (not my photo)
http://outdoors.webshots.com/photo/1102109616051367090ZALMrH
regards
Neil
Mercury Rising
Wow, the February heat is creeping in, one reason not to spend time in a my place with no air conditioning.
The forecast for today was to be 40C but already it is 41.2C (106F) outside so I would imagine by late afternoon it will be past 110F.
It's a times like this you need to think back to the old TV series Kung Fu with David Carradine, in my case rather than walking over rice paper and leaving no prints, my test is to sit perfectly still so I don't sweat in this heat. One wrong movement and I'll be soaked, ah Grasshopper.
Last week there were some record temperatures set in the Wheat Belt of Western Australia when the shade temperatures reached 48C (118F), now that would be a real test of trying to stay motionless.
On the AIM side, not had much action in a couple of weeks now although I have several that are just itching to be sold, I can just tell. I have orders sitting there waiting but all that happens is an approach then a retreat.
The Aussie market breached the 6000 point mark for the first time ever. It seems like all the lessons of 2000 have been forgotten. The market has doubled in value in 3 years, that is unprecidented.
Imagine from the low that the DOW set of around 9000 a few years ago to have it now sitting at 18,000 would you be nervous?
All the financial magazines and papers are saying it will just continue but you know what they say, when everyone is in agreement it's time too look for a seat and wait for the music to stop.
Regards
Neil
4th Sell on CPU.AX
All this talk of global warming (Hey guys, I heard a report that 30% of your fellows had never heard of the term before, can that be true?) has put a bit of a rocket under some of my environmental stocks.
This is my fourth sell on Ceramic Fuel Cells. Wow I am glad now that I bought more at 50c (this was beyond what AIM suggested as it was a secondary cash raising) as I've now sold some at $1.345 which is a nice amount to put back into the cash register.
The market had a bit of a rest today after it big run earlier in the week.
I keep ending up surprised about how far a market can run in one leg without having a 10%+ breather.
Regards
Neil
Hello Ray,
I have been experimenting with different methods of implementing an AIM portfolio.
One of them was to AIM individual volatile stocks putting a minimal amount of cash in upfront.
What I would then do is set a downside SAFE of around 10% as normal but on upside I would leave it open until the stock doubled in price, at which point I would sell half the position
I would then run it as a standard AIM.
This would not produce many sells but because I had around 15 stock it gave more activity than just four or five.
Other stocks I have LD-AIMed and started with a 20% SAFE's as I was not concerned with moving stock as quick as possible but with dividend capture along with a bonus of selling some stock if it moved up beyond it's 'value'
Technology One would fit that category, when I bought it it was one a modest PE and was good value, on my last sell at $1.095 it was getting expensive at a PE near 30 and I think it was valued with one of the value calculators at around 80c.
Regards
Neil
Sale for the week.
Only one sale this week, in Technology One (TNE.AX).
This was a small LD-AIM account I set up in 2004 as I remember. Picked up the shares at 48c, The first sale was at 69c followed by a sale at 88c and on friday a sale at $1.095c.
I am very impressed with the way AIM takes the fear out of holding a position for nearly three years, in my earlier days I was like a nervous rabbit, jumping in and out of stocks in a few days, usually losing money along the way. Now I feel a lot more mature in my stock market dealings.
Started up a new program on small microcap Pro Medicus (PME.AX)
They are a medical software company that have a retrieval/distribution system for medical x-rays, CT scans etc.
The fundamentals seemed sound, no debt, high ROE over the last 5 years or around 45%, good earnings forecasts, no dilutions of stock in their history so far. Stock dilutions irritate me intensely!
Lets see if the fundamentals translate themselves into a bit of price movement.
Regards
Neil
Sales dept. report.
Had a couple of sales recently which is always pleasing, especially with the markets hitting new highs all the time.
At times like this I would prefer to be on the selling side than the buying.
Just over a week ago I sold some Alinta Ltd (AAN.AX) this a large Western Australian Energy utility. I first bought their convertable preference shares a few years ago at $100 each.
The first sale came in Jan 2005 for $133, second sale in May 2005 for $157.
They were then converted to Ordinary shares at a rate of 1:16.2(as I remember) so I had to reset my AIM spreadsheet and start again, then suddenly a management buyout appeared and I got the opportunity to sell more for $12.56 and hoping for another sell at $14.58.
The other stock that went out of the door the other day was Antares Energy (AZZ.AX) which I have mentioned before. They are a gas explorer/producer in the Texas area.
There has been some great volatility in the stock each time a well is evaluated. A chart of the stock is below. I believe they are finally getting a bit of momentum in the upward direction
Regards
Neil
Borrowing to Invest
Hi Extelecom. An interesting on thread on if one should borrow to invest or not.
We are obviously quite conservative when it comes to borrowings that go into companies (stocks) yet the contrast when it comes to property is so stark.
Everywhere I look people are encouraging borrowing to 'invest' in property.
In fact I was recently having a drink with an acquaintance who has got involved with a group with the name "The Investment Club" it sounds like a nice little self help group except for the fact that they are really a company that works with developers to sell off all their properties in a development. They get a favourable price from the developer as it is a 'bulk' deal but then they turn around and sell these on to their club members at a premium (and pocket the difference).
They encourage members to purchase a property per year for 7 years at which point the first property bought has doubled (they claim) in price and is sold off to be begin the cycle again.
My friend had already bought the first property and was now lined up for the second. Increasing the leverage all the time.
Isn't it strange how we have this unshakable belief that leveraging into property is always a sure way to make money but into good income producing growth companies is a no no.
I guess it is all down to the 'greater fool theory" that means that there will always be a fool willing to pay a higher price.
Average house prices (up until year 2000) cost around 4 times annual salary, now they are around double that. I'm told to expect 12% increases in prices into the distant future, what rubbish.
That would mean an house costing $300,000 now, would in 10 years cost $931,754 while assuming an average wage of $60,000 which grows at 4% (noticed ho hard it is to get a pay increase these days) would grow to $88,815 from these figures,
at the beginning a new home buyer would be paying 5 times annual salary for the house.
In ten years they would be paying 10 times annual salary.
So what is the more likely scenario, wages bounding up by 12% per year of property coming down.
Not very easy to AIM property either
Regards
Neil
Good luck with the back Tom,
I know how painful it can be once you have ruptured a disk in the back.
I did mine when I was around 28 while lifting weights at the gym.
I had been in a bit of a rush that day and instead of going through the usual discipline of a warm up I went straight into some squats with around 80kg weight.
The funny thing is, there was no dramatic snapping or pain. In fact I finished the session, legs a bit shaky. The first time I noticed anything wrong was a sore calf muscle that I couldn't shift (even with pain killers).
Two weeks later get back to the gym and do some squats, I didn't use a rack, just picked the weight off the floor and swung it over my head and onto my shoulders, now, that was dramatic. I felt a shooting pain in my back and just collapsed onto the floor.
After that incident I was in pain for 9 months, it gradually got better with my own efforts at rehab (doctors were hopeless)and now mostly ok unless I do any lifting which I try to avoid.
Let me know how you go with your treatment, you never know I may have to do something like that in the future.
Regards
Neil
Hello Aimster
I'm in more of the AIMing individual stocks camp because as you mention, by AIMing a portfolio, it brings a bit of personal judgement into what stock should be bought and sold and maybe that is the fallable bit of the system.
I do take extra precautions when AIMing individual stocks especially the small ones in that I watch the amount of money I have allocated to them, I don't like to go much over $3,500 in total before I begin to see some sales.
So far this has protected me from some anchors amongst my picks. One stock I bought started at around 48c is now 5c. I stopped buying at 23c. Another has gone into administration, unfortunately I made the error of putting too much into this one as it was a "sure thing" tip. Gee and to think I had trained myself not to fall for these things, of well, a fool and his money.....
a few of my other small holdings that looked like dud's picked themselves up and have now rewarded me wonderfully, it's really a case of picking the right management.
Here is to a successful New Year.
Regards
Neil
Happy New Year Everyone!
May next year bring much volatility to the markets and may AIM add to our accounts and lifestyles.
Best regards to all on this great board.
Neil
Another sell before the end.
Wow, Ceramic Fuel Cells (CFU.AX) gave me just a little more to celebrate with a third sale in around 2 weeks, this time at $1.13.
Would have been nice to have held out for a little more as the price hit $1.22 at yesterdays close.
I placed another sell in the market at $1.27 then changed it at the last minute to $1.32 to see if I could collar just a few more cents as the stock traded about 10% higher overnight on the FTSE.
It didn't manage to hit my target it got to $1.25 before retreating. But on the bright side it is up a further 8% in the UK so far this evening.
Hard to believe what a turnaround a stock can make, after being an under performer since listing in mid 2004 it has now more than made up for its slow start.
Regards
Neil
Hello Aimster,
I'm not sure if everyone was using AIM we would all be totally logical as a share price must reflect some underlying fundamental.
What this fundamental is what makes the discussion up in the stock market.
We use AIM and say it is logical, someone else may use a tested trading system that has a positive expectancy.
Others say that a price must reflect the underlying returns that the company produces.
All these are logical and true and valid, AIM is just one of them.
What AIM actually is, is a gatherer of personality types. The people that have gravitated towards it have a certain view about how the financial world works.
We have all used different methods before settling on the method that is most in tune with our personality.
That is the key, I realised that when I was part of a small group of traders that went through various methods of dabbling in the finance markets, stocks, options, futures, CFD's, Forex.
I knew immediately that Forex did not suit my personality, nor CFD's or Futures. I traded options for 3 years, made money during that time but realised that my unease meant that again it was not in tune with me.
Only with AIM did a certain calm descend upon me and I knew that I had found the path.
All sounds very mystic but I think you fill find that it rings true.
Happy Christmas
Neil
Hi Tom,
If you know what menu you go through to change that setting can you let me know.
The Australian version of the software may not be exactly the same but I should be able to work out where the equivalent setting is (if it exists)
Regards
Neil
Quicken calculations.
I'd be interested to find out from others which software they use for calculating capital gains.
The reason I ask is that I recently has some email sparring with the people at Reckon Software (who sell Quicken in Australia) regarding the way they calculate the capital gains.
At first I couldn't work out how they were doing it, all I knew is that it was not the way I was calculating into on a FIFO basis using the FIFO prices as well.
Eventually after some brains stretching I worked out what they were doing.
They were averaging the buying costs, so, if I made 3 purchases at lower prices they would work out the average an use that as the cost basis when it came to the sell. I disagree with that as it stuffs up the 50% discount to CGT if you have held the shares for a year.
How satisfied and what method do others use for calculating the CGT for their accounts.
Regards
Neil
Christmas leap.
Well, the portfolio entered the Christmas period at an all time high and even had some product fly off the shelf.
This one is an interesting one, I originally purchased CFU.AX (Ceramic Fuel Cells Ltd) in mid 2004. It was a float and I purchased an LD AIM amount at $1.00 per share.
After an initial rise, not enough to trigger a sale ( I was using wide 20% SAFE) the price began to sag and I purchased another quantity at 77c. A year passed and I ended up buying more at 64c.
Then they had a secondary listing on the AIM board in the UK. The offer price over there equated to 50c over here and they asked if current shareholders wanted to take up more stock.
I hesitated at first then decided that this company did have a future so purchased a further 4000 at 50c.
Well, this week after news announcements of major contracts signed with German utilities to integrate their fuel cells into household boilers/power generators the stock has begun to rocket.
With the uneven buying at the bottom end it meant that the first sales came at a price below the purchase price's
First sale was at 87c then on the friday I sold another quantity at $1.01, so over the 2.5 years of holding the stock the return is 57% on funds used.
A nice end to the year.
Regards
Neil
Break in the drought,
Well, after three weeks of no sales and no buys (Except for a new program started) somebody has put their hands up to buy some Antares Energy (AZZ.AX).
I've had this small gas explorer for about 2 years now and during that time have had 5 buys and 2 sells.
My ROCAR in this stock is up 32% and I've got big hopes for this company.
The directors were buying up big when the stock was around 40c and now it is currently 69c. It's always a good sign when the directors go out and purchase stock on market for their retirement accounts.
On the diver side, the bane of my portfolio is Norwood Abbey (NAL.AX) a small biotec which looks like it may implode at any moment. I LD-AIMed this one with a very small initial buy, lucky.
It has fallen from initial buy of 48c down to 7c. Shareholder equity is negative and I reckon it may be only a matter of months before it goes pop. I stopped placing funds into this when it was around 28c so I have limited my risk.
I think the MD of this company deserves a good flogging for the appalling performance.
Regards
Neil
Stock picking
Hello again Tom, I think you will find that in general people talk more about their success' than their failures despite more being learned from our failures than our successes.
This would probably correlate with up and down days on the market.
Therefore more postings on a DOW up day as more people are AIM selling at a profit, less postings on a DOW down day as there are less sales and more buys (which, no matter which way you look at it, are not a validation of being correct in picking the direction of the stock), which kind of show we made our initial buy at the wrong time, and, as we are taught from young being wrong is bad being right is good.
So I propose we discuss some of our investing failures and what we learned from the experience.
I'll kick off.
I invested money (using AIM) in small medical/biotec Norwood Abbey with the aim (excuse the pun) of proving that AIM was as close to alchemy as we could get by turning lead into gold.
I didn't do a lot of fundamental analysis but I was sold on some of the products they were going to bring out.
I first purchased at 48c followed by a second buy at 35c a month later, three months later I had a sell at 62c.
The slide then began, I bought at 33c then again at 30c and one final buy at 23c.
Luckily my Very LD-AIM saved me from greater losses in that my initial investment was only $800 and I waited for the market to increase my holdings by its own gyrations. I stopped buying at a predetermined risk level af around $3400. The stock is now trading at 10c.
What did I learn, well, not even AIM can turn lead into gold.
If I had checked the fundamentals and seen the losses building up, negative cash flow in the last 5 years. The losses all get subtracted from the shareholder equity which means that it is harder the next time to make a profit. The company now stands with a negative shareholder equity and all the while the managers were feeding like pigs at a trough, the executive chairman had his biggest income year of over $1,000,000 while the share price was diving.
Lesson, check the ROE and make sure you are not paying too much for the share, stay away from a negative ROE (maybe 1 year is excusable if the reason is to generate guarenteed future returns).
There it is, older and wiser, AIM protected by learning experience.
Regards
Neil
Hello Tom,
The moving average I have on my chart is basically a 130 day which equates to 26 weeks, although strictly speaking it is not 26 weeks as weekends are excluded from the price data.
The indicators on the next line down are ones I developed from John Bollingers book, the green is a normalised 20 day Bollinger band. That is a way of displaying Bollinger bands along a horizontal axis so that when it breaks above 1 it indicates the price has gone beyond the top Bollinger Band while a break below 0 indicates a break below the Bottom Band.
I use this in conjunction with what I call Bollinger bandwidth which shows, in horizontal format the current volatility of the stock.
If you study breakouts you can get a higher probability trade by picking one when the red line is below zero for a period of time (signifying low volatility) followed by a break of the green line above 1 (sudden increase in volatility).
This usually indicates something significant has happened and would be a good momentum play.
The indicator below that is another custom one called a Normalised MFI (Money flow index), I like that as it has the volume incorporated into the calculation, so, when the indicator approaches the top it means that new money is flowing into the stock and should support the price.
On the bottom I have normalised volume, which is great for picking up above average volume, anything above the blue line is greater volume than the preceeding 50 day average.
So, looking at the chart, you can see above average volume activity in around January 2006, this coincided with the MFI peaking showing money going into the stock, the price took off after that.
The Bluish trace above the volume is the On Balance Volume, again, a good indicator to show if support is starting to fade out.
I only use indicators as a support to some fundamental analysis these days and will take a position if the fundamentals are good and it looks like others are starting to take positions. Finally AIM is my cash allocation manager.
Regards
Neil