Forum Archive Index - August 2003

[Jerry&sam <samjer@xtra.co.nz>]

Title:

I find that  following  market depth for a few days ( or even weeks)  before
making a purchase is very helpful in getting in at the right time .... I 
simply don't buy a share unless there are considerably (and consistently)
more buyers than sellers within the displayed price range .... ASB Securities
internet broking provides their clients with real time market depth, with
totalled bids and offers for buyers and sellers, and for Australian shares,
numbers of individual buyers and sellers, as well ... I jot the figures 
down in a big diary, and often refer back several weeks to find if more buyers
or sellers are entering the market when I'm thinking about buying ...  

I combine this with very basic technical analysis, using the charts on   
www.bigcharts ,   looking at the trends, volumes, OBV, MACD's, PSAR, Momentum,
 Fast Sochastics, and Candlesticks over a year, then over, six months, then
over three months, then smaller time frames ...and I've learned never to
buy in a downtrend unless I see huge numbers of buyers entering the market
... I've gotten minorly tricked by this once or twice,  like having to chase
a share, only to see it drop back a bit before recovering.  

In terms of learning the basics of technical analysis,  all the postings
of Phaedrus (available at Sharechat, I think)  are an education in themselves,
and Louise Bedford's The Secret of Candlestick Charting is very readable,
clear, insightful and helpful.  

I certainly try to keep abreast of the fundamentals about a company, as well,
bearing in mind that the fundamentals of a company can change mighty quickly
.... I also check the annoucements on the NZX and Australian Stock Exchange
as frequently as I can ... in this respect, the Australian  market is easier
to invest in, because their companies provide a good deal information about
what they are doing  ...  NZ coys (other than the Warehouse,  Ports of Auckland,
and Fisher and Paykel), don't seem to have gotten their little brains around
this continuous disclosure requirement .... we haven't heard a peep out of
Genesis R & D for months,  we never seem to hear anything about their
agri reasearch,  whereas most Aussie biotechs  frequently update the market
about developments ...


Good luck

Jerry 


Pete Stevens wrote:

 

> >
> > My current strategy is to buy in as soon as the price closes above the
> > previous day's close (That's my feeble attempt at technically timing
> > my purchase).
> >
>
> Thus guaranteeing your final return will be worse than if you had
> bought the previous day!

The explanation of my current strategy was faily brief, so I'll elaborate a bit:

 

You are correct in saying that if I waited until WHS had closed up, my final return would have been worse than if I bought during the previous day.

 

However, no one know's when that "previous day" will be!

 

What I do know - is that one technical analysis theory states that if a share price is falling, then it is likely to continue to fall until it reaches some resistance level.

So if we apply this theory to the inta-day trades of WHS shares (see graph below), we see that WHS opened at $4.80 on Monday morning, and closed lower every day until Friday, when it closed higher at $4.61. 

Therefore, using this theory, you would purchase shares after Friday's close (or just prior to it as I did).

 

If I had bought shares at the point when I fundamentally decided to invest in the Warehouse (which was Sunday) - my shares would have lost 4% of their (paper) value!

 

Does anyone want to share how they time their share purchase after they fundamentally decide to invest in a company?

 

> Hi Pete,
>
> >
> > One thing that concerns me
> > though, is the recent fall in the share price (It's fallen $0.25 since
> > I've been watching it!).  My question is:
> >
> > Does anyone know if there is reason behind the recent fall?  Is there
> > some announcement/article that has escaped my research?
> >
> >
>
> Sluggish consumer confidence figures in the USA?    Don't ask me how
> that directly flows through to the WHS shareprice - that' s Mr Market
> for you!
>
> The share price of WOW, Aussie's number one retailer, coming off the
> top, and an associated flow on effect to other retailers?
>
> >
> > The cynic in me said that it due to insiders selling out prior to a
> > (possibly) disappointing annual report.
> >
>
> We already know this years result will be disappointing, so that won't
> be the reason.  It could be that these so called 'insiders'  think that next
> year will also start in a disappointing way.    But you didn't invest in the
> Warehouse banking everything on a recovery in Australia next year did
> you?
>
> >
> > My current strategy is to buy in as soon as the price closes above the
> > previous day's close (That's my feeble attempt at technically timing
> > my purchase).
> >
>
> Thus guaranteeing your final return will be worse than if you had
> bought the previous day!
>
> >
> >For those who are interested, the fundamental
> > justification for purchasing WHS is as follows:
> >
> > The current ratio (i.e. for every $1 of current liability we have $x
> > of current assets) has been increasing, from 1.63 in Aug '00 to 2.484
> > in Jan '03.
> >
> > Gearing ratio (a measure of how much long term debt the company has)
> > has been decreasing, from 0.41 in Aug '00 to 0.365 in '03.
> >
> > The only area of concern is (apart from the one detailed above) is the
> > return on assets percentage (how much revenue the company generates
> > from each $1 of asset) - which has fallen from 14.5% in '01 to 13.5%
> > in '02.
> >
> >
>
> We have already been told about the lack of a suitable series of
> 'hooks'  (read having the right item on the front of the WHS brochure) 
> to get the Australians into the yellow shed stores week after week.  
> We were also told of the lack of anything to market in terms of
> electronic game workstations in NZ last Christmas.     This is all
> historical data that I think goes a long way to explaining the
> deterioration in ROA.
>
> SNOOPY
>
> disclosure hold WHS
>
>
>
> --
> Message sent by Snoopy
> on Pegasus Mail version 4.02
> ----------------------------------
> "You can tell me I'm wrong twice,
> but that still only makes me wrong once."
>
>
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