ASX INVESTOR HOUR. How to preserve capital and profit from the sharemarket

Transcription

1 ASX INVESTOR HOUR How to preserve capital and profit from the sharemarket SPEAKER: Dale Gillham, Wealth Within LOCATION: Melbourne Investor Hour DATE: 4 April 2012 DISCLAIMER: The following material was presented at ASX Investor Hour. The views, opinions or recommendations of the presenters are solely their own and do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN and its related bodies corporate ( ASX ). Information and material presented at the seminar is for educational purposes only and does not constitute financial product advice. Investors should obtain independent advice from an Australian financial services licensee before making investment decisions. No responsibility is accepted by ASX for any loss or damage arising in any way (including due to negligence) from anyone acting or refraining from acting as a result of this information or material. Copyright 2012 ASX Operations Pty Limited ABN All rights reserved 2012.

2 How to preserve capital and profit from the share market using a ruler and pencil?

3 Agenda Explode the myths about the share market Learn simple strategies to increase your share market returns Understand how to avoid the common mistakes people make in the share market

4 Ask yourself? Who has the most to lose in your investment decisions? Broker? Financial Planner? Managed Fund? YOU?

5 Ask yourself? Which direction is the Australian share market likely to travel in the next year? What are you doing to ensure your investments perform?

6 Keys To Success Know when to buy and when to sell Set a Stop Loss Practice sound money management and diversification principles

7 How to buy and sell Trend lines All trend lines must touch either three peaks or three troughs All trend lines must be drawn in a trend of 12 or more bars on a weekly chart

8

9 When to buy and sell Trend lines Buy when a stock closes above a downtrend line on two or more consecutive weeks Sell when a stock closes below an uptrend line on two or more consecutive weeks

10

11 Beat the Managed Funds by 20% Using trend lines and a simple stop loss I show you in my book how you could have achieved an average annual return of 52.09% from 1 January 1997 to 30 January Compounded return 20.03% Imagine what you could achieve if you really understood the market.

12 Beat the Managed Funds by 20% If you owned the top 20 shares on 1/7/2007 Using trend lines on a monthly chart to exit, during the GFC your portfolio would only fallen less than 3.0% How much does a lack of knowledge cost? Ignorance can be expensive!

13

14

15

16

17

18

19 To Sell or Not to Sell? Why don t people sell shares they are loosing on? 1. Emotions: It is far easier to deal with a paper loss than an actual loss in your emotional bank account 2. Laziness They do not know how or when to sell, so they do nothing except to blame the economy or someone else

20 To Sell or Not to Sell? Why don t people sell profitable shares? 1. Emotions: -Fear of missing out -They believe past performance will continue -Being fixed on a price 2. Laziness They do not know how or when to sell so they do nothing except to blame the economy or someone else

21 Stop Losses For Blue Chip shares set your stop loss at 15% below your buy price Use an uptrend line as a trailing stop loss 15% below the last major high if no trend line is present

22 $1,000 Invested since 1982 Maximum 5% loss in any one quarter Based on quarterly returns for the XAO Jan 1982 to July 2011

23 $1,000 Invested since 1982

24 Diversification or de-worsification Diversification was devised as a way to minimise risk, but many in the financial services industry also use it as a way to reduce profits and so maintain the standard average 7.5% per annum return over any 10 year period

25 Golden rules to investing Golden Rule: Always aim to have between 5 and 12 stocks in your portfolio. The trick is not to have lots of stocks with small amounts invested in each.

26 Money Management A portfolio of 30 shares evenly balanced has a risk of 3.3% per share This means if you lose 100% of a share it only means 3.3% of your total portfolio is lost Inversely if a share you own rises 100% it only contributes 3.3% to your portfolio growth Tip: Always look at portfolio returns as a whole

27 Money Management When purchasing a share always aim to invest between 8% and 12% of your total portfolio Never invest more than 20% of your total capital in any one share Never risk more than 2% of your total capital

28 Common Mistakes Reacting to the short term market news Mis-reading economic events Actively trading with no knowledge Using Gut feel Sourcing information from the wrong places or looking for tips

29 Accredited, quality education Wealth Within has developed Australia s highest level of education in the share market: Diploma of Share Trading and Investment Advanced Diploma of Share Trading and Investment Course in Contracts for Difference For more information visit

30 KEEP LEARNING Take a short online course Subscribe to the Investor Update e-newsletter Play the ASX Sharemarket Game Watch another Investor Hour presentation VISIT