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Marcus PadleyMAppFin. LLB MSAA ADA (ASX)
Stockbroker
Available from The Educated Investor Bookshop outside
The Stockmarket Newsletter for Every Investor
Specialises in EquitiesInvestment portfolios
Daily trading IdeasDaily Stockmarket News
An Education
Ten Investors
DISCLAIMER
DISCLAIMERBirth
DISCLAIMERBirth
Marriage
DISCLAIMERBirth
MarriageDivorce
DISCLAIMER
Birth MarriageDivorce
Kids
DISCLAIMERBirth
MarriageDivorce
KidsInheritance
DISCLAIMERBirth
MarriageDivorce
KidsInheritance
Career
DISCLAIMERBirth
MarriageDivorce
KidsInheritance
CareerBusiness
DISCLAIMERBirth
MarriageDivorce
KidsInheritance
CareerBusiness
Being Stupid - Predators
The Thirteen Investors
RATING CRITERIA
Element of GamblingRelies on the Market going up
Employs Timing SkillsUses Trading Skills
Uses Company KnowledgeRequires PatienceTime Consuming
Intellectual – Interesting - Fun
The Thirteen Investors
1. The Plodder
Your Portfolio - $1m
The Banks (40%)Macquarie (sold)Babcock & Brown (bugger) BHP (maybe RIO) WoolworthsWestfield (WRT) TelstraFortescue (sold in 2008)WoodsideQBECSLMyer No QRN (wish you had)
Faith in the BanksFaith in ChinaFocus on FrankingCapital Gains issuesFull Service broker80:20 but really 99:1Sat out the GFCGold maybeTerm DepositsThe Warren Buffett WayIntelligent Investor
The Plodder Not a lot of risk
Not going to blow upBut going to take the market on the nose
Relies on the market going upVulnerable to a GFC Faith in the Banks
Faith in China OK if you don’t need the money
2. The Income Investor
The Income Investor Things you should know:
You make less money in high yielding stocksYou exclude the Super stocks – (PDN)
You can’t buy Resources – best bitThe yield trap
Yield Trap
The Income Investor Things you should know:
You make less money in high yielding stocksYou exclude the Super stocks - restricted choices
You can’t buy Resources – best bitThe yield trap
ROE more important - TelstraCapital gains are income too
Change of mindset - Make moneyChange of mindset - Spend capital
The Return on cash can be as good as equities
3. The Value Investor
The Value Investor Sounds good
Cerebral exercise is impressive – but effective?Reality - No-one is Warren BuffettDeny ability to time the marketPatience takes a lot of moneyPatience takes a lot of timePatience takes a lot of faith
Not practical – edge of the envelope (School fees)Vulnerable to a GFC
Rubbish in rubbish out – Forecast reliant
Otherwise…Great!
4. The Daytrader
The Daytrader
Roots are in free leverageNot investment
ComputersHerd trading
SoulessBoring
StressfulProne to shocks
Very time consumingLike walking onto a battlefield wearing orange
5. The Trader
The Trader Not just Technical Analysis
Trading Skills are for everyoneStructure – Controlling the outcome
A plan – Sleep at nightDiscipline - Vigilance
Playing probability - No pride No fearAny time frame
Same intentions as an investorNeed education – a commodity
Time consumingPredators
Long term results the goal
6. The Sophisticated Investor
The Sophisticated Investor
Certificate required – saying you are richSpeed of the essence
Free option on financial opportunities
Reality No product disclosure statementsNo-one taking the blame but you
Fine line between a Sophisticated Investor and a Bunny Depends on broker relationship
Are you sophisticated – or do you just qualify as one.
7. The Top Down Investor
The Top Down Investor
The money is made out of what the analysts don’t knowThe money is in the Big Drivers - rarely in the detail
Good news follows good sectorsGood managers are in good sectors
Good luck is in good sectorsM&A happens in good sectorsMy client with the Midas touch
8. The Stock Picker
The Stock Picker Average returns don’t exist
ALL ORDS AVERAGE RETURN
ALL ORDS EXPECTED RETURNS
ALL ORDS ACTUAL RETURNS
ASX 100 RETURN
ASX 100 EXPECTED INDIVIDUAL STOCK RETURNS
ASX 100 ACTUAL INDIVIDUAL STOCK RETURNS
ASX 100 ACTUAL INDIVIDUAL STOCK RETURNS
Difference between picking the top ten stocks and the worst ten stocks in the:
ASX 100-37.5 +83.1 = 120.6%
ASX 200 -51.0% +248.9 = 299.9%
ASX 300 -66.1% +273.9% = 340.0%
ALL ORDS-70.2% +444.3% = 514.5%
The Stock Picker Average returns don’t exist
Making money is about buying stocks that go upAvoiding stocks that go down
Avoid anyone hiding in averagesValue anyone trying to pick stocks
Value time spent trying to pick stocksFind a stable of good stocks
Apply trading skills
9. The Zombie
10. The 10 Stock Gambler
11. The One Stock Portfolio
12. The Boat Fund
13. FOREX and CFDs
BEST APPROACH
BEST APPROACH
Looking for high probability outcomes(It is a gamble)
BEST APPROACH
Looking for high probability outcomesUsing both Fundamental and Technical
(Weak alone – stronger together)
BEST APPROACH
Looking for high probability outcomesUsing both Fundamental and Technical
(Weak alone – stronger together)
Cannot shut eyes to “The odds”(knowing when to play the market)
BEST APPROACH
Looking for high probability outcomesUsing both Fundamental and Technical
(Weak alone – stronger together)
Cannot shut eyes to “The odds”(knowing when to play the market)
Identify and trade Individual Stocks(Buying stocks that go up – Avoiding stocks that go down)
BEST APPROACH
Looking for high probability outcomesUsing both Fundamental and Technical
(Weak alone – stronger together)
Cannot shut eyes to “The odds”(knowing when to play the market)
Identify and trade Individual Stocks(Buying stocks that go up – Avoiding stocks that go down)
Time entry (not the sole focus)
BEST APPROACH
Looking for high probability outcomesUsing both Fundamental and Technical
(Weak alone – stronger together)
Cannot shut eyes to “The odds”(knowing when to play the market)
Identify and trade Individual Stocks(Buying stocks that go up – Avoiding stocks that go down)
Time entry (not the sole focus)
Trading skills to control outcome
BEST APPROACH
Don’t nail yourself to one mastValue stock pickers
Learn Technical basicsGet trading skills
252,435 hours
252,434 hours
The Stockmarket Newsletter for Every Investor
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