Investing in Shares 101: My Experience 2

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Dr Tony Stewart is a scientist and analyst by training. He has run a strategic market research business and has an extensive background in statistical analysis. At the beginning of his investment career, he read widely and undertook courses on investing run by the Securities Institute of Australia. He has invested in the Australian stock market for thirty years.

John Rothfield 1987 Feature 3

ORT_Logo Breadtag Sagas ©: Author Tony,  1 December 2021

Investing in Shares 101: My Experience Part 2 — Overview, Building a Portfolio, Banks

1 Introduction

In my experiences Part 1, I covered the golden age of floats, successes, luck, my education in shares and my one major systemic mistake. Because of the last, I argued passionately against diversifying and recommended you concentrate on a few shares only. My take homes were to stick to the value investing approach and to concentrate rather than diversify and the reasons for this. The nuts-and-bolts advice and investing methodology are covered in 1 Basics and in 2 Value Investing.

In Part 2 I begin with an overview of my thirty years of investing in shares not covered in part 1. I talk about why understanding a woman’s approach to investing is useful.  I extoll the virtues of DRPs (Dividend Reinvestment Plans) or forced investment in small lots and the general advantage of growing one’s portfolio in small parcels. I explain why I thought early on that the banking sector in Australia was a good bet and why I have been constantly disappointed. This is a useful case study that can be generalised and is worth pondering upon.

I conclude with a take home summary that encapsulates everything I have been advising in these four articles.

I hope you’ll remember this advice fondly in thirty years time, but also that you’ll review it annually and compare your investing experiences with the advice. You can always correct when you divert from sensible action!

2 Overview of My Thirty Years

I was very lucky starting out when I did. I was very lucky investing in CSL (see My Experience 1).

I had a good time buying and selling shares. I did seriously try to be contrarian (buying when the market was down, selling when it was up). I learned a great deal buying and selling many shares, hopefully not too regularly. However, I regret that I spent so much time trading in mediocre companies. From the early 2000s, I spent much time trying to get rid of shares that I shouldn’t have bought in the first place.

Continue reading “Investing in Shares 101: My Experience 2”

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Investing in Shares 101: My Experience 1

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John Rothfield 1987 Feature 2

Dr Tony Stewart is a scientist and analyst by training. He has run a strategic market research business and has an extensive background in statistical analysis. At the beginning of his investment career, he read widely and undertook courses on investing run by the Securities Institute of Australia. He has invested in the Australian stock market for thirty years.

ORT_Logo Breadtag Sagas ©: Author Tony,  1 November 2021

Investing in Shares 101: My Experience Part 1 — Beginnings, Floats and My Major Error

1 Introduction

I have broken this into two parts because it became too long. Part 1 is about successes, luck and one major mistake. I give a minor take home, but leave the major conclusions to Part 2

Part 2 is an overview, a suggestion of the best ways to build a portfolio slowly, a shareholder’s view of investing in Australian banks (which is also relevant to investing in banks anywhere), some conclusions and final take homes.

Neither parts of my experience give a prescription of how you ought to invest that information was contained in 1 Basics and 2 Value Investing. I did not fully understand the answers to value investing and to being a contrarian at the beginning. Although I quickly grasped the principles, it took me years to really understand them and to understand where I’d gone wrong. Hopefully the nuts-and-bolts approach: outlining what I experienced and where I went wrong, will help you to avoid some of the things I went through and to concentrate on others.

When I began to do some statistical analysis of my share experiences, I began to get depressed at the shenanigans I went through in the first phase of my share investing. Some of my minor losses early on were through stupidity and hubris.

Continue reading “Investing in Shares 101: My Experience 1”

Investing in Shares 101: 2 Value Investing

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Dr Tony Stewart is a scientist and analyst by training. He has run a strategic market research business and has an extensive background in statistical analysis. At the beginning of his investment career, he read widely and undertook courses on investing run by the Securities Institute of Australia. He has invested in the Australian stock market for thirty years.

ORT_Logo Breadtag Sagas ©: Author Tony,  1 October 2021

Investing in Shares 101: 2 Why Value Investing?

Approaches to Investing in Shares

1 The Bogus Concept of a Free-Market

Unfortunately, there is a lot of ideology involved with stock markets. This is primarily associated with the wealthy trying to assure themselves and others that whatever they do to acquire their wealth is honest and good for us all. Much of this ideology is associated with the concept of the free-market, which has been around for a long time.

Fitzherbert, quoted in article 1 Basics, criticises the academic theories (espoused even by nobel laureates) called efficient-market theories from the 1970s and 1980s (based on free-market ideology). The efficient-market theories were debunked by the early 1990s, but have continued in different guises under the banner of neo-liberalism. They are nonsense!

Now, I’m not suggesting you abandon your political beliefs or change your dinner party conversation, or your detailed knowledge of economic theory. I don’t want to interfere with your outside life.

I mentioned Dr Turf in 1 Basics. Whenever you engage in buying or selling shares, or anything to do with the stock market, just don’t put a pumpkin on your head. It makes it too hard to see!

Leave the free market or efficient-market theory for when you are bullshitting with your mates.

Also continuing with the horse racing analogy, if you want to speculate on daily swings in the market, getting out and going to the racetrack is probably healthier. Continue reading “Investing in Shares 101: 2 Value Investing”

Investing in Shares 101: 1 Basics

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John Rothfield 1987 Feature

Dr Tony Stewart is a scientist and analyst by training. He has run a strategic market research business and has an extensive background in statistical analysis. At the beginning of his investment career, he read widely and undertook courses on investing run by the Securities Institute of Australia. He has invested in the Australian stock market for thirty years.

ORT_Logo Breadtag Sagas ©: Author Tony,  1 September 2021

Investing in Shares 101: 1 Basic Concepts & Pitfalls

1 Introduction

There are so many complex and simplistic guides to investing that confuse rather than inform. Shares 101 Basics addresses the problem. Shares 101 Basics is biased slightly towards Australia and the ASX (Australian stock exchange), but it applies generally to the USA and UK as well, which are usually in step.

The book I used in the 1990s to help me understand the basics of investing said:

These days, people who either own shares, get appointed as trustees, attend seminars or otherwise advertise their interest in investment matters, will soon, will soon find themselves receiving unsolicited material containing offers of assistance, ‘research opinions and newsletters. (Fitzherbert)

In today’s Internet era, this is magnified. Perhaps I am too suspicious when it comes to finances, but even an organisation that I support wholeheartedly, The Australian Shareholders Association, seems a little suspect in recent years in its educational activities.

A tour of my experiences in the share market might help those starting out. First, I am going to cover the basics. The second article on value investing will look at the best approaches to investing in shares. The third article will detail my personal experiences warts and all.

In Q Research, I often used the David O’Gilvie 1963 quote based on an earlier one: where he bemoaned the reluctance of marketing executives to use their own judgement; instead they use research as a drunkard uses a lamp post for support, rather than for illumination.

In this overview of best practice and my experiences of thirty years investing in shares, I want to offer illumination in Shares 101 Basics rather than support for your prejudices. Continue reading “Investing in Shares 101: 1 Basics”