Learning how to manage and build your own investment portfolio is quickly becoming one of the most popular topics on everyone’s lips. Self managed superannuation, share trading, derivatives, all topics once spoken by only the financial elite are now common subjects at dinner parties and Friday night drinks.
This interest in financial planning has been fuelled by a rapidly aging population who have realised that their lifestyles will be substantially compromised if they do not become much more financially literate and responsible.
In addition, the introduction of the Internet, financial seminars and software have all empowered the Arm Chair Investor to manage their own money. However, many of these home based investors have had little or even no formal training in funds management. Now, while it is not a pre-requisite to have a degree in order to profit from various investments, it is imperative that investors understand the basics, have clearly defined investment strategy, realistic goals and appropriate asset diversification.
Now while we all have clear financial goals – to make more money – many do not appreciate the importance of sound asset allocation, or diversification. Many people have made the mistake of putting all their capital into only one investment. Diversification is critical to the success of any long term investment strategy. But, by diversifying, you must balance your investments based on risk and reward. Putting all of your money in the bank may be very secure, however, your overall return will suffer. Conversely, using all of your money to trade in options may produce very high returns, but the risk is very high that you could lose the lot. Therefore you must allocate your assets to suit your personal level of risk tolerance.
Investment Buckets
What are Investment Buckets? Well, at Platinum Pursuits, we like to make investing fun and easy. So when we looked at the topic of Asset Allocation, we likened it to buckets.
In order to protect your money, maximise your investment returns and ensure that you always have sufficient capital to meet your lifestyle, you must properly allocate your funds.
To do this, we think of using buckets. We have two buckets to consider, the Safety Bucket and the Growth Bucket.
Safety Bucket
The safety bucket is like a safety net. This is where we put our safe, secure investments and assets, such as our house, term deposits, insurances, etc. The safety bucket will not produce a good return, but then, that is not it’s purpose. It is there to ensure that we can always meet our financial commitments and that we never risk our most important assets, such as our house.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Wednesday, October 15, 2008
Top-Down Approach – Strategy of Professionals (written by Daniel Kertcher)
Regardless of which method you use to choose your shares, be it technical analysis, fundamental analysis or gut feeling, the most successful share traders and investors adopt a similar approach when it comes to reviewing the market, that is, a...
Top-Down Approach.
A top-down approach refers to looking at the performance of the major global economies, such as the US and European markets. We then focus on the overall performance of our local market and see how it is performing in light of the other markets around the world. We then study the performance of the different sectors that make up our local market, such as mining or retailing. Finally, we compare and study the individual shares that make up the sectors.
By adopting this approach, we can gain a fair idea of how individual shares will perform in comparison to the larger markets around the world. Looking at the performance of just one company can be likened to studying just one tree in the forest. For example, looking at the graph of a particular share may show a sudden fall. Does this indicate bad news or an adverse shift in fundamentals within the company, or was the company simply caught up in a general market correction? It is important to understand what is happening to the forest and for that, broader measures are needed.
If studying the forest is important for the average investor or trader, it is vital for institutions and managed funds that have large portfolio holdings. The huge growth of the managed funds industry requires not only that all stock exchanges provide a broad benchmark to measure market movement, but several subindices as well, to show how each segment of the overall market is performing in relation to the whole.
To study the performance of different international markets, we use indices. An index is simply an arbitrary benchmark designed to measure the movement of some broad compilation of shares. Just as a datum is an arbitrary horizontal mark set to measure ocean tides, an index serves a similar function for an exchange: it shows whether the market tides are rising or falling.
It is for the exchange concerned to decree which shares or commodities are included in an index, how they are weighted (the basis for comparison between them) and what base-line is used initially to provide their benchmark. Once this figure has been set and the reference point established, then future movements will alter this figure up and down, in accordance with what is happening in the underlying markets.
The most popular Australian index is the All Ordinaries (All Ords). The All Ords is made up of approx. 260 companies. If the All Ords is rising, it means that the overall Australian economy is strengthening. Other popular indices include the ASX 200, which is a measure of the top 200 companies in Australia.
The Dow
The most famous index in the world is the Dow Jones Industrial Average. It is the most widely-watched of the US market indices, even though it is not representative of the market as a whole. It consists of only the top 30 companies on the New York Stock Exchange, yet these Dow stocks represent some of the biggest companies on the planet. It has often been said that when the Dow sneezes the rest of the world catches a cold. If something violent happens to the Dow, the impact will almost certainly be felt by other markets the next day.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Top-Down Approach.
A top-down approach refers to looking at the performance of the major global economies, such as the US and European markets. We then focus on the overall performance of our local market and see how it is performing in light of the other markets around the world. We then study the performance of the different sectors that make up our local market, such as mining or retailing. Finally, we compare and study the individual shares that make up the sectors.
By adopting this approach, we can gain a fair idea of how individual shares will perform in comparison to the larger markets around the world. Looking at the performance of just one company can be likened to studying just one tree in the forest. For example, looking at the graph of a particular share may show a sudden fall. Does this indicate bad news or an adverse shift in fundamentals within the company, or was the company simply caught up in a general market correction? It is important to understand what is happening to the forest and for that, broader measures are needed.
If studying the forest is important for the average investor or trader, it is vital for institutions and managed funds that have large portfolio holdings. The huge growth of the managed funds industry requires not only that all stock exchanges provide a broad benchmark to measure market movement, but several subindices as well, to show how each segment of the overall market is performing in relation to the whole.
To study the performance of different international markets, we use indices. An index is simply an arbitrary benchmark designed to measure the movement of some broad compilation of shares. Just as a datum is an arbitrary horizontal mark set to measure ocean tides, an index serves a similar function for an exchange: it shows whether the market tides are rising or falling.
It is for the exchange concerned to decree which shares or commodities are included in an index, how they are weighted (the basis for comparison between them) and what base-line is used initially to provide their benchmark. Once this figure has been set and the reference point established, then future movements will alter this figure up and down, in accordance with what is happening in the underlying markets.
The most popular Australian index is the All Ordinaries (All Ords). The All Ords is made up of approx. 260 companies. If the All Ords is rising, it means that the overall Australian economy is strengthening. Other popular indices include the ASX 200, which is a measure of the top 200 companies in Australia.
The Dow
The most famous index in the world is the Dow Jones Industrial Average. It is the most widely-watched of the US market indices, even though it is not representative of the market as a whole. It consists of only the top 30 companies on the New York Stock Exchange, yet these Dow stocks represent some of the biggest companies on the planet. It has often been said that when the Dow sneezes the rest of the world catches a cold. If something violent happens to the Dow, the impact will almost certainly be felt by other markets the next day.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Plan for Success (written by Daniel Kertcher)
To be a successful investor or trader, a written investment plan is a must! In fact, most broking firms will not allow its professional traders to trade money without a trading plan!
Each and every trader must submit their plan and have it approved to be able to start trading money on behalf of clients. The trader is then judged and compensated for how well he follows his own plan and how well he does financially. If he violates his own plan, he may be subject to immediate dismissal!
So it’s crazy for us non-professionals traders to start trading without a plan, especially when things don’t go our way, and they won‘t always go our way, you can be assured of it!
Now, before we begin to write our plan, take just a moment to think about your true investment objective. What do you want to accomplish with this trading account? Simply saying, “ I want to make money” is not an investment objective. You have to have a specific objective, like, “To outperform the All Ords by at least
10% annually”. That’s an objective.
Then you must decide what type of industry and sector of shares you are going to invest in. The energy sector, the housing sector or the retail sector are unlikely to outperform the All Ords. That means you might have to look at the more volatile, but more rewarding sectors, like the computer sector, telecommunications, etc.
This will likely give you lots of volatility in your portfolio and you’ll have to accept it or don’t get involved in that sector in the first place.
There are 7 necessary ingredients in your investment plan:
Reasonable investment objective
● What growth factor do I want to achieve?
Be realistic. Are you actively trading or long-term investing?
Risk tolerance statement
● What industries, sectors and types of shares will I invest in?
Diversification plan
● How many different types of companies do we buy on average? Between 10 –20 should be a maximum.
Price range of the shares we buy
● Do we buy $30 shares, or only the sub $10 shares? Do we invest only in Australia, or overseas too?
A defense strategy
● How much price decline are we willing to accept? Be sure to use a Stop-Loss!
Contingency / Repair plan
● What do we do in a potential large market correction? How do we prevent and/or repair large market losses?
Timeframe
● How often do we, or will we, re-assess our investment strategy? It should be reviewed every 3-6 months and updated if and when the market conditions change.
To help tailor your investment strategy, try asking yourself these questions:
1. Do I usually average down in price, or do I take a small loss?
2. How many shares do I buy and sell everyday and do I diversify well?
3. What is the usual size of my trades? 500 shares, 1000 shares, or even more?
4. When do I take my profits? When I’m up 10%, 20%, 50% or more?
5. If I have a profit in a stock, do I hold it overnight?
When you have considered all the above aspects, you will be well underway to finalising a very valuable and effective investment plan. Armed with this plan, you are now in a superb position to manage your investment capital the way you want it managed, as opposed to just shooting from the hip.
Adopt a professional approach and you will be a successful investor!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Each and every trader must submit their plan and have it approved to be able to start trading money on behalf of clients. The trader is then judged and compensated for how well he follows his own plan and how well he does financially. If he violates his own plan, he may be subject to immediate dismissal!
So it’s crazy for us non-professionals traders to start trading without a plan, especially when things don’t go our way, and they won‘t always go our way, you can be assured of it!
Now, before we begin to write our plan, take just a moment to think about your true investment objective. What do you want to accomplish with this trading account? Simply saying, “ I want to make money” is not an investment objective. You have to have a specific objective, like, “To outperform the All Ords by at least
10% annually”. That’s an objective.
Then you must decide what type of industry and sector of shares you are going to invest in. The energy sector, the housing sector or the retail sector are unlikely to outperform the All Ords. That means you might have to look at the more volatile, but more rewarding sectors, like the computer sector, telecommunications, etc.
This will likely give you lots of volatility in your portfolio and you’ll have to accept it or don’t get involved in that sector in the first place.
There are 7 necessary ingredients in your investment plan:
Reasonable investment objective
● What growth factor do I want to achieve?
Be realistic. Are you actively trading or long-term investing?
Risk tolerance statement
● What industries, sectors and types of shares will I invest in?
Diversification plan
● How many different types of companies do we buy on average? Between 10 –20 should be a maximum.
Price range of the shares we buy
● Do we buy $30 shares, or only the sub $10 shares? Do we invest only in Australia, or overseas too?
A defense strategy
● How much price decline are we willing to accept? Be sure to use a Stop-Loss!
Contingency / Repair plan
● What do we do in a potential large market correction? How do we prevent and/or repair large market losses?
Timeframe
● How often do we, or will we, re-assess our investment strategy? It should be reviewed every 3-6 months and updated if and when the market conditions change.
To help tailor your investment strategy, try asking yourself these questions:
1. Do I usually average down in price, or do I take a small loss?
2. How many shares do I buy and sell everyday and do I diversify well?
3. What is the usual size of my trades? 500 shares, 1000 shares, or even more?
4. When do I take my profits? When I’m up 10%, 20%, 50% or more?
5. If I have a profit in a stock, do I hold it overnight?
When you have considered all the above aspects, you will be well underway to finalising a very valuable and effective investment plan. Armed with this plan, you are now in a superb position to manage your investment capital the way you want it managed, as opposed to just shooting from the hip.
Adopt a professional approach and you will be a successful investor!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Trading the US markets (written by Daniel Kertcher)
Wise investors know that one of the secrets to success is to diversify. Not only between various market sectors, but also between different markets. The US market represents an ideal market to consider.
Benefits of investing in the US market
Trading the US market offers many benefits over trading the local Australian market:
● Enormous size and liquidity. The US market is over 100 times larger than the Australian market!
● Vastly superior brokerage services with much cheaper brokerage rates due to the greater number of stockbroking firms in America, which means increased competition.
● Similarly to Australia, the US markets are highly regulated, with protection systems in place to protect investors.
● There is far more information, more readily available about US companies than Australian companies, allowing investors to make more discerning choices about their investments.
Excellent websites to research company data include www.moneycentral.com and
http://finance.yahoo.com
Similarities and differences
Buying and selling shares on the US market is virtually an identical process to trading shares in Australia. The options market; however, has a few subtle differences.
Differences between Option Markets
Australia
● Options expire on the Thursday prior to Last trading Friday of the month
● 1,000 shares per contract
● Much more capital required for trading and writing covered calls
● Very few opportunities to trade due to very limited size of the market – Less than 10 highly liquid stock options
● Strategies limited to trading and covered call writing due to limited liquidity
US
● Options expire on the third Friday of the month
● 100 shares per contract
● Far less money is required for trading and writing covered calls
● Enormous number of trading opportunities – Over 500 highly liquid stock options
● Many different strategies are possible, such as Covered Puts, Spreads and much more
Education
To anyone with experience trading the Australian Stockmarket, the US market is a relatively simple transition, with respect to terminology and procedures.
However, it still pays to familiarise yourself with the various companies and strategies available before you start trading. There are quite a few books, homestudy courses and seminars available in the market. One of my favorite authors is Michael Thomsett, who has written numerous books on US stocks and options. There’s even the board game, Call Up Put Down which teaches players how to trade US options.
Looking to the future
Whilst many Australian investors have done extremely well over the past year, alas, no market can continue to rise forever. Savvy investors know the benefits of diversification. Today, it has never been easier to trade the US market, and participate in the Greatest Market on Earth!
Platinum Pursuits offer a wide range of live seminars, home study courses, DVD’s, Audio CD’s, software and other tools designed to teach investors how to trade US stocks and options. For more information, please visit: www.PlatinumPursuits.com
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Benefits of investing in the US market
Trading the US market offers many benefits over trading the local Australian market:
● Enormous size and liquidity. The US market is over 100 times larger than the Australian market!
● Vastly superior brokerage services with much cheaper brokerage rates due to the greater number of stockbroking firms in America, which means increased competition.
● Similarly to Australia, the US markets are highly regulated, with protection systems in place to protect investors.
● There is far more information, more readily available about US companies than Australian companies, allowing investors to make more discerning choices about their investments.
Excellent websites to research company data include www.moneycentral.com and
http://finance.yahoo.com
Similarities and differences
Buying and selling shares on the US market is virtually an identical process to trading shares in Australia. The options market; however, has a few subtle differences.
Differences between Option Markets
Australia
● Options expire on the Thursday prior to Last trading Friday of the month
● 1,000 shares per contract
● Much more capital required for trading and writing covered calls
● Very few opportunities to trade due to very limited size of the market – Less than 10 highly liquid stock options
● Strategies limited to trading and covered call writing due to limited liquidity
US
● Options expire on the third Friday of the month
● 100 shares per contract
● Far less money is required for trading and writing covered calls
● Enormous number of trading opportunities – Over 500 highly liquid stock options
● Many different strategies are possible, such as Covered Puts, Spreads and much more
Education
To anyone with experience trading the Australian Stockmarket, the US market is a relatively simple transition, with respect to terminology and procedures.
However, it still pays to familiarise yourself with the various companies and strategies available before you start trading. There are quite a few books, homestudy courses and seminars available in the market. One of my favorite authors is Michael Thomsett, who has written numerous books on US stocks and options. There’s even the board game, Call Up Put Down which teaches players how to trade US options.
Looking to the future
Whilst many Australian investors have done extremely well over the past year, alas, no market can continue to rise forever. Savvy investors know the benefits of diversification. Today, it has never been easier to trade the US market, and participate in the Greatest Market on Earth!
Platinum Pursuits offer a wide range of live seminars, home study courses, DVD’s, Audio CD’s, software and other tools designed to teach investors how to trade US stocks and options. For more information, please visit: www.PlatinumPursuits.com
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Effective Investment Strategies (written by Daniel Kertcher)
Building your own retirement portfolio can be quite a daunting task. There are many different strategies you can adopt to help your investment dollars grow. The difficulty lies in choosing the strategies that will suit you the most.
Many people believe in investing heavily in property. While residential property investments have been very popular for decades, many investors have not enjoyed strong gains simply due to poor decisions when they bought the properties. Buying property in slow growth areas, gearing too high and poor property management can leave many investors with a very sour experience, not
to mention the opportunity loss.
Over the past decade, share trading and investing have become far more popular. Many of the hassles of property investing do not exist with share investments. However, it still comes back to making the right decisions when purchasing, and then managing the investment well. The beauty of shares is that you can quickly, inexpensively and easily exit the investment if it is not performing. Conversely, you can quickly enter an investment if you feel it has strong potential.
As more and more investors become interested in the stock market, many are discovering that there is far more to share investing than just buying shares and leaving them in the bottom drawer. Investors are discovering strategies such as “Writing Covered Calls” and “Spreads, Straddles and Strangles”. In fact, there are many different strategies which allow share and options traders to reduce their risk and/or increase their reward.
One of the most exciting strategies is Writing Covered Calls. To many, these words have little meaning, but to those who know, these words mean everything. Writing covered calls has been hailed as one of the most powerful, yet simplest, forms of wealth creation.
If you already own shares and would be prepared to sell them at a higher price then they are today, then writing covered calls may be for you. In return for the obligation to sell them at a higher price, you will be paid between 2%-6% of the value of the shares.
Now, there are some restrictions and limitations. Not all shares have Exchange Traded Options (ETO) available, and hence, not all shares will allow you to write covered calls. In fact, only 64 company shares have ETO’s. The Australian market can be fairly illiquid for all but the largest companies, but once you understand the strategy, you can use it on the American markets, as that market offers the same opportunities. The only difference is that there are thousands of ETO’s available.
Platinum Pursuits hosts investment seminars most weeks, as well as 3 day training workshops, where a variety of investment strategies are taught. Various Australian experts are invited to teach topics such as Option trading, writing Covered Calls, Self-Managed Super, Tax planning and effective international share investment. Be sure to secure your place at one of our upcoming seminars!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your
objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice,
consider the appropriateness of the advice, having regard to your
objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible
acquisition, of a particular financial product - you should obtain a
Product Disclosure Statement relating to the product and consider the
Statement before making any decision about whether to acquire the
product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Many people believe in investing heavily in property. While residential property investments have been very popular for decades, many investors have not enjoyed strong gains simply due to poor decisions when they bought the properties. Buying property in slow growth areas, gearing too high and poor property management can leave many investors with a very sour experience, not
to mention the opportunity loss.
Over the past decade, share trading and investing have become far more popular. Many of the hassles of property investing do not exist with share investments. However, it still comes back to making the right decisions when purchasing, and then managing the investment well. The beauty of shares is that you can quickly, inexpensively and easily exit the investment if it is not performing. Conversely, you can quickly enter an investment if you feel it has strong potential.
As more and more investors become interested in the stock market, many are discovering that there is far more to share investing than just buying shares and leaving them in the bottom drawer. Investors are discovering strategies such as “Writing Covered Calls” and “Spreads, Straddles and Strangles”. In fact, there are many different strategies which allow share and options traders to reduce their risk and/or increase their reward.
One of the most exciting strategies is Writing Covered Calls. To many, these words have little meaning, but to those who know, these words mean everything. Writing covered calls has been hailed as one of the most powerful, yet simplest, forms of wealth creation.
If you already own shares and would be prepared to sell them at a higher price then they are today, then writing covered calls may be for you. In return for the obligation to sell them at a higher price, you will be paid between 2%-6% of the value of the shares.
Now, there are some restrictions and limitations. Not all shares have Exchange Traded Options (ETO) available, and hence, not all shares will allow you to write covered calls. In fact, only 64 company shares have ETO’s. The Australian market can be fairly illiquid for all but the largest companies, but once you understand the strategy, you can use it on the American markets, as that market offers the same opportunities. The only difference is that there are thousands of ETO’s available.
Platinum Pursuits hosts investment seminars most weeks, as well as 3 day training workshops, where a variety of investment strategies are taught. Various Australian experts are invited to teach topics such as Option trading, writing Covered Calls, Self-Managed Super, Tax planning and effective international share investment. Be sure to secure your place at one of our upcoming seminars!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your
objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice,
consider the appropriateness of the advice, having regard to your
objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible
acquisition, of a particular financial product - you should obtain a
Product Disclosure Statement relating to the product and consider the
Statement before making any decision about whether to acquire the
product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
IPO - A Public Company is born (written by Daniel Kertcher)
When a private company reaches a point in it’s development that it requires an injection of capital to expand the business, then the directors have a couple of choices. One of the most popular methods is to FLOAT the company.
Floating, also known as Listing, involves taking a private company public to raise money for company growth and expansion. Members of the public as well as fund management institutions are invited to purchase shares in the Initial Public Offering (IPO).
The Prospectus
Before any company may solicit funds from the public, regulations require that it must draw up an offer document called a prospectus, which needs to be registered with the Australian Securities and Investment Commission (ASIC). This must present enough details and financial information on the company to allow a prospective investor to make an informed choice on the suitability of the shares for his or her portfolio.
The level of information that must be provided (which can often seem overwhelming to readers) is only one requirement that must accompany a listing application. Government consumer protection legislation is one consideration, but the stock exchange itself will have its own listing criteria. Such things as fees, required documentation, reporting requirements, size of the company and number of shareholders, etc. will all figure in a listing decision. For example, one requirement of the ASX is that a company has at least 400 holders of $2,000 each.
This sale of shares has occurred on the Primary Market. The money raised from the sale of shares has gone to the company to allow it to expand its operation. The new shareholders will want to see that the company is well run, professional and efficient. To do that, the shareholders will elect a board of directors to oversee the day-to-day running of the company. They do this by voting in accordance with the size of their shareholdings. This might result in, say, the election of a six-person board that selects its own chairman. Once a year, the board of directors must conduct an annual general meeting (AGM) to report to the shareholders on the company’s progress. Well in advance of the meeting, a copy of the annual report will be provided to all shareholders. All shareholders are welcome to attend the AGM’s.
Investors, particularly share traders, purchased the shares in the float with a view to selling them in the future to make a capital gain. They must therefore have a market at which to sell the shares. This is where the shareholders return once again to the stock market.
When the investor sells his or her shares, the money raised does not go to the listed company, instead, the money, minus broker commission (brokerage) goes to the investor. This is known as the Secondary Market. The Secondary Market is where the shares are traded once they have been purchased in the IPO.
This may seem staggeringly obvious; however, it raises an important point. Many people who invest in shares for the first time do not fully appreciate that the value of a company’s shares is not directly related to the performance of the company, or who the company is. Instead, the value of the shares is based on the public’s perceived value of the company. What Telstra does as a company is not as important as what
the public perceives the value of Telstra’s shares to be. There are many examples of companies that are very sound and well run, but are undervalued by the public. Alternatively, there are companies that don’t even produce profits whose share prices have skyrocketed. You only have to think back to some of the American Internet stocks such as Yahoo and Amazon.com for examples. These two companies had not even produced profits when they floated, yet their share prices rose incredibly fast, making the original owners billionaires literally overnight! It is this variance in share price and public perception that encourages share investors and allows them to make consistently high returns from the stock market.
The Bottom Line
The bottom line is that you cannot expect to be consistently successful as a share trader or investor by simply buying shares in companies that sound interesting. You must know how to investigate the company and to study the share price performance to determine which shares have the greatest potential to perform.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Floating, also known as Listing, involves taking a private company public to raise money for company growth and expansion. Members of the public as well as fund management institutions are invited to purchase shares in the Initial Public Offering (IPO).
The Prospectus
Before any company may solicit funds from the public, regulations require that it must draw up an offer document called a prospectus, which needs to be registered with the Australian Securities and Investment Commission (ASIC). This must present enough details and financial information on the company to allow a prospective investor to make an informed choice on the suitability of the shares for his or her portfolio.
The level of information that must be provided (which can often seem overwhelming to readers) is only one requirement that must accompany a listing application. Government consumer protection legislation is one consideration, but the stock exchange itself will have its own listing criteria. Such things as fees, required documentation, reporting requirements, size of the company and number of shareholders, etc. will all figure in a listing decision. For example, one requirement of the ASX is that a company has at least 400 holders of $2,000 each.
This sale of shares has occurred on the Primary Market. The money raised from the sale of shares has gone to the company to allow it to expand its operation. The new shareholders will want to see that the company is well run, professional and efficient. To do that, the shareholders will elect a board of directors to oversee the day-to-day running of the company. They do this by voting in accordance with the size of their shareholdings. This might result in, say, the election of a six-person board that selects its own chairman. Once a year, the board of directors must conduct an annual general meeting (AGM) to report to the shareholders on the company’s progress. Well in advance of the meeting, a copy of the annual report will be provided to all shareholders. All shareholders are welcome to attend the AGM’s.
Investors, particularly share traders, purchased the shares in the float with a view to selling them in the future to make a capital gain. They must therefore have a market at which to sell the shares. This is where the shareholders return once again to the stock market.
When the investor sells his or her shares, the money raised does not go to the listed company, instead, the money, minus broker commission (brokerage) goes to the investor. This is known as the Secondary Market. The Secondary Market is where the shares are traded once they have been purchased in the IPO.
This may seem staggeringly obvious; however, it raises an important point. Many people who invest in shares for the first time do not fully appreciate that the value of a company’s shares is not directly related to the performance of the company, or who the company is. Instead, the value of the shares is based on the public’s perceived value of the company. What Telstra does as a company is not as important as what
the public perceives the value of Telstra’s shares to be. There are many examples of companies that are very sound and well run, but are undervalued by the public. Alternatively, there are companies that don’t even produce profits whose share prices have skyrocketed. You only have to think back to some of the American Internet stocks such as Yahoo and Amazon.com for examples. These two companies had not even produced profits when they floated, yet their share prices rose incredibly fast, making the original owners billionaires literally overnight! It is this variance in share price and public perception that encourages share investors and allows them to make consistently high returns from the stock market.
The Bottom Line
The bottom line is that you cannot expect to be consistently successful as a share trader or investor by simply buying shares in companies that sound interesting. You must know how to investigate the company and to study the share price performance to determine which shares have the greatest potential to perform.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Mastering your mind for profit (written by Daniel Kertcher)
The stock market is made up solely of buyers and sellers. These buyers and sellers may be super huge, billion dollar institutions trading enormous amounts of money everyday or private individuals trading just one or two parcels of shares each year. Regardless, at its core, the market is made up 100% of people. People with emotions just like you and me.
You’ve no doubt heard the phrase, “History repeats itself”. Well, despite all of our technological achievements, we have still not mastered our emotions. History in the stock market always repeats itself because the markets are driven by two of the strongest human emotions, FEAR and GREED.
Markets boom and bust with cyclical regularity because of human nature. We are creatures of habit. For those who can accept this and learn to control their emotions, the rewards are outstanding. By recognising emotion in the markets, we can time our entry and exit strategies and profit from history repeating itself time and time again.
Investors like Warren Buffet recognise that investing is 80% psychological and only 20% mechanical. It doesn’t matter how good your system or strategy is. Unless you are mentally focused and as emotionless as possible, you will fail. This is much easier said than done, of course. Why? Because we spend our entire lives developing our psychological feelings towards money. These feelings are often referred to as Comfort Zones.
Comfort Zones
One of the most basic human needs is the feeling of Certainty. When we are certain of our surroundings we can rest easy and enjoy our lives. Uncertainty brings risk and makes us feel anxious and very uncomfortable. Since we were little children we have developed our comfort zones and we all have different comfort zones when it comes to money. Some of us feel that we must work very hard to make money. Others feel that they will never have money, or they don’t deserve to have money.
If you look at the wealthiest people in the world, very few live within these comfort zones. Their money comfort zones see them having an abundance of money. They believe that there is an enormous amount of money, more than enough for everyone to enjoy. They know that there are trillions of dollars circulating the world everyday looking for a home. They know how to make money and that making it is ridiculously simple.
Our emotion of certainty dictates our comfort zones. If we are certain that money is hard to make, then it will be, and we will be certain in our comfort zone. We would probably not be rich, but in our minds, we would be right. Alternatively, if we are certain that money is easy to make, and we just have to know how, than it will be easy to make, and we will be certain in our comfort zone.
Obviously, if your comfort zone has you believing that money is difficult to make, or some other negative feeling, then you will have to break out your comfort zone and climb into another one. When you do this, you will feel very uncertain. This can be very scary and is the reason why, despite all of the opportunities available, 95% of people end up broke or financially dependent when they reach 65 years of age.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
You’ve no doubt heard the phrase, “History repeats itself”. Well, despite all of our technological achievements, we have still not mastered our emotions. History in the stock market always repeats itself because the markets are driven by two of the strongest human emotions, FEAR and GREED.
Markets boom and bust with cyclical regularity because of human nature. We are creatures of habit. For those who can accept this and learn to control their emotions, the rewards are outstanding. By recognising emotion in the markets, we can time our entry and exit strategies and profit from history repeating itself time and time again.
Investors like Warren Buffet recognise that investing is 80% psychological and only 20% mechanical. It doesn’t matter how good your system or strategy is. Unless you are mentally focused and as emotionless as possible, you will fail. This is much easier said than done, of course. Why? Because we spend our entire lives developing our psychological feelings towards money. These feelings are often referred to as Comfort Zones.
Comfort Zones
One of the most basic human needs is the feeling of Certainty. When we are certain of our surroundings we can rest easy and enjoy our lives. Uncertainty brings risk and makes us feel anxious and very uncomfortable. Since we were little children we have developed our comfort zones and we all have different comfort zones when it comes to money. Some of us feel that we must work very hard to make money. Others feel that they will never have money, or they don’t deserve to have money.
If you look at the wealthiest people in the world, very few live within these comfort zones. Their money comfort zones see them having an abundance of money. They believe that there is an enormous amount of money, more than enough for everyone to enjoy. They know that there are trillions of dollars circulating the world everyday looking for a home. They know how to make money and that making it is ridiculously simple.
Our emotion of certainty dictates our comfort zones. If we are certain that money is hard to make, then it will be, and we will be certain in our comfort zone. We would probably not be rich, but in our minds, we would be right. Alternatively, if we are certain that money is easy to make, and we just have to know how, than it will be easy to make, and we will be certain in our comfort zone.
Obviously, if your comfort zone has you believing that money is difficult to make, or some other negative feeling, then you will have to break out your comfort zone and climb into another one. When you do this, you will feel very uncertain. This can be very scary and is the reason why, despite all of the opportunities available, 95% of people end up broke or financially dependent when they reach 65 years of age.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Stay in the Game! (Written by Daniel Kertcher)
Stay in the game.” What do I mean by that statement, and what does it mean in relation to share investing? Well, I want to share with you a powerful lesson I saw demonstrated recently that will help you improve your investment returns.
Each month we conduct a one-day investment seminar teaching covered calls and option trading. At this seminar, I run a game called the “Ring Toss”. It’s a fun game where we re-create an options trading environment. Players (the course students) have to buy “Rings” from a “Market Maker”. There is only one Market Maker, but over 30 Players. The rings represent options in the real world.
When the market opens, players can buy 4 rings. The price of the rings vary as market demand forces the prices up and down. Each player has to jostle with each other for a good position in front of the market maker in order to get their order filled at the best possible price. There are not enough rings for everyone, so competition is very high, often turning mild mannered adults into crazed ring-grabbing maniacs!
Well, during one of the games we were playing, one rather large gentleman worked his way through the crowd and positioned himself directly in front of the market maker. He had one of the best spots to buy rings when the price was right. As soon as the market opened, the buying frenzy commenced. The market maker sold rings to a person on the gentleman’s left. He then sold more rings to another person on the gentleman’s left. The market maker turned and faced the gentleman. Our player was the next to buy rings. However, all the buying activity meant that the price of the rings had risen quite substantially.
Our player decided that he did not want to buy, as the price had gone too high. This in itself is a wise decision. However, what he did next was very powerful. He stepped back! He physically moved away from his excellent position and allowed someone else to take his place.
Sure enough, within a couple of seconds the ring price hit a high and started to fall. Eventually, the ring price fell back to a point at which our player wanted to buy. Unfortunately, he was now not physically positioned to take advantage of the opportunity. He couldn’t get his order in quick enough to buy the cheap rings. Before long, the rings were sold out and the market closed. Our player never bought rings and missed out in making money, despite the fact that he was involved in the game itself.
The moral of this story is quite interesting, and very powerful when you relate it to your own investment philosophy and strategies.
How many people do you know have invested in the stock market? Often, most people invest based on tips or become serious and buy trading software and attend training courses. However, after a while they become distracted, or complacent. Ultimately the market turns against them and they lose money on their shares. At this point, many novice investors leave the game. In other words, they stop looking for profitable opportunities in the market on a daily basis and put their losing shares in the bottom drawer, vowing to look at them in 6 months.
Sure enough, the market recovers and presents many chances to make strong profits. Unfortunately, for all the people who left the market, they miss these profitable trades. Eventually, the market recovers so strongly that the media highlights all the money being made by clever investors.
At this point our original investors decide to re-enter the market, but now the market is peaking again. Not the wisest time to re-join the game.
The point is, once you enter the market or “The Game”, stay in. You don’t have to trade money if the market is not offering opportunities. But keep looking at your investment strategy, keep watching the market. This way, you will be in the right place at the right time, and you will recognise the profitable trades when they become available.
Our ring-buying player lost his opportunity to buy rings cheap because he left the game. Don’t make the same mistake!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Each month we conduct a one-day investment seminar teaching covered calls and option trading. At this seminar, I run a game called the “Ring Toss”. It’s a fun game where we re-create an options trading environment. Players (the course students) have to buy “Rings” from a “Market Maker”. There is only one Market Maker, but over 30 Players. The rings represent options in the real world.
When the market opens, players can buy 4 rings. The price of the rings vary as market demand forces the prices up and down. Each player has to jostle with each other for a good position in front of the market maker in order to get their order filled at the best possible price. There are not enough rings for everyone, so competition is very high, often turning mild mannered adults into crazed ring-grabbing maniacs!
Well, during one of the games we were playing, one rather large gentleman worked his way through the crowd and positioned himself directly in front of the market maker. He had one of the best spots to buy rings when the price was right. As soon as the market opened, the buying frenzy commenced. The market maker sold rings to a person on the gentleman’s left. He then sold more rings to another person on the gentleman’s left. The market maker turned and faced the gentleman. Our player was the next to buy rings. However, all the buying activity meant that the price of the rings had risen quite substantially.
Our player decided that he did not want to buy, as the price had gone too high. This in itself is a wise decision. However, what he did next was very powerful. He stepped back! He physically moved away from his excellent position and allowed someone else to take his place.
Sure enough, within a couple of seconds the ring price hit a high and started to fall. Eventually, the ring price fell back to a point at which our player wanted to buy. Unfortunately, he was now not physically positioned to take advantage of the opportunity. He couldn’t get his order in quick enough to buy the cheap rings. Before long, the rings were sold out and the market closed. Our player never bought rings and missed out in making money, despite the fact that he was involved in the game itself.
The moral of this story is quite interesting, and very powerful when you relate it to your own investment philosophy and strategies.
How many people do you know have invested in the stock market? Often, most people invest based on tips or become serious and buy trading software and attend training courses. However, after a while they become distracted, or complacent. Ultimately the market turns against them and they lose money on their shares. At this point, many novice investors leave the game. In other words, they stop looking for profitable opportunities in the market on a daily basis and put their losing shares in the bottom drawer, vowing to look at them in 6 months.
Sure enough, the market recovers and presents many chances to make strong profits. Unfortunately, for all the people who left the market, they miss these profitable trades. Eventually, the market recovers so strongly that the media highlights all the money being made by clever investors.
At this point our original investors decide to re-enter the market, but now the market is peaking again. Not the wisest time to re-join the game.
The point is, once you enter the market or “The Game”, stay in. You don’t have to trade money if the market is not offering opportunities. But keep looking at your investment strategy, keep watching the market. This way, you will be in the right place at the right time, and you will recognise the profitable trades when they become available.
Our ring-buying player lost his opportunity to buy rings cheap because he left the game. Don’t make the same mistake!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
The Power of Technical Analysis (written by Daniel Kertcher)
Technical analysis is the study of share prices. By researching the past performance of a share, we can gain an insight into how it will likely perform in the future.
To fully appreciate the power of technical analysis it is important to understand the basics. There are three key principles upon which technical analysis is based:
● Everything is discounted and reflected in market prices.
● Prices move in trends and trends persist.
● Market action is repetitive.
Let’s examine each principle in detail.
The first and most important principle is that everything is discounted and reflected in market prices. All knowledge, regardless of type (fundamental, political, economical, psychological or other) is already reflected in market prices.
It can be time consuming studying fundamental information such as company financial statements, earnings and P/E ratios in an attempt to determine the potential for a share to rise in value. The real value of a share at any point in time is determined solely by supply and demand, as reflected in trades made at the stock exchange.
Technical analysts do not care what the underlying forces of a shift in supply and demand are; instead he or she is interested in what occurs to the price.
If demand is greater than supply, prices will increase. On the other hand, if supply is greater than demand, prices will decline.
The study of market prices is all that is necessary to make money from the stock market.
The second principle on which technical analysis is based is that prices move in trends and trends persist.
The supply and demand balance sets a trend in motion. Once in motion, a trend remains intact until it ends. For example, if a stock’s price is moving up, it will continue its rise until there is a clear change in direction.
It is far easier to follow the trends, rather than fight them. The old Wall Street adage, “the trend is your friend” is true because, once begun, a trend is likely to continue once it is in place. A trend will usually give us warning that it is about to change direction. The warning can sometimes last a day or longer, so it is important to become familiar with recognising the signs.
The final key principle on which technical analysis is based is that market action is repetitive. Certain patterns appear time after time on charts. These patterns have meanings that can be interpreted in terms of probable future price movement.
Although not infallible, the odds are in the analysts’ favour. Common reversal patterns include Double Tops, Shooting Stars, Doji’s and Head and Shoulders.
These patterns, when seen during an uptrend (bull run) consistently identify a likely trend reversal, i.e. a fall in share prices.
Human nature is such that it tends to react to similar situations in consistent ways. As a rule, people will act the same in the future as they have in the past.
Since the stock market is a reflection of the actions of people, technical analysts study it to determine how people will react under certain conditions and thus, how share prices will move. Technical analysts analyse the recurrence of similar characteristics in an attempt to identify the likely future price direction.
As you can see, technical analysis can be defined as the study of individual share prices and the overall market based on supply and demand. Technical analysts record, usually in chart form on a computer, historical and up-to-date price and volume activity and deduce from that pictured history the probable future trend of prices.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
To fully appreciate the power of technical analysis it is important to understand the basics. There are three key principles upon which technical analysis is based:
● Everything is discounted and reflected in market prices.
● Prices move in trends and trends persist.
● Market action is repetitive.
Let’s examine each principle in detail.
The first and most important principle is that everything is discounted and reflected in market prices. All knowledge, regardless of type (fundamental, political, economical, psychological or other) is already reflected in market prices.
It can be time consuming studying fundamental information such as company financial statements, earnings and P/E ratios in an attempt to determine the potential for a share to rise in value. The real value of a share at any point in time is determined solely by supply and demand, as reflected in trades made at the stock exchange.
Technical analysts do not care what the underlying forces of a shift in supply and demand are; instead he or she is interested in what occurs to the price.
If demand is greater than supply, prices will increase. On the other hand, if supply is greater than demand, prices will decline.
The study of market prices is all that is necessary to make money from the stock market.
The second principle on which technical analysis is based is that prices move in trends and trends persist.
The supply and demand balance sets a trend in motion. Once in motion, a trend remains intact until it ends. For example, if a stock’s price is moving up, it will continue its rise until there is a clear change in direction.
It is far easier to follow the trends, rather than fight them. The old Wall Street adage, “the trend is your friend” is true because, once begun, a trend is likely to continue once it is in place. A trend will usually give us warning that it is about to change direction. The warning can sometimes last a day or longer, so it is important to become familiar with recognising the signs.
The final key principle on which technical analysis is based is that market action is repetitive. Certain patterns appear time after time on charts. These patterns have meanings that can be interpreted in terms of probable future price movement.
Although not infallible, the odds are in the analysts’ favour. Common reversal patterns include Double Tops, Shooting Stars, Doji’s and Head and Shoulders.
These patterns, when seen during an uptrend (bull run) consistently identify a likely trend reversal, i.e. a fall in share prices.
Human nature is such that it tends to react to similar situations in consistent ways. As a rule, people will act the same in the future as they have in the past.
Since the stock market is a reflection of the actions of people, technical analysts study it to determine how people will react under certain conditions and thus, how share prices will move. Technical analysts analyse the recurrence of similar characteristics in an attempt to identify the likely future price direction.
As you can see, technical analysis can be defined as the study of individual share prices and the overall market based on supply and demand. Technical analysts record, usually in chart form on a computer, historical and up-to-date price and volume activity and deduce from that pictured history the probable future trend of prices.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Baby Boomers – The future of the market (written by Daniel Kertcher)
You have no doubt heard of the “Baby Boomers”, those individuals born between 1943 and 1963.
Following World War II, Australia’s population grew at record levels. Australia was not alone in this phenomenon. The United States, New Zealand and Canada all experienced Baby Booms at a similar time.
The Baby Boomers are an important phenomenon to understand. They have had dramatic effects on society and will substantially impact the way the stock market performs over the next 20 years. For this reason, it is important to understand some of the background on this interesting group of people.
As mentioned, the Baby Boom was experienced in various countries around the world. Part of the reason for the “Boom” was that these countries were immigrant receivers and immigrants tend to be in their 20’s, the prime childbearing years.
At its peak in 1957, the US boom hit 3.7 children per family. Canada hit its peak in 1959 with Canadian women averaging 4 offspring each; that was over 479,000 new births that year alone! Australia’s boom was not quite as big as the Canadian or US booms; however, we still have a disproportionate number of people who are today in their 40’s and 50’s. Following the Baby Boom, we had a Baby Bust. Far fewer children were born during the late sixties, leaving Australia with an asymmetrical population graph.
The Baby Bust group, born between 1964 and 1976 are a much smaller group than their predecessors and are commonly referred to as Generation X.
Baby Boomers are a very significant and important group. It is not that, individually, they are any different than any other group who preceded them; it’s just that there are so many of them. Due to their large numbers, Baby Boomers have had a significant impact on our society, making substantial changes as they grew. They have changed the economy, driven housing and other markets and transformed social attitudes and lifestyles.
In Australia and North America today, the fastest growing industries, apart from technology, are financial management, leisure activities and health care. It is very easy to see why. Boomers have been working all their adult lives, usually for someone else. They have raised their children and are now focusing on their retirement. They have had a magnificent time. They have not endured wars, or a depression like their parents and grandparents. They have enjoyed fantastic luxuries such as cars, world holidays and computers. They have been at the forefront of the age of discovery.
Unfortunately, the majority have not prepared themselves financially for their retirements, believing instead that like their parents, they would enjoy a comfortable pension from their employers and/or government.
The stark realities are now coming to light. Everybody, especially the Boomers, must take responsibility for their financial futures. Our government will simply not be in a position to provide adequate pension incomes for a growing number of retirees. Today, for every person who is retired, there are four people working, providing income to the government. By 2025, there will be only 2 people working for every retiree. What’s more, the Boomers, as they start to retire, will live longer than any group before them, well into their 70’s and 80’s on average. As a result, it is up to each of us as individuals to take responsibility of our own personal financial planning.
The Australian government has made substantial improvements and preparations for the growing populations. They have introduced a compulsory superannuation scheme that all employers and employees must participate in and which is gradually rising in required contributions, but it will be too little, too late. The key to investment growth is time, a luxury many Boomers no longer possess.
Consider this fact, that at a return of 8% per annum, net of tax, an investment of $30,000 would require over 15 years to triple in value, not even considering the effects of inflation. Most investment strategies commonly promoted to the public boast returns of 4% to 10% per annum. We often see managed funds, superannuation schemes, bank term deposits and property investments offering such results. Many people consider these returns appropriate and even good! Unfortunately, many members of the public require a much greater return on their investments to adequately improve their financial positions before they retire (if they can ever afford to!).
In future issues we will explore ways of generating high returns and how to self manage your own super, one of our upcoming seminars!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Following World War II, Australia’s population grew at record levels. Australia was not alone in this phenomenon. The United States, New Zealand and Canada all experienced Baby Booms at a similar time.
The Baby Boomers are an important phenomenon to understand. They have had dramatic effects on society and will substantially impact the way the stock market performs over the next 20 years. For this reason, it is important to understand some of the background on this interesting group of people.
As mentioned, the Baby Boom was experienced in various countries around the world. Part of the reason for the “Boom” was that these countries were immigrant receivers and immigrants tend to be in their 20’s, the prime childbearing years.
At its peak in 1957, the US boom hit 3.7 children per family. Canada hit its peak in 1959 with Canadian women averaging 4 offspring each; that was over 479,000 new births that year alone! Australia’s boom was not quite as big as the Canadian or US booms; however, we still have a disproportionate number of people who are today in their 40’s and 50’s. Following the Baby Boom, we had a Baby Bust. Far fewer children were born during the late sixties, leaving Australia with an asymmetrical population graph.
The Baby Bust group, born between 1964 and 1976 are a much smaller group than their predecessors and are commonly referred to as Generation X.
Baby Boomers are a very significant and important group. It is not that, individually, they are any different than any other group who preceded them; it’s just that there are so many of them. Due to their large numbers, Baby Boomers have had a significant impact on our society, making substantial changes as they grew. They have changed the economy, driven housing and other markets and transformed social attitudes and lifestyles.
In Australia and North America today, the fastest growing industries, apart from technology, are financial management, leisure activities and health care. It is very easy to see why. Boomers have been working all their adult lives, usually for someone else. They have raised their children and are now focusing on their retirement. They have had a magnificent time. They have not endured wars, or a depression like their parents and grandparents. They have enjoyed fantastic luxuries such as cars, world holidays and computers. They have been at the forefront of the age of discovery.
Unfortunately, the majority have not prepared themselves financially for their retirements, believing instead that like their parents, they would enjoy a comfortable pension from their employers and/or government.
The stark realities are now coming to light. Everybody, especially the Boomers, must take responsibility for their financial futures. Our government will simply not be in a position to provide adequate pension incomes for a growing number of retirees. Today, for every person who is retired, there are four people working, providing income to the government. By 2025, there will be only 2 people working for every retiree. What’s more, the Boomers, as they start to retire, will live longer than any group before them, well into their 70’s and 80’s on average. As a result, it is up to each of us as individuals to take responsibility of our own personal financial planning.
The Australian government has made substantial improvements and preparations for the growing populations. They have introduced a compulsory superannuation scheme that all employers and employees must participate in and which is gradually rising in required contributions, but it will be too little, too late. The key to investment growth is time, a luxury many Boomers no longer possess.
Consider this fact, that at a return of 8% per annum, net of tax, an investment of $30,000 would require over 15 years to triple in value, not even considering the effects of inflation. Most investment strategies commonly promoted to the public boast returns of 4% to 10% per annum. We often see managed funds, superannuation schemes, bank term deposits and property investments offering such results. Many people consider these returns appropriate and even good! Unfortunately, many members of the public require a much greater return on their investments to adequately improve their financial positions before they retire (if they can ever afford to!).
In future issues we will explore ways of generating high returns and how to self manage your own super, one of our upcoming seminars!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Let’s Talk Fundamentals – Some More (written by Daniel Kertcher)
Last week we discussed the power of fundamental analysis and how it is used. This week we’ll continue exploring more of the most popular and useful fundamental indicators available.
P/E Ratio
The P/E Ratio is one of the most widely recognised fundamental indicators, and, one of the easiest to calculate. The P/E ratio stands for the price of the share compared to the earnings per share (EPS). Last week we discussed the EPS.
Basically, the EPS is the amount of profit the company makes divided by the number of shares issued. By comparing the price of the share to the earnings per share, we can gauge whether or not the share price is undervalued, fairly valued or overvalued. If the price of the share is very high, compared to the earnings, then the P/E ratio will be very high too. High P/E ratios identify shares that may be overvalued and hence, it may be sound to sell the share.
A company with a low share price, but high earnings, will have a very low P/E ratio. This low ratio identifies to the investor that the share price is undervalued, and could represent a buying opportunity.
For example, let’s say that the share price for our imaginary company, XYZ ltd, is $1.00. The EPS for the company is $0.10. Our calculation would be as follows:
P/E Ratio = Price of the share
Earnings per share
10 = $1.00
$0.10
Therefore, the P/E ratio for XYZ ltd is 10. Now what exactly does this mean?
Well, we can do a variety of things with the P/E ratio. We can compare the P/E ratio of XYZ with previous P/E ratios for XYZ. If we notice a trend of increasing P/E ratios, then the share price may be reaching an overvalued situation. If the trend has been of decreasing P/E ratios, then perhaps the company is currently unpopular with investors, but may be a good buy.
Alternatively, we can compare the P/E ratios of other companies in the same industry and sector. For example, if we notice that XYZ’s competitors have much higher P/E ratios, then perhaps XYZ represents a good buy. If XYZ’s P/E ratio is substantially higher than it’s competitors, then perhaps it is approaching it’s peak in price. As you can see, the P/E ratio can be rather vague. The most sensible use of the P/E ratio, in my opinion, is to use it when calculating the PEG ratio.
PEG Ratio
The PEG ratio is one of the most powerful indicators. Every famous successful investor, such as Warren Buffett, and Peter Lynch use the PEG ratio as one of their principle leading indicators when assessing a potential investment.
The PEG ratio compares the P/E of a share with it’s earnings growth rate. Hence, the PEG ratio stands for Price of the share, compared to the Earnings of the share, compared to the earnings Growth rate of the share.
Let’s consider XYZ again. It has a P/E ratio of 10, and an earnings growth rate of 15. This means that the earnings (profits) are growing at 15% per annum.
PEG ratio = (Price of the share/Earnings per share)
Earnings Growth rate
0.66 = 10
15
A PEG ratio less than 1 indicates that the share price is undervalued. The price of the share is low compared to its earnings and to its growth rate. If the growth continues, then the share will continue to produce excellent returns. Other investors will eventually recognise this and will invest in the company. The increased demand will increase the share price.
A PEG ratio greater than 1 indicates that the share price is overvalued. Be sure to incorporate the PEG ratio in you analysis techniques. This simple, yet effective indicator will help you evaluate your investments regardless of which international market you choose to trade.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
P/E Ratio
The P/E Ratio is one of the most widely recognised fundamental indicators, and, one of the easiest to calculate. The P/E ratio stands for the price of the share compared to the earnings per share (EPS). Last week we discussed the EPS.
Basically, the EPS is the amount of profit the company makes divided by the number of shares issued. By comparing the price of the share to the earnings per share, we can gauge whether or not the share price is undervalued, fairly valued or overvalued. If the price of the share is very high, compared to the earnings, then the P/E ratio will be very high too. High P/E ratios identify shares that may be overvalued and hence, it may be sound to sell the share.
A company with a low share price, but high earnings, will have a very low P/E ratio. This low ratio identifies to the investor that the share price is undervalued, and could represent a buying opportunity.
For example, let’s say that the share price for our imaginary company, XYZ ltd, is $1.00. The EPS for the company is $0.10. Our calculation would be as follows:
P/E Ratio = Price of the share
Earnings per share
10 = $1.00
$0.10
Therefore, the P/E ratio for XYZ ltd is 10. Now what exactly does this mean?
Well, we can do a variety of things with the P/E ratio. We can compare the P/E ratio of XYZ with previous P/E ratios for XYZ. If we notice a trend of increasing P/E ratios, then the share price may be reaching an overvalued situation. If the trend has been of decreasing P/E ratios, then perhaps the company is currently unpopular with investors, but may be a good buy.
Alternatively, we can compare the P/E ratios of other companies in the same industry and sector. For example, if we notice that XYZ’s competitors have much higher P/E ratios, then perhaps XYZ represents a good buy. If XYZ’s P/E ratio is substantially higher than it’s competitors, then perhaps it is approaching it’s peak in price. As you can see, the P/E ratio can be rather vague. The most sensible use of the P/E ratio, in my opinion, is to use it when calculating the PEG ratio.
PEG Ratio
The PEG ratio is one of the most powerful indicators. Every famous successful investor, such as Warren Buffett, and Peter Lynch use the PEG ratio as one of their principle leading indicators when assessing a potential investment.
The PEG ratio compares the P/E of a share with it’s earnings growth rate. Hence, the PEG ratio stands for Price of the share, compared to the Earnings of the share, compared to the earnings Growth rate of the share.
Let’s consider XYZ again. It has a P/E ratio of 10, and an earnings growth rate of 15. This means that the earnings (profits) are growing at 15% per annum.
PEG ratio = (Price of the share/Earnings per share)
Earnings Growth rate
0.66 = 10
15
A PEG ratio less than 1 indicates that the share price is undervalued. The price of the share is low compared to its earnings and to its growth rate. If the growth continues, then the share will continue to produce excellent returns. Other investors will eventually recognise this and will invest in the company. The increased demand will increase the share price.
A PEG ratio greater than 1 indicates that the share price is overvalued. Be sure to incorporate the PEG ratio in you analysis techniques. This simple, yet effective indicator will help you evaluate your investments regardless of which international market you choose to trade.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Let’s Talk Fundamentals (written by Daniel Kertcher)
Technical Analysis has become extremely popular over the past decade. Modern day computers and the Internet have allowed everyone from professional traders to arm-chair investors study the markets live and make their trading decisions instantly.
Despite the technological advancements and the “New found power of Technical Analysis” we must not forget the traditional approach to investing, that is Fundamental Analysis.
Before computers made charting child’s play, professional investors and brokers would study the fundamentals of a company. They would study the balance sheets, the forecasts, and the past performance. They would investigate the board of directors, attend the general meetings and really try to get a “feel” for the company. Because back then, just like today, the market always rewarded Earnings, or Profits. A company’s whole mission in life is to make profits. If the company can continue to make and grow its profits, the share price will rise. A company like that may well get stung in times of high market volatility, but those with strong earnings will always fall the least and recover the quickest.
Fundamental analysis is essentially the study of a company’s earnings. Up until recently, however, fundamental analysis was extremely time consuming, and hence, not as popular by private investors.
For most investors these days, time is a precious commodity, and they simply don’t have enough of it to spend investigating the thousands of companies that are out there. Fortunately, there are now a variety of web sites that cater to fundamental information. The best sites are those that provide search engines.
These search engines allow you to program the desired fundamental information and parameters you are looking for and then will conduct the search for you, usually within seconds!
The key is to know what to look for!
You may well have heard of a variety of fundamental terms and ratios. They usually get thrown around at dinner parties by those who are trying to sound impressive, or at least semi-intelligent.
Terms such as P/E ratio, PEG ratio, EPS (earnings per share) and Current ratio are usually foreign to most people, yet they tend to nod knowingly when discussing the topic with their friends.
Well, as it is, these particular calculations are extremely useful, especially when used to find shares in the market that represent great value. Now, there are many more calculations to consider, and we will investigate them in future issues of this report. But to begin, let’s look at a few now.
As mentioned, earnings, or profits, are extremely important for a public company (or any company for that matter). Revenue, or income, is sometimes confused with earnings. Many companies have enormous revenues, but fail to make any profit. Even a school child would know that that is an unsustainable situation.
Earnings per share (EPS)
One way to identify potential share investment opportunities is to study the earnings track record of a company. We want to see how profitable have they been over the course of the past two years. Now the past does not always equal the future, but it gives us a good idea as to how well management has performed over the past couple of years, how well have their products or services sold over the past couple of years. So, we want to look 2 years in the past and see how earnings have grown if they’ve grown at all.
We only want to be investing in companies whose earnings are increasing and have grown in excess of 15% per year.
In other words, if their earnings were $1 a share 2 years ago, we want to see last year’s earnings up to $1.15 and this year’s earnings up another 15%.
When you find companies whose earnings are going up at least 15%, you are finding the cream of the crop, because most companies are not able to sustain that level of growth or profit growth over a period of time. In future issues we’ll continue to outline exactly what to look for when searching for the best share investment opportunities.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Disclaimer
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Despite the technological advancements and the “New found power of Technical Analysis” we must not forget the traditional approach to investing, that is Fundamental Analysis.
Before computers made charting child’s play, professional investors and brokers would study the fundamentals of a company. They would study the balance sheets, the forecasts, and the past performance. They would investigate the board of directors, attend the general meetings and really try to get a “feel” for the company. Because back then, just like today, the market always rewarded Earnings, or Profits. A company’s whole mission in life is to make profits. If the company can continue to make and grow its profits, the share price will rise. A company like that may well get stung in times of high market volatility, but those with strong earnings will always fall the least and recover the quickest.
Fundamental analysis is essentially the study of a company’s earnings. Up until recently, however, fundamental analysis was extremely time consuming, and hence, not as popular by private investors.
For most investors these days, time is a precious commodity, and they simply don’t have enough of it to spend investigating the thousands of companies that are out there. Fortunately, there are now a variety of web sites that cater to fundamental information. The best sites are those that provide search engines.
These search engines allow you to program the desired fundamental information and parameters you are looking for and then will conduct the search for you, usually within seconds!
The key is to know what to look for!
You may well have heard of a variety of fundamental terms and ratios. They usually get thrown around at dinner parties by those who are trying to sound impressive, or at least semi-intelligent.
Terms such as P/E ratio, PEG ratio, EPS (earnings per share) and Current ratio are usually foreign to most people, yet they tend to nod knowingly when discussing the topic with their friends.
Well, as it is, these particular calculations are extremely useful, especially when used to find shares in the market that represent great value. Now, there are many more calculations to consider, and we will investigate them in future issues of this report. But to begin, let’s look at a few now.
As mentioned, earnings, or profits, are extremely important for a public company (or any company for that matter). Revenue, or income, is sometimes confused with earnings. Many companies have enormous revenues, but fail to make any profit. Even a school child would know that that is an unsustainable situation.
Earnings per share (EPS)
One way to identify potential share investment opportunities is to study the earnings track record of a company. We want to see how profitable have they been over the course of the past two years. Now the past does not always equal the future, but it gives us a good idea as to how well management has performed over the past couple of years, how well have their products or services sold over the past couple of years. So, we want to look 2 years in the past and see how earnings have grown if they’ve grown at all.
We only want to be investing in companies whose earnings are increasing and have grown in excess of 15% per year.
In other words, if their earnings were $1 a share 2 years ago, we want to see last year’s earnings up to $1.15 and this year’s earnings up another 15%.
When you find companies whose earnings are going up at least 15%, you are finding the cream of the crop, because most companies are not able to sustain that level of growth or profit growth over a period of time. In future issues we’ll continue to outline exactly what to look for when searching for the best share investment opportunities.
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Disclaimer
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Gearing – Using debt wisely (written by Daniel Kertcher)
Now, we know that as soon as we start talking about borrowing money to invest on the stock market, many people run for the hills. Some find it daunting enough just to invest their own money on shares, let alone borrow money for shares.
Most people fear debt because parents and other well meaning family members tell us to pay cash for everything. While there is an element of truth in this, it should not be taken as a blanket statement that all debt is bad. Debt for consumables can destroy wealth – debt for growing assets can build wealth.
Please bear in mind; you should never do anything in the stock market if it makes you nervous or uncomfortable. We will simply outline the concept of gearing, or borrowing, here. For more detailed information, please consult a professional accountant or financial adviser.
Borrowing for shares can be an excellent strategy to improve your returns. By borrowing, we are leveraging the power our money has in the markets. For example, if I have $1.00 in the market and make a 10% return, I will make ten cents profit. If I borrowed an additional $1.00, I would have $2.00 in the market. A 10% return now makes me a 20 cent profit, or 20% on my original $1.00. This is the power of leveraging, or gearing.
At the same time, however, I have increased my potential risk of loss. If I lost 5%, then I would have ten cents, or 10% of my original capital. Fortunately, I would have to lose more than 50% before I lost all my money. By using a 5% stop loss, I can limit my potential loss. Risk Management and stop-losses obviously become very important if you ever choose to borrow money for the stock market. Gearing is an advanced strategy and should only be used by experienced and successful traders who have sought proper advice from professional financial planners and/ or accountants.
To further consider gearing and the power it has, let’s consider two people who can each spare $4,000 a year. Fred Needy can’t wait to get behind the wheel of brand new $20,000 sports car that is going to cost him $4,000 a year over 10 years. Richie Rich decides that with his $4,000 a year, he can borrow another $4,000 and buy some shares. How can he borrow $4,000? Most banks will lend 50% on the value of shares. Therefore, Richie can buy $8,000 worth of shares with his $4,000 cash. Let’s look at the two situations.
Fred Needy got a great deal from his local bank and borrowed the entire $20,000, with a principal and interest loan at 14% reducing interest. At $4,000 a year for 10 years, he will clear the loan and own the car outright. However, in the first year, the $4,000 is made up of $3,000 interest and $1,000 principal. Richie Rich borrows $4,000 from the bank at 7.5% interest only.
His repayment is $300 for the first year, which is tax deductible. Richie receives a tax refund of $141 as he is on the highest marginal tax rate. So Richie only has to pay $159 interest in his first year. Each year, Richie has another $4,000 to invest. He must first pay the interest and can then borrow an equivalent amount of the remainder from the bank to buy some more shares.
After 10 years, at 11% depreciation per year, Fred’s car would be worth $6,236. Although he doesn’t owe anything on the loan at the end of the term, if he had sold the car at any time up to the seventh year, he would have been going backwards – for most of the time, he owed more than the car was worth.
However, at 11% capital growth (appreciation) per year compound, Richie’s shares would be worth $128,848. However, as he has been borrowing more every year he now owes $36,219, leaving Richie’s total equity at close to $98,000! If Richie ever wanted to stop borrowing and pay back the bank, he could simply sell some of his shares immediately and pay the bank back within a couple of days. (But why would he? The interest bill Richie was paying by the tenth year, after his tax refund, was only $1,333 a year. The dividends on his shares would pay most if not all of that).
Let’s go one step further. After 10 years, Fred Needy is left with an almost worthless car. To buy another car, he would need to borrow $40,000, because by then, that’s what a new car would cost with inflation.
On the other hand, Richie Rich, if he wants to, can sell some of his shares and pay cash for a brand new car. He’d also have enough to buy one for his wife, one for his son and to go on a holiday!
© Platinum Pursuits 2006. All rights reserved.
Disclaimer
The decision to invest or trade and the method selected is a personal decisions and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of our services for your circumstances. Platinum Pursuits Pty Ltd is an Authorised Representative (Rep. No. 286343) of Option Partners Pty Ltd, AFSL 298347.
Information contained in all Platinum Pursuits products and websites is intended to be general advice only and should not be relied upon as financial product advice. You are warned that:
1. The advice has been prepared without taking into account your objectives, financial situation or particular needs; and
2. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs; and
3. If the advice relates to the acquisition, or possible acquisition, of a particular financial product - you should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product.
Equities and derivatives trading involves risk, Investors need a broker to trade equities and derivatives, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Investors are required and advised to request for and read the product disclaimer statements as provided by the particular profile they trade with.
None of the information and data contained in this presentation or the Platinum Pursuits websites (www.platinumpursuits.com or www.ppmember.com) nor any opinion expressed constitutes a recommendation to purchase or sell a security, or to provide investment or financial product advice.
The information contained on all Platinum Pursuits products is provided for general informational purposes, as a convenience to the customers of Platinum Pursuits Pty Ltd. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. Platinum Pursuits Pty Ltd is not engaged in rendering any legal or professional services by presenting this general information or by placing these or any general informational materials on their websites.
Platinum Pursuits Pty Ltd and its associates do not receive any remuneration (including commission) or other benefit from third parties by virtue of the advice provided.
Platinum Pursuits Pty Ltd is an Authorised Representative (286343) of The International Securities and Derivatives Group Pty Ltd ABN 22 103 552 683, AFSL 227544.
Most people fear debt because parents and other well meaning family members tell us to pay cash for everything. While there is an element of truth in this, it should not be taken as a blanket statement that all debt is bad. Debt for consumables can destroy wealth – debt for growing assets can build wealth.
Please bear in mind; you should never do anything in the stock market if it makes you nervous or uncomfortable. We will simply outline the concept of gearing, or borrowing, here. For more detailed information, please consult a professional accountant or financial adviser.
Borrowing for shares can be an excellent strategy to improve your returns. By borrowing, we are leveraging the power our money has in the markets. For example, if I have $1.00 in the market and make a 10% return, I will make ten cents profit. If I borrowed an additional $1.00, I would have $2.00 in the market. A 10% return now makes me a 20 cent profit, or 20% on my original $1.00. This is the power of leveraging, or gearing.
At the same time, however, I have increased my potential risk of loss. If I lost 5%, then I would have ten cents, or 10% of my original capital. Fortunately, I would have to lose more than 50% before I lost all my money. By using a 5% stop loss, I can limit my potential loss. Risk Management and stop-losses obviously become very important if you ever choose to borrow money for the stock market. Gearing is an advanced strategy and should only be used by experienced and successful traders who have sought proper advice from professional financial planners and/ or accountants.
To further consider gearing and the power it has, let’s consider two people who can each spare $4,000 a year. Fred Needy can’t wait to get behind the wheel of brand new $20,000 sports car that is going to cost him $4,000 a year over 10 years. Richie Rich decides that with his $4,000 a year, he can borrow another $4,000 and buy some shares. How can he borrow $4,000? Most banks will lend 50% on the value of shares. Therefore, Richie can buy $8,000 worth of shares with his $4,000 cash. Let’s look at the two situations.
Fred Needy got a great deal from his local bank and borrowed the entire $20,000, with a principal and interest loan at 14% reducing interest. At $4,000 a year for 10 years, he will clear the loan and own the car outright. However, in the first year, the $4,000 is made up of $3,000 interest and $1,000 principal. Richie Rich borrows $4,000 from the bank at 7.5% interest only.
His repayment is $300 for the first year, which is tax deductible. Richie receives a tax refund of $141 as he is on the highest marginal tax rate. So Richie only has to pay $159 interest in his first year. Each year, Richie has another $4,000 to invest. He must first pay the interest and can then borrow an equivalent amount of the remainder from the bank to buy some more shares.
After 10 years, at 11% depreciation per year, Fred’s car would be worth $6,236. Although he doesn’t owe anything on the loan at the end of the term, if he had sold the car at any time up to the seventh year, he would have been going backwards – for most of the time, he owed more than the car was worth.
However, at 11% capital growth (appreciation) per year compound, Richie’s shares would be worth $128,848. However, as he has been borrowing more every year he now owes $36,219, leaving Richie’s total equity at close to $98,000! If Richie ever wanted to stop borrowing and pay back the bank, he could simply sell some of his shares immediately and pay the bank back within a couple of days. (But why would he? The interest bill Richie was paying by the tenth year, after his tax refund, was only $1,333 a year. The dividends on his shares would pay most if not all of that).
Let’s go one step further. After 10 years, Fred Needy is left with an almost worthless car. To buy another car, he would need to borrow $40,000, because by then, that’s what a new car would cost with inflation.
On the other hand, Richie Rich, if he wants to, can sell some of his shares and pay cash for a brand new car. He’d also have enough to buy one for his wife, one for his son and to go on a holiday!
© Platinum Pursuits 2006. All rights reserved.
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