4 techniques to engage with the sharemarket

Transcription

1 4 techniques to engage with the sharemarket and how to use them to time the market Or what we learned from Alan Hull s presentation to the Brighton East Stock Doctor User Group October 2016

2 Warning Alan Hull warned something like this. I ve written hundreds and hundreds of pages on these subjects and tonight I ve had to condense it down to a handful of slides (In other words he had to leave out a lot when speaking to the Brighton East stock doctors group.) This is my summary of his summary. It s probably inaccurate I d recommend you go direct to Alan or his books or websites to get more info on his formulas and advice.

3 What s going on here You ll find very brief summaries of 4 investment techniques promoted by Alan Hull (note Alan has others we re only covering 4 here) You ll also find thoughts on how to time the market with these techniques.that s explained after we run through the techniques

4 Technique 1. a very brief summary. Look for stocks with good fundamentals Only buy stocks with both characteristics Look for Stocks with rising share prices This is the system used for the 3hourInvestor portfolio Lincoln has great tools to allow us to follow this system efficiently including filters and charting tools such as MMA. Alan Hull also sells newsletters & tools to related to this system. Critical skills. (a) use a system to tell you when to sell and (b) what and when to buy. Must be disciplined Do not try this system without frictionless ability to sell out when the system says sell.

5 COH an ideal stock for active investing COH is a star stock. It has Strong fundamentals It s share price is rising with relatively little volatility Active investing looks to buy fundamentally good stocks growing like this and holds them until they start to decline. Nice looking MMA. Little volatility

6 Technique 2: Fundamentals are sound PE<15 Div Yield > RBA rate Investigate stocks with all these characteristics Buy if suitable Market Cap/Net Tangible Assets <5 (P/A ratio) Unlike active investing. Buy stocks when prices are low. If prices go down, buy more as PE, Div Yield and Market cap /NTA will improve.

7 More on income investing Income investing is not passive set and forget Lincoln has many tools to help us identify stocks suitable for income investing. Do not use this system to buy cyclical stocks such as mining stocks We only profit if the business has sound fundamentals and continues to pay dividends Alan Hull also sells tools and services to help with income investing If we see fundamentals declining, then it s time to sell We must check the business fundamentals regularly (I d say at least 2 x per year and monitor for changes)

8 Technique 3. Take ASX 200 stocks Rank by speed of growth (ROAR) Buy the top 10 No attention is paid to Fundamentals With this technique we are simply buying the fastest growing stocks Alan provides risk, money management Rules and guidelines If you follow this system, you d want to Be confident of being able to buy in and Sell Out when the system says to. (sell when they drop out of top 40) No friction, just do it.

9 Technique 4. Take all ASX stocks Find those with growth over 100% (3 mth ROAR) No fundamentals. Actively check for stops daily Use tighter stop losses than for other systems Sell out quickly Stocks will have little liquidity Many stocks will be penny dreadfuls, however they ll be growing at phenomenal rates And will likely be volatile Typical hold 1-2months then sell quickly Buy the top growers

10 Timing: when to use the different systems Here you might find that the market is no longer paying attention to fundamentals. Stocks that go up, go up further. This is where the approaches in the blue chip report and active trading might give fabulously great returns. You probably won t find ANY stocks suitable for Income Investing. During the down phase do not use active investing or active trading type approaches. Don t buy for price gains in a down market. However during this phase we might start looking for deep value stocks suitable for income investing. At this point in the cycle you ll find a lot of Income Investing stocks that fit the criteria. Using this method can be highly profitable at this phase as it finds undervalued stocks Here you might find that stocks with good fundamentals grow quickly. (active investing) Note this chart was copied from Alan Hull s website

11 More on timing. The timing aspect is the key thing that we learned from Alan s presentation It seems that matching the technique we are using to the phase of the market will help us maximise our returns over time. How will we use this information?. Personally I ll be adding a few extra scans into my routine to help me understand where we are in terms of phase of the market. If there are loads of income investing opportunities available then perhaps we re down near the bottom. If there are none we re likely close to the top. Right now there are no income investing opportunities that fit Alan s scanning criteria. That suggests we re at or getting close to the top. Does that mean the newsletter portfolio should get out of the market and go to cash? I think not we ll simply stay in growing stocks until the market says sell and then we ll be out and waiting on the sideline until the signs tell us its time to re-enter the market.

12 Links to Alan Hull Alan Hull s website. Alan seems to have several strategies that suit different stages in the market and different types of approach (trading, investing, income) He also covers US markets. Furthermore he educates his clients to help them improve. We very much liked is presentation and his approach..thanks Alan. Again read the warning I m sure I ve left out much more than I should have. Also please note I have no financial interest or ties with Alan Hull. Happy investing.