Looking to invest 150000 has anyone got any ideas on what to invest in.
looking at Pipex and Healthcare enterprise group

Scrip's lottery

Depends on what sort of returns you are after. I would suggest CFDs and/or Forex for the best returns, but they do have a higher risk.

I have some nice south sea island equity i could let u have at a small premium. I also do a good line in Tulip Bulbs.

i have a lovely line in canadian wildcat explorers i can recommend!

I'm very big in ladies underware.

MS

The Other Kevin, ROFL.

Just money, Investing in something decent other than highly speculative loss making small caps.

What do you guys/girls thinks about Pipex and healthcare enterprise group and sorry dscott62 am new to shares so i dont know what Forex CFDs is but i dont mind high risk

I'm in Pipex and it has plenty of potential. Good management but it doesn't do anything very much. I would suggest you read previous postings and look on ADVFN BB. The one I'm starting to get excited about is HMY. Again read old postings and look at other bb's. You must get a feel for a stock yourself and don't be influenced by other's. Research as much as you can. Look at the management of a company as they are the people to increase shareholder value. And remember it's easier to loose that to gain.

LOL

MS

One more thing, with the amount you have I would suggest you look at several investments rather than one. It spreads the risk and don't get carried away with greed and blinded by the numbers.IMHO

LOL

MS

justmoney - Sorry to have been flippant earlier but if you have 150k to invest and don't know anything about shares, don't be tempted by anything you read on any of the bulletin boards. Put the cash on secure deposit and then DYOR.

Agree, Or at least spend some of that money buying a course or something so you can learn.

guys, there is caution and there is caution.

dip your toe into a stock or two to become familiar with the mechanism and habit of trading the market (i mean a few thousand pounds).

keep those stocks in a FTSE 250 name and steer clear of small caps. the last thing you want is romp home a winner in your first week and then realise that they are not all that easy...as you lose a few hundred grand!

IQE IS FLYING AT THE MOMENT. YOU COULD RIDE ON THE MOMENTUM

How much will you pay me!

Watch, buy in cheap and sell high.

The is no rush to buy stock until you are sure you have a feel for the one you are looking at.

Make sure you do all the research you can, on all sites you can subscribe to.

If you are lucky you will win.

If you are foolish you may still win, but then again probably not.

I could give a deeper analysis of certian stocks but so can every one else. We are all experts in our fields, or at least we think we are!

Market is generally rising which is nice, but it is better to do a little bottom feeding like daves dazzler does, sometimes!

He waits for a company to make a sudden big drop in price (evaluating the reason why it drops and the likelyhood of a bounce back over a period of time),and buys in at usually the right moment, and then sells before it tops out, therfore avoiding any further drop.

Clever!

My he is also so flippant!!!

Nice one seawall.

Fund manager:

If you give me the money I can deduct my money for managing it, deduct the MMs fees on the spread, deduct the stamp, oh and you want me to manage it for more than five seconds... that will cost you another percent or so... costs are expensive these days... now we will manage it.. sell.. deduct MM spread, deduct costs, deduct fee for managing to do it

Deduct money to send you report for telling you how we are doing.


Oh, did we say what you lost on that share... oh never mind, it is very useful to be able to offset that against the massive gains and big CGT that you may have to pay.
(incidentally and not joking on this one, I actually got a big high profile solicitors in London charging big fees to be executors on an estate who messed up on transactions telling me words to that effect!)

Anyway what I am saying is.. why are you asking BBs this? You have a bit of dosh, so?

Are you trying to impress?

Okay will I counter that..

'more than one' of my trades I have on at the moment is more than that.... will you give me your money to manage.

Will you trust me?

Will you buy things I tell you to buy?

Anyway what I am saying is.. why are you asking BBs this? You have a bit of dosh, so?

Are you trying to impress?

Okay will I counter that..

Most of my trades I have on at the moment are losing .... will you give me your money to manage.

Will you trust me?

Will you buy things I tell you to buy?

Who am I?
Do you trust me?

Be careful, and good luck!

justmoney

I was in your position in January 2004 with about 60K to invest. I did have some experience in the stock market but the main source of guidance was the Shares Magazine. I invested 5K each in 12 shares, including Bloomsbury, Ottakar's, Hamleys (since taken over), Telecom Plus, Alizyme, Centrica, Egg. Over the months that followed I followed a policy of selling the poor performers (e.g. Egg) and increasing the stakes in the successful companies - good advice.
With a portfolio now doubled in value, I have just six shares. Of these, only Alizyme has been retained from the original portfolio but the overall performance is 120% gain. Your question has led me to ask the question: what would I do if I started again? I suggest:

1. Follow John Marshall of Shares. Several of the above were his recommendatins. Actually, I have yet to see him back a loser. He is still recommending Bloomsbury, Ottakar's plus Topps Tiles, Tesco, Peacocks. His major success this year is ASOS; a bit too late for Glenmorangie. There is a preponderance of consumer oriented shares in his selections. Get back copies of Shares to help with your research.

2. Decide what your objectives are. The key thing is a selection between: (a) capital gains and dividend returns; (b) high and low risk.

3. dyor. moneyAM is a good way to do this. Lets say you select a share recommended by John Marshall. Select 'Research' and print out the fundamentals. You need to understand, in particular, PE, Price to Sales, Market Cap. (PEG is useful if you can get your mind round it!) Go to News and print out the last results. Allow yourself an hour or two per company.

4. There is a big variation of helpfulness in these BBs. Some really are just a good laugh and many posters are in it for the repartee. One exception, I believe, is the ASC bb. ASC has grown 1600% this year but probably has another 100-200% to go in the next six months before it gets over-heated. There is a fascinating portfolio on that bb at present which came about as an "ASOS Challenge", i.e. a challenge to readers to nominate a share which would double quicker than ASOS. Needless to say ASOS is leading but the whole portfolio is worthy of consideration.

5. Decide on the weightings to individual shares. On 120K, I would start off with 10K per share, but, if you were convinced you had a great performer, then double the weighting (and keep a bit back). If a bit doubtful, reduce the amount to 5K but don't go over 12 shares because they are just too difficult to get to know really well.

6. Put your portfolio up on sharewatch and check it at least once daily. Any notes are indicated and check those out.

7. Are there any musts in the portfolio? There are two FTSE100 which should probably be in any balanced portfolio - Tesco and HSBC. Both have risen consistently for a long time, have international status which helps to ensure future growth and are still reasonably priced - because the market takes too short term a view. The real growth is probably to be found in the small cap and AIM markets. The reason is that many of these are, at present, not large enough for the institutional investors to pile in; the cap probably needs to be nearer 100M for that. The real movement can happen when they all want a share - something that is starting to happen with ASOS, for instance. Beware the higher risk in that part of the market. I believe, myself, that there is more risk in companies like Boots, WHSmith, Sainsbury which have become too big for the respective management's to handle.

8. Enjoy the process. Be prepared to learn. Take care who you listen to. Be prepared to admit your mistakes. And run those profits! Thank your lucky stars for having the funds. If the above is too frightening, go to a professional advisor (I went through a selection process recently for my sister-in-law and am delighted with the outcome - I can give the name to you personally if you e-mail me via the administrator).

Hope this helps. Feel free to question any points made. Good luck.

Eric

Thanks Eric/EWRobson thats realy helps

I think you can make money on the stock market. If you are lucky you may only buy stars and no duds. However the majority of long-term punters have bought some duds in their "careers. Sometimes one remembers the pain and the shame and hopefully increases one's skill to prevent the reoccurrences.

I would suggest dumping your cash in a high interest account with a reliable internet access. Smile, Bank of Scotland etc. (Make it one of the larger banks.)

Next step would be to buy a Portfolio management software package (personally I like Sharescope, but have little experience of other packages) .

While your 150k is attracting nice risk free interest, run alongside it phantom portfolios and shares, which you think, are winners.

Judge at the end of 3months that your results would have been.

Look at the normal spread of buy to sell and the normal market size of the share you consider buying. Look at the trend for the share you are buying, buy with the uptrend not against it. Not many read the bottom of a shares price, however there must be some who do it or the share wouldnt bottom out. (But do they do this consistently or just brag on the occasions they get it right.)

Start off an internet ISA account which provides you with on line research prices and lower dealing costs.

Get a variety of books and CDs on Technical Analysis, such as David Jones introduction to charting on CD from(Sharescope) , Martin Prings introduction to TA. CD and book) Also Technical Analysis for Dummies by Barbara Rockefeller. One of the best books I have read on TA.

Some books on Fundamental such as The investors guide to Understanding accounts by Robert Leech. I find these books (Fundamental's) boring, but they give some insight into the basics of a company and the markets. (I wish I had understood a little more about accounts now and before I had started gambling.)

Get a few books such as How to read the Financial Pages by Michael Brett.
The Times: How to Understand the Financial Pages An A-Z Guide to Money and the Jargon by Alexander Davidson


Remember there is never any urgency to buy, but there is sometimes a need to sell quickly. However good or reliable a tip check it out first before buying or selling ie DYOR . If you don't buy immediately, if it is a good share you can ride on the trend and there are always plenty more fish in the sea.


Buy Shares, Investors Chronicle and use the various internet platforms. They may help you to think about what you are doing. (Dont believe what you read, or see, without checking out the basics for yourself, NMS, Spread, cash, earnings, PE. ROC yields Etc,.

DONT BE IN A HURRY. Have a good holiday before you start, it may be the last you can afford for a while.

PS another important Buy if you don't already have it is BroadBand or equivalent. It makes downloading and looking around so much easier. The latest other Gizmos and latest highest speed commuter is not generally a great advantage and if "needed" rather than "wanted" can be bought 12mths later far cheaper with the teething problems of the latest versions resolved.

If you want risk buy PET and TMC and you could make a million +.

PS Leave CFDs, Spread betting, Options etc. to others, until you think you understand what is driving the markets and then you can try it, possibly losing money at the same rate as many others.

Also for about 3-6 months form a portfolio of tipped shares and check the results. Chek the price of the shares tipped for a period before and after the tip.

Fred1new,
I reckon yourself and EWRobson have put some good points there that would do well to be noted by new and not so new investers alike.
opto

Helpful comments from Fred1 new. Not so convinced about all the books; you can lose yourself in a mass of detail. The only investment book that I have read (I do read plenty of articles in Shares and IC, so that is good advice) is Jim Slater's Zulu Principle. His wife taught him the ZP; she was an expert in Zulus and their history and was in much demand to share her knowledge. Perhaps the best advice to take is to really get to know the companies you invest in very well indeed - you end up knowing more than the experts and learn to predict share movements and thus know when to sell or accumulate. Whether you jump in or take time to study depends on your personality. Certainly, start by using moneyAM and pay their 10+VAT per month subscription to get current prices and use stockwatch for your portfolio and also a watchlist of shares that you are interested in. Also, find an on-line trader which keeps the dealing costs down. I am happy with stocktrade, one of the originals. Their charge is 14.50 per transaction which is not the cheapest but I do find that they deal at good prices (checking the trades against the live stream).

I thought we should play a game! I will start by defining some criteria for investing 150K and then put forward a portfolio. It wouldn't be my actual investments because my personal portfolio is much higher risk, seeking greater returns. The criteria may be right for you; they would fit several friends - now I don't advise friends! but, if they insisted... My suggestion is that other visitors to the bb put forward their own portfolios and we can then see how they do. You may want to go for mine or one of the others or none at all. But we should all learn from the exercise. What is at the back of my mind is that this bb, given that it stays alive because we are playing this game, could then be helpful to others who are coming to the market with a significant sum to invest and are wondering what to do.

So, here are the criteria:
1. Spread the risk over 12 shares.
2. Objective to take out 15K (10%) per annum (presumably to use this bequest, say, to improve lifestyle whilst keeping the principle amount invested). Part of this can be dividends but obviously not all. Essentially you are aiming for a minimum of 10% capital growth per year (+ inflation). If achieved exactly, the sum invested is staying at 150K (+ inflation).
3. Bearing in mind that higher capital growth implies, generally, higher risk, restrict the risk funds to one-third of the portfolio.

We will call the portfolio below the ER portfolio - a couple of initials please to identify other proposals. Price to be offer price quoted at close of business.

______________ EPIC level pe__ yld price_ shares
(1st third)
HSBC__________ HSBA 25K_ 15.2 3.7 918___ 2723
Tesco_________ TSCO 25K_ 17.6 2.4 290.75 8598
(2nd third)
Bloomsbury____ BMY_ 10K_ 16.2 0.9 257___ 3891
Ottakar's_____ OKR_ 10K_ 10.7 1.6 362___ 2762
Telecom Plus__ TEP_ 10K_ 22.8 3.4 298___ 3355
Topps Tiles___ TPT_ 10K_ 23.4 1.7 196___ 5102
Alizyme_______ AZM_ 10K_ -___ -__ 123___ 8130
(3rd third)
ASOS__________ ASC_ 10K_ 83.2 -__ 83____ 12048
Healthcare Ent HCEG 10K_ -___ -__ 1.92__ 520833
Pipex Comms___ PXC_ 10K_ -___ -__ 7.5___ 133333
Yoomedia______ YOO_ 10K_ -___ -__ 26____ 38461
Petrel Res.___ PET_ 10K_ -___ -__ 110___ 9090

A very quick summary of basis for selection:
- Portfolio in 3 thirds (50K each): (1) blue chip with consistent growth; (2) 100m+ cap, established; (3) emerging small-cap growth stocks.
- HSBC and Tesco stand head and shoulders above FT100 for growth with income.
- Bloomsbury: excellent management, acquisitive, not just H Potter.
- Ottakar's: excellent formula with plenty of room for growth. -- Telecom Plus: far more than Telecoms company with network marketing approach.
- Topps Tiles: as for Ottakar's.
- Alizyme: established portfolio of drugs, awaiting major licencing deal.
- ASOS: success story of 2004; plenty of further growth to come (see bb).
- HCEG: proposed by justmoney; potential winner for MRSA.
- Pipex: proposed by justmoney; 20% holding by BCS; moving to profit.
- YOO: leader in emerging digital TV marketplace (see bb).
- Petrel Resources: only high risk share; Iraqi oil deal within month? (see bb).

Happy to justify selections. Progress report at month close. Any other portfolios?

Eric

Surprised no takers yet for the 150K Challenge above. Imagine being able to start again without the dead wood in your portfolio! Or are you overcome by the brilliant analysis?

Eric

Echo Opto comment of 6th November - who needs fund managers? Remember the day may well come when you find internet access to brokers cut off and all telephone lines engaged, whilst prices drop before your eyes. This is for your fun money. With my 150K I would take slightly less risky approach. Keep HSBC/Tesco as blue chips. In established cos change Alizyme, Telecom Plus and Topps for AG Barr,Halma and Domnick Hunter - lovely cash generation feeds good and growing dividends. Many to choose from in emerging cos (some of which will fail) and cannot argue with your choice, but personal preference would favour Fayrewood and Imprint Search in the short term at least (both now profitable and with good prospects)over PET and YOO.

partridge

Agree comment re fund managers. diy approach becomes a better route with informed input on these BBs from people who (a) know their onions; (b) know their investments inside out. Its a stock-pickers market. Thanks for PR portfolio - Unless you want to do it, I'll post this evening with shares allotted on basis of closing offer price (easy to do as variant on my ER portfolio). Other players?

Eric

Eric

Very happy for you to do the posting - thanks.

Lloyds Bank
Framlington Second Dual Zero Div Pref
Civilian Content
Finsbury Food
Marchpole
Alliance Dresdner Income Growth Ordinary
Ideal Shopping
William Ransom
Investec High Income Ordinary
Simon Group
Equal amounts in each even investment trusts can give good returns

poacher45

Thanks for entry. Have logged the shares with offer price. Have you offer price for the Framlington plus Alliance Dresdner plus yield and PE?

Eric

Partridge

Invested your 150K as requested in the PR Portfolio! Don't see Domick Hunter to give it a PE or yield. All looked blue today which suggests you might have an upwardly mobile portfolio.

______________ EPIC level pe__ yield price shares

HSBC__________ HSBE 25K_ 15.2 3.7__ 914__ 2735
Tesco_________ TSCO 25K_ 17.6 2.4__ 293.5 8517
Bloomsbury____ BMY_ 10K_ 16.2 0.9__ 257__ 3891
Ottakar's_____ OKR_ 10K_ 10.7 1.6__ 360__ 2777
AG Barr_______ BAG_ 10K_ 13.1 3.6__ 730__ 1369
Halma_________ HLMA 10K_ 23.4 3.9__ 16.6_ 6359
Domnick Hunter DKH_ 10K_ -___ -____ 395__ 2531
ASOS__________ ASC_ 10K_ 82.2 -____ 82___ 12195
Healthcare Ent HCEG 10K_ -___ -____ 2.00_ 500000
Pipex Comms___ PXC_ 10K_ -___ -____ 7.5__ 133333
Fayrewood_____ FWY_ 10K_ 0.4_ 9.2__ 137__ 7299
Inprint Search IMP_ 10K_ -___ 22.8_ 156__ 6410

Good luck! Eric

Alliance Dresdner Price 46p P/E 6.7 Dividend Yield 13.74%
Framlington Price 138p No P/E or Dividend.
Hope this helps.

Eric, heres my list don't think it fits perfectly into your criteria though.

FTSE

TSCO 20,000
RSA 20,000
CNE 10,000

MKT CAP 100m +

HRN 20,000
AZM 10,000
NLR 20,000

SMALL CAP

MPH 12,500
ASC 12,500
CCN 12,500
ACE 12,500

cheers

capa

Domnick Hunter has yield 2.6% and P/E of 16. Don't forget the "n" in the middle. Please also note spelling of Imprint. Many thanks. Have dealt since 1972 and probably had more blue days than red, made some money, lost most of my hair and had a lot of fun!

Partridge
IMP FWY yields.
What are these figures?

Justmoney - have you thought about looking outside of equities? If i had 150k spare i would look to a) pay off my mortgage; b) buy property; c) invest in fixed term bonds (you can get 5.5% to 6% guranteed over 1 year); d) buy gold.

If I had 150K I'd buy a brothel. Load's a money!

MS

Is that the going rate for a brothel then ? Seems cheap !

How do you advertise when selling. "room with a screw" perhaps

capa

poacher45, capa

Thanks for input. We seem to have lost 'justmoney' though! Realised that its not sensible for me to log the portfolios - the major problem is formatting the wretched things to post the result. Happy to do a monthly report on ER and PR, as that is a variant on my own. Hope you put yours on a spreadsheet and post it: first, the initial shares bought and then a portfolio evaluation based on end-of-month prices. I think the results should be informative for ourselves plus any new investors. If mickeyskint can include the figures (or vital statistics!) for his brothel, so much the better!

Eric

50K on mary 36-24-36
50K on suzie q 40-24-36 (Inplant job)
49999.50p on bald headed sally ( Keep's her teeth in a jam jar next to the bed)
50p on me, management & consultancy fee and general tester.

MS

mickeyskint

I like it (sorry, them)! Will look forward to your end of month trading account!

Eric

Torquay - yield on IMP is nil (although I hope that will soon change now they are profitable/cash generative) and negligible 0.4% on FWY (again they should be able to afford more on 2004 result if half year bullishness and recent trading update prove well founded). Sorry for error above ( don't want to blame Eric as he has done all the work!).

I have 250000 to spend which i have decided to purchase 4 buy-to-let flat/House (Deposit - 100000/25000 each flat/house) i already have two but-to-let properties and rest is going to be invested in shares.

So far shopping list looks like this:

Tesco
Pipex
Healthcare Enterprise Group
Alizyme
Colt Telecom
Medical Solutions
Sterling Energy
Yoomedia
HSBC - Maybe

What do you guys think?

A big YES for SEY (mirror symmetry - how odd. A good portent?)

I also like Tesco - their move into the Chinese market will increase shareholder value over the next few years. And do you notice the number of Tesco Express outlets that keep apperaing in small towns and villages. They always seem to be full of shoppers and always advertising job vacancies. These boys are growing and the housewifes seem to like them. I remember the old days of 'pile it high, sell it cheap'. But now quality seems to be their thing.

Any ideas on any others that i should add my list

Forget Pipex it's going nowhere. Looks good but it seems one of those under achievers. Too many shares issued. I think the only way this will do anything is if a take over bid is made. Oil is running out so I would look at a major like BP and an exploration company like SEY. 2006 will be their time but is a little risky. I think equities will struggle during 2005 and into 2006. I am reshaping my portfolio taking a more defensive position in the FT100 but leaving a little fun money for the AIM market.

LOL

MS

I agree forget Pipex,but Yoo and HCEG could be a long time coming good but have good prospects. I like GMC which is just coming to life, SBT and best prospects in my opinion are with NLR which is motoring up and likely to continue so buy on weakness also PAY which has not yet taken off but figures due in Dec may change that and then I hope they rocket. Also HMY is very undervalued. All my opinion do your own research!!

justmoney

Your list is looking pretty good. Medical Solutions has come back a long way. Charles Stanley produced projections which were far too optomistic so that share was down-graded. I was in for a while but got out with a small loss. Their postion in the market though is excellent, as they should be in the vanguard of the movement of treatment via the genome. Prof Sakora is Medical Director and that gives immense prestige value. Timing could be good but I am not watching the share that closely.

Yoomedia is currently suspended whlilst they complete an acquisition which could is effectively a reverse takeover. In my view, one of the best medium term prospects in the market - presumably you are watching the bb. Be careful, as the price could jump on return to the market, probably next week. Alizyme, definitely. HCEG probably, although I am suspicious of their management - why issue billions of shares? Is Ebiox the winner they claim for MRSA. Was looking but turned away: be careful.

Sterling Energy timing is probably good as they have just cleared a funding and could now move ahead. Petrel Resources for some risk funds but with a very high upside. Petroceltic has positive support on tehir bb.

ASOS, I think the biggest mover this year, is still cheap and a must (its my heaviest holding).

I have argued above for Tesco and HSBC. First time I had looked at Pipex and liked what I saw; an acquisitive company like YOO in the market and unencumbered by history. Suspicious of Colt Telecom which is encumbered by a history.

Your list though is taking shape well. One approach is to make initial purchases at about the 5K level. Once you hold a share, you follow it that much more closely. Sometimes you start to see, or feel, the warts. Then back the winners; not only run the profits but accumulate. Don't stay on the sidelines too long!

Eric

Justmoney

I think you would be wise to just view this thread for 3mths and leave your money in a high interest account.

You could start off a phantom portfolio with the advice and reflect.

DYOR DYOR DYOR DYOR At least then you can only blaim yourself or bask in your own Glories.

I still suggest getting Martin Prings bookd and CD on TA and reading the last few chapters if nothing else. It would have or may have saved me a couple hundred thousand.

These chapters are simple and to the point.

And remember the Trend is your friend, if your trade against it you are lucky if you suceed and stupid if you don't.

I like Fred1new's "trend is your friend". Modify with a cautionary note: "but not when it is running out of momentum". Add "run your profits and cut your losses". Add: "the shares you know best are the ones you hold; so if you want to buy, sell the one you already have, which is a dog, to make room".

Any other pow's? (that's pearls of wisdom, stupid!)

Eric

my favourite pow

shares can go down as well as down.

and just when you think it can't go down any further it will collapse!

I like the saying that "the Rothschilds made their money by selling too soon" and on the same theme "never be frightened to let the next man make a bit"

I thought Boyse contribution on Traders BB is very valid to investors.
Vice Number One: PERFECTIONISM

Perfectionism is often the chief culprit when the pain of losing exceeds the pleasure of winning. Desperately trying to feel good about themselves, perfectionists set unrealistically high ideals. They think they will finally be OK if they just accomplish X. (For X, you could substitute many things, including looks, wealth, popularity, or achievement). Because X is an unattainable goal, perfectionists ironically use their ideals as a basis for self-criticism when their performance doesnt match up. After all, is achieving X will make me OK, then I must not be OK if I fail to achieve X. The emotional theme of the perfectionist is not good enough. Perfectionists are driven to do more and more because they never feel competent, worthy, and loved as they are. Thus, even when theres a profit on a trade, perfectionists will look for the portion of the move that they did not participate in. If they caught most the move, they will reprove themselves for not trading a larger position. And when trades dont go well, perfectionists review all the reasons that shouldnt have made the trade, should have known better, etc. By focusing on the portion of their performance that doesnt match their ideals, perfectionists transform successes into defeats, losses into failures. They rationalize their perfectionism as a drive for achievement, but all they are accomplishing is an undercutting of their confidence.

Perfectionism shows up as negative self-talk and self-blaming. Emotionally, we recognize perfectionism from frustrated, angry feelings when trades dont work out as planned. Beating myself up is how many perfectionists describe their self-talk. The way to beat perfectionism is to make a concerted effort to talk to yourself the way you would talk to a good friend in a situation where things went wrong. Most people know how to treat others with respect, love, and dignity. They just havent learned to do the same for themselves. If you would be more nurturing, understanding, and supportive of a friend than you are of yourself in the identical situation, then you know that youre not being your own best friend. If a trade doesnt work out, the constructive trader focuses on, What can I learn from this?not Whats wrong with me?. In Woodies language, the best antidote to perfectionism is the ability to reassure yourself, There will be better trades down the road. The key is to not miss those better trades while youre beating yourself up!
Vice Number Two: EGO

Everyone likes to win in the markets. Its only natural to feel good when youve done your homework and end the day with a profit to reward your efforts. Ego involvement in trading, however, goes further than this. When the ego is involved, we write the market a blank check for our self-esteem. If trading is green, we feel good about ourselves; if we go into the red, we feel diminished. That places tremendous pressure on our trading over time. Not only do we have the burden and challenge of reading complex market patterns; now we also have a psychological gun pointed to our head ready to go off any time our pattern recognition fails us.

Most traders are aware of the dangers of trading with too much leverage. A trader accustomed to trading 2 lots, where each tick in the ES is worth $25, would feel overwhelmed jumping to 100 lots, where each tick now moves the account $1250. With the stakes raised to such a degree, the same trade would now no longer feel the same. It would be hard to let a position go against you by a point ($5000, instead of $100), and it would be difficult to let a profit run. When traders invest their feelings about themselves in their trading, they are operating with maximum emotional leverage. In the currency of self-esteem, they trade 100 lots. So much of their emotional account rides on each trade, that it inevitably affects decisions about cutting losses, letting profits run, and entering and exiting in a timely fashion. The successful trader wants their trades to work out; the ego-involved trader needs them to be profitable.

We know that ego threatens our trading when we find ourselves needing to trade just to win back some recently lost dollars; when we feel a desire to advertise our positions; and when we find ourselves riding an emotional roller coaster as profits wax and wane. Just as we can recognize traders perfectionism from anger/frustration, we recognize ego-involved traders from euphoria/depression. If trading has us truly depressed, we know that its not just our trading account thats hurting. The antidote to ego-involved trading is to place our self-esteem eggs in many baskets: recreational interests; other work involvements; relationships; and our spiritual lives. Many times we pour our self-esteem into trading because those other facets of our lives are not properly developed. A balanced life makes for balanced trading. In the spirit of Woodies CCI Club, we can take some of the ego out of trading by learning from others, by becoming a candle that lights other candles, and by using a portion of market profits to help others make a wish that will come true. If your good feelings in life come from good relationships and worthy achievements, you wont need the markets for your happiness. Market success can be the frosting on the cake of your successful life, rarely can it substitute to the cake itself.


Vice Number Three: OVERCONFIDENCE

It is common for traders to complain of a lack of confidence in their trading, but very often it is overconfidence that does them in. Overconfidence results from a lack of appreciation of the complexity of markets and an underestimation of the challenges of trading them successfully. In a sense, overconfident traders lack respect for the markets. They think that reading about a few setups or buying the newest software will prepare them to make money. Overconfident traders dont want to work their way up the trading ladder: they resist the idea that screen time is the best teacher. They also chafe at the idea of growing their account. Rather than start with one contract and wait until theyre profitable before trading larger size, they want big positionsand profitsright away. Because theyre so eager to make moneyand so sure they can make itoverconfident traders generally trade impulsively. They wont wait for the setup to form; theyll jump the gunand get whipsawed in the process. Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process.

The hallmark of overconfident traders is that they think they are going to make something happen in the market, instead of patiently waiting to take what the market gives them. Spelling out profit goals for each day or week of trading is one manifestation of overconfidence. Humble traders know that markets expand and contract their volatilitysometimes the trade just isnt there. The overconfident trader, however, feels that he/she is bigger than the market. Indeed, overconfident traders will often take great pains to try to catch the tops of bull swings or the bottoms of corrections. As a result, they often fight the market trendand can get run over in the process. If the emotional signs of perfectionism are anger/frustration and the emotional signs of ego involvement are elation/depression, then the emotional signs of overconfidence are impatience/impulsivity. Overconfident traders overtrade. They fear missing opportunities more than they fear losing money. The antidote to overconfidence is rule-based trading and the intensive rehearsal of trading rules. By making entries, exits, stops, and position sizing rule-governed and vigorously rehearsing trading rules during simulated trading (as well as in real time with small positions), traders can greatly reduce their impulsive trading. Very often this means training oneself to focus on (and rehearse) what-if scenarios of being wrong in the market, as well as forcing oneself to spell out the rationale, targets, and stops for all trades. By making trading a more self-conscious process, traders interpose thought between impulse and action, gaining greater control of their trading. When the trading room admonishes, No boasting, just posting, it is encouraging restraint on overconfidence.

Fred1New

Thanks for that. A really helpful analysis and I suspect all of us see some of ourselves in some of it! There is a personality type system called the Enneagram which this resonates with. If any one is aware of it, or is prepared to investigate it, then it is a great help to understand yourself and to understand others and your relationship with others. I mention it partly because the Number One (of 9 numbers) is the Perfectionist and this is a very good portrayal of the types and attitude. We all need something of the perfectionist because otherwise we can be slap-happy and undisciplined. You know a No. 1 as soon as you go into their house and (feel as if you should) take off your shoes. They are tight-lipped and everything has to be in order. What I hadn't thought about was the attitude to trading. I am a Number Five which is characterised by wisdom, but the failing is a hunger for knowlege, a need to store away lots of knowledge before you act (a number five was reporting earlier, saying not to invest for three monmths before you had enough knowledge!). The key point is to know your type and characteristics and therefore the traps you might fall into. I won't comment further but could give references if anyone wants to follow it up.

One point I don't agree with from the above is in the last section. That is the part that talks about following rules. The person who follows rules is a Number 6 and we have an awful lot of them, particularly in the Civil Service. That is not, for me, the way to tackle investments, but I accept that is a function of my own type. It is not my way! I do the research but I will not set rules. I have just been explaining to the chap from Blue Index that I do not operate stop losses; told him I had just seen a guy having his investment in PET sold just because the price momentarily dipped. But I am able to sell - I sold Medical Solutions a few weeks ago because they missed their forecasts; they have now dropped another 75% on a profit (rather loss) warning; I am weighing them up again to buy. I believe the author confuses impulses with insights. You need to understand the rules, yes. You need to see the logic behind the movements, yes. You need to get the big picture and, in the light of that big picture, you have an insight which then governs the action. He has made the mistake of a dreadfully simplistic approach. Its better to read the guides who talk about such things as contra-cyclical investment - or you work out what the rules say, realise that is what everyone else is doing and THEN DO THE OPPOSITE!

Eric

You could put a few thousand in Antonov PLC.
More than a few thousand and you would likely move the price.
Antonov PLC and Rotrex have designed a two-speed supercharger - when the engine RPM drops, the gearbox automatically changes to a higher gear to ensure pressure is maintained. The market for these could be comparable to the market for turbochargers. They have designed a 4-speed gearbox which might go into production this year and a 6-speed gearbox which may go into production in 2005. With one of the designs, you can shift from any of 6 gears to any other with no torque interuption - this is called powershift. Rival powershift transmissions are the dual clutch transmissions which require gear shifts odd-to-even and even-to-odd, eg the highly praised VW dual clutch trannies. Gearbox length corresponds to car width in most FWD cars. That means thin automatic cars have been difficult to make in the past and so the US has no small cars. All that could be set to change. Antonov has designed a dual clutch transmission too that is shorter than the VW design, allowing thinner cars, and making small cars a viable proposition for the automatic driving US.

The news of the Rotrex partnership becoming official (heads of agreement) is only a couple of days old and the share price hasn't reacted to the possibility of supercharged cars hitting the streets in big numbers. Superchargers have been used for increased power in the past. Superchargers for fuel efficiency (required by 2008) isn't generally understood, but if a six cylinder V6 is replaced by an inline 4, the savings on friction losses and valve operation etc can be imagined.

Far too many people are daydreaming about hydrogen and fuel cells. Practical design solutions for today's problems that can b made with today's technology - that's where I think the money is. Development takes time and investors lose confidence. The turnaround for Antonov has already started. To be honest, you've missed it. But who actually manages to buy at the bottom and sell at the top?

Desire Pet. is still a good buy if you fancy a roller coaster ride! Don't forget to hold on tight.

Two essential investments for everyone:

The Intelligent Investor by Benjamin Graham updated recently by Jason Zweig

A Random Walk Down Wall Street by ??? Malkiel ??? (spelling unsure) now in its eighth edition

Each of these books will cost around 10, possibly including postage. I got the second one from Amazon and the first from a bookseller's on the phone. They're probably both available on Amazon; in addition, Investor's Chronicle seems to be recommending both of them in its "book club" and giving a phone number to order them.

Shares magazine and Investor's Chronicle are for keeping up to date with what's happening week by week; the books are more for strategy and understanding how markets work.

After reading lots of exciting "get rich quick" stuff, these two books were a breath of fresh air. The Intelligent Investor, in particular, contains a large dose of solid common sense. These books are possibly the best investments you will ever make because they will warn you against being silly with your money and throwing it away on wildly speculative shares or losing it gradually on commission charges and share-price spreads.

Azpol