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Online Share Trading

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Might be a stupid question but hey im jus a rookie

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Mr_S
Super Contributor
last week the all share index dropped past 26000 points right, now whats bugging me is that a while ago the market was around 15 - 18000 points if im not mistaken. now we around 26 000, if we do drop to say 20 000 points, what should we do to preserve my initial investment? or is it just a matter of having patience? but still patience can taken a few years. so whats the best option? im a long term investor by the way, but i dont wanna spend 2 years waiting for my stock to appreciate after a huge drop in the all share index. thanks guys.
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24 REPLIES 24
geordie1
Super Contributor
if you cannot stomach losses bail out and take the loss on the chin.Yes it may go lower if the bears have their way.2 years is short term in my book.I personally will sit in the shares I have and wait out the recovery in the next 15 years or so-I am an investor.
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striker
Super Contributor
I differ on the time frames.My medium term is three yrs. and my long term is five yrs. IMO our market will see steady and significant upside in 2009.
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striker
Super Contributor
Mr.S - history shows,it is the time you spend holding shares in the market,(not trying to time the market bottom) that is important. If your stock selections were thoughtful,and you bought them any time over the past few months,then sit tight,and be patient.
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Mr_S
Super Contributor
thanks guys, but lets say the market crashes, is it still a matter of sit tite and be patient? wont make an 'opportunity loss' as they call it?
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john_1
Super Contributor
Simply deciide on a level below which you are unhappy holding and get out if that limit is reached, its called a stop loss.
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Mr_S
Super Contributor
this thing of a stop loss kinda gets to me, cos jus last week i stopped out of a share that i was plannin on holding for a while, but then emotion stepped in and i decided to sell 100% of my holding, but now i reviewed my strategy and saw that i really should have stayed in, now ima end up buying again..talk abt buying high and selling low then buying high again, thats one thing i promissed myself i wouldnt do..guess i still got a lot to learn, im only 19 so its cool :-)
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john_1
Super Contributor
Stick to your stratergy, stick to your stoplosses and while you learn put most your holding into satrix.
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Not applicable
Look at it this way - you bought a share in a high-quality nice and cheap. If the share price drops, the same exposure to the high-quality company is available even cheaper - i.e. it is an even better investment than before! A value-oriented investor should therefore not sell a share just because the price has dropped (as long the the fundamentals are still positive). Quite the opposite - if the price has risen significantly, the investment may have become relatively expensive, and then it might be time to sell it and buy something cheaper. Say 100 times after me - buy cheap, sell expensive; buy cheap, sell expensive...
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Mr_S
Super Contributor
timato, thats exactly what i thought! thanks guys really appreciated, i mean you guys are so generous with yr knowledge, we need more ppl like u
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louisg
Super Contributor
Mr S I agree with Striker and Timato. IF you are a long term investor there is no reason to sell the share. Selling a share only because the price delcined is not a good enough reason. If the reasons why you bought the share are still intact then you should not concern yourself with a short term price decline. Remember you are investing in the business as a shareholder for the long term. Although a stop-loss is paramount in a short term strategy, I would not use it as a long term investor. The market is volatile by nature and you will watch your shares go up and down all the time, sometimes significantly. As a long term investor you MUST accept that your shares CAN decline as much as 40%-50% in the short term. If you can stomach that you will be fine. DISCIPLINE and PATIENTS ... also 100 times but this time write it down.
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Mr_S
Super Contributor
see thats the exact thing that was confusin me cos everyone kept saying set a stop loss set a stop loss, it puzzled me how one can set it at say 20% and expect to hold the share for a few years, and not take into account volatility. i have now opted to cancel all my stop losses. i must admit, it is very very hard trying to have patience and discipline for the long term when you are bombarded with stock news etc, but ill work on that, i guess ill buy into that stock i sold and follow my strategy. does an entry price matter for a long term investor, i mean obviously you are gon try go for the lowest price but is it really THAT important?
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louisg
Super Contributor
Obviously the lower the purchase price the higher your return. BUT, perhaps it's better to attempt to be about right rather than precisely correct. It is not necessary to buy at the absolute bottom to be a successful long term investor. Choosing the company is more important than the price you pay for it. ie. rather buy a great company at a fair price than a fair company at a great price. OMO Which company are looking to invest in? Never feel that a question that you do not no the answer to is stupid. A person remains ignorant only until they ask the question.
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john_1
Super Contributor
And the best way to chose a company is to throw darts or ask a six year old.
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Mr_S
Super Contributor
i bought sbk just before i put this topic, but i wasnt really looking to get into any particular stock at the time. although now im trying to find stocks that have suffered due to interest rates etc. i was also looking at Investec Ltd since they have interests in the uk housing market, and thats taking a bit of a knock right now, im still doing FA on it. iv been eyein out Mr Price for some time but honestly..i think iv missed the boat, according to my watchlist today, it was up 60%! ill start looking into property stocks too ouch theres a bit of shine in that sector, coronation has been hit hard so im gon have a loot at that too. how abt u? looking at any particular stocks?
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schizo
Frequent Contributor
lousig, if you a long term trader why are you on this site every day, you should be chillin out on some beach
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barry_1
Super Contributor
If one trades on the momentum,then no share that has gone up say 60% is high yet,best in that case the thing to do is to see when the div is going to be payed as the share is likely to IN MY OPINION ONLY KEEP GOING UP TILL THAT DATE is past.Another momentum share is Aveng and JDG is unlikely to fall further and has the advantage of being near the start of its run.OMHO.
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Not applicable
The shares in my portfolio that I believe offer good value include ART, ILA, HVL, LEW and SBG. I prefer FSR to the other banks (it is on a cheaper P/E the SBK). I have a few other positions that I'm too embarrassed to talk about in a public forum... Obviously you must do your own research, my opinion should not count for anything. (Many people consider me a complete idiot, so perhaps it should count for less than nothing.) What you must understand is that there are two orthogonal theories in investing: fundamental and technical analysis. Fundamental analysis deals with the absolute price of a share; while technical analysis deals with the direction of the share price. Fundamental analysts believe that the market is inefficient; that it prices some shares too high and others too low; and that this provides opportunities for them to find the best-valued companies and thereby outperform the market. Non-believers believe that it is impossible to pick stocks that are better than average, because the insiders always know more than you do, before you. Technical analysts believe that the shapes traced by the historical share price graph predict (to a large degree) the future movement of the share price. Non-believers believe that share-price movements are simply brownian motion (squiggles in which the direction is random at each point in time). Although fundamental and technical analysis do not preclude each other, many people believe in one to the exclusion of the other. One then gets flame wars breaking out; one seems to be starting on this thread...
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Not applicable
Another share that I have but forgot about earlier (it is a small cap and doesn't trade often, so I have it in the corner and normally ignore it) is FPF. It's up an incredible 33% today, but it is still very cheap at these levels (in my opinion). I bought it near the end of July at 43, and it is now at 80. Patience is required when buying or selling small caps, and the volatility can hit you either way.
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Mr_S
Super Contributor
i have seen huge volumes in FSR, seems like the favourite, im definately going to increase my holding there. iv been watching aveng too, i wonder how high this can go, possibly as high as M&R?
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