Investing In The Stock Market For Total Beginners

[HawkHybrid]

for those who must/itching to invest, here's an example of a share that should form

the bottom line of what other shares should beat to get a decent risk to reward ratio.

 

company name: rambler metals and mining, lse:rmm

product/service: copper and gold concentrate

current debt level: little or none. cash resources(canadian dollar) $8.7M

yearly profitability: 3 quarters year to date (canadian dollar) revenue $47M profit before tax $10M.

earning per share 4.9 canadian cents

current p/e <10

 

my expected fair value for rambler is ~28p for a p/e of 10 once the full year results is out.

giving a profit of 10% from the current share price of 25-26p. downside is it'll drop if shtf.

 

HH

[Pipers]

Just to add one more.

 

Bonds, Corporate Bonds, be very weary of the high yield returns.  Bonds are rated AAA downwards in the last rescission the banks were rolling up junk bonds (Collateralised Debt Obligations)  with AAA and selling them as AAA.  The buyer was not aware of the risk, if he were, he would want a bigger return or wouldn't of invested.  Remember no one has gone to prison for doing this, the bankers who did this are still working and selling products. 

 

So what I'm saying is the water is sold as clear but is very muddy!

[Cointreau]

My fuelcell company which is by far and away my biggest investment in the stockmarket has taken its first orders.

 

http://www.dailymail.co.uk/money/markets/article-2696278/AFC-Energy-sparks-life-announcing-second-South-Korean-deal.html

[HawkHybrid]

ask yourself has the russian billionaire made any money out of his investment in afc?

then ask yourself when are you likely to make any money. going green is great but

what the experts don't tell you is that it takes decades to provide a financial return

because the initial costs are so high. I'd be more comfortable with a small long term

play here.

 

consider others like lse:arl atlantis resources, they are trying to build a 400MW tidal

farm off scotland. An update due sometime later this year, should their figures look

good, they are worth further research.

 

HH

[Cointreau]

Ah but Roman Abramovich has a long term plan. He is also invested in the Waste to Energy sector and tried to buy into Linc Energy,

a UCG specialist. (UCG means underground coal gasification). However there are two pieces of the jigsaw that need to be completed.

From UCG you get syngas as a final product. But you also need to process this gas with a methane steam reformer to extract the pure hydrogen

which can be passed through a fuelcell to produce electricity with a byproduct of pure water.The other missing piece of the jigsaw is to economically extract the co2 from the syngas and store it permanently underground.

By the way, I am no eco warrior. Far from it. I'm in it for the money, that's all. I am actually a global warming sceptic.

People like Al Gore are full of bullshit.

[Ares]

Did a piece for a university dissertation about the integration of HFC technology into the steel making industry, capital and recurring costs and so on. Plus the chemistry and energy efficiency side of it too.

Interesting stuff. Multi-dimensional however.

[Cointreau]

Did a piece for a university dissertation about the integration of HFC technology into the steel making industry, capital and recurring costs and so on. Plus the chemistry and energy efficiency side of it too.

Interesting stuff. Multi-dimensional however.

Is that hybrid fibre coaxial?

[Ares]

Nah, just plain old Hydrogen fuel cell.

Nicely got a company in the US to give me all their financial data on a 1MW bank + costs of expansion per 500kW module. Purchase cost, installation cost, operating cost per kWh, cost of recoring after 40,000 hours.

Pretty expensive, we're talking millions of £ for 1MW.

[Cointreau]

Nah, just plain old Hydrogen fuel cell.

Nicely got a company in the US to give me all their financial data on a 1MW bank + costs of expansion per 500kW module. Purchase cost, installation cost, operating cost per kWh, cost of recoring after 40,000 hours.

Pretty expensive, we're talking millions of £ for 1MW.

Hmmm, that info would be of interest to me. I fancy you may be talking about FuelcellEnergy. Who ever it is, I am sure they are much more expensive than AFC, who have the aim of becoming competitive with conventional gas turbine power plants.

[smokestack]

Just watches part one of million dollar traders on you tube , it is a great programme ,i am off to watch part two now.

[shemyaza]

I'd just say, discover the art of learning, research and find your own style in understanding opinion, numerical analysis and where the best places or methods are in order to invest. Practice on paper, don't be impatient and understand a wide variety of viewpoints before developing your own. Sometimes you might see something many others haven't.

Additional video's you might want to add to your list of viewing are from Best Evidence ("Who blowtorched american jobs" and "Ben Bernanke's Sovereign Deception") will add to helping you understand that not all that is told is actually true. Neil Sanders is useful in understanding the portrayal and purpose of information and techniques in mass influence of decision making amongst populations.

[Pete]

I used to trade a lot and on average made a decent profit on say 8 stocks only to loose all this profit on a single bad one.

You have to be prepared to sit in front of a screen all day and your life passes you buy.

Buying & selling UK shares works out much more expensive per trade than trading in the USA.

Check out dealer charges and allow for stamp duty.

Trades in the USA with an account like Charles Schwab are very low cost.

If you want to play the market, open a USA trading account and play.

Having been there however I definitely recommend regular payments into big equity funds like Artemis, Rathbone, Threadneedle etc with a broker waiving 100% of the buying fees so if you pay £1000 you get £1000 of the fund. Even better if you can do this in an ISA or SIPP.

[shemyaza]

A reminder to all, a W8-Ben Form is required to be filed to minimise taxation by the IRS.

[lightjaw]

If people are looking for tips, can i suggest QFI

 

Quadrise fuels make have a fuel that has been tested by Mearsk, and is now awaiting a contract to be signed with a major refinery to produce enough fuel for a letter of no objection test for the engine makers.

 

Huge potential, also a deal with the kingdom of saudi arabia in the offing. Price has taken a big dip recently due to the oil price drop and it looking like it wont be making substantial returns until 2016/17.

 

Price is pennies right now, and if you have the money for a flutter, could well be worth it in the medium term. Please as always though do your own research, dont trust a word i or anyone else says! If anyone does wants to ask me anything about it though please do as i watch them pretty closely.

[oliversw5]

Hi All,

 

I just wanted to throw my 2 cents into the ring (it will be long),

 

Investing in the stock market carries as much risk as you want it to, I understand that not everyone will know the jargon or indeed understand the ins and outs of trading/investing. Like previously mentioned they are different things and it is best to work out a clear and well thought out strategy on either before you start (otherwise it will cost you a lot of money...from experience). If you decide that trading is for you, you can do it without technical analysis as crazy as that sounds, I've done it and made a lot of money on some occasions. You will have to consider your strategy, do you want to take small profits in a short amount of time and compound it or do you want to take larger profits which usually will take longer to turn around. If you are opting for small profits then companies in the ftse 100 are your best option, I am a big fan of trading BP. I don't spread bet but buy the shares outright which suits the level of risk for me. I can buy in at 6 quid from my broker pay the 0.5% stamp duty and still turn 1 or 2% profit on that...rinse and repeat. If you are looking for larger profits when trading you can go down to the ftse 250 or even the Aim markets; if you are as sharp as a tack which I don't doubt some of you are you can trade foreign shares and play on the currency on top. 

 

As for investing, this is where time is your friend. The longer you have the more likely that you will turn a profit especially if you are investing in dividend paying companies. I read earlier that it is best to pay off debts that have interest...this is not always true and the reason for this is that debt is straight line and if you re-invest your dividends its cumulative. I ran the numbers the other day on a spreadsheet and if you were to take out a loan of 7500 at 7.4% interest and invested it a company paying 5% dividend or 1.25% a quarter, over the space of 5 years assuming the price of the company stays the same you actually would have more money that you started in your account if you can service the monthly charge. 

 

Investing in funds is probably best for a novice, some funds will carry very little risk and others will be riskier than investing in some individual shares, it all depends on geography, sector or theme. I am not a fan of funds but I have the time and know how and begrudge paying someone for what I could do myself.

 

If you wish to invest in individual shares, most literature suggests you invest in 15 to 25 different companies. The more you diversify the lower your risk will be but also the lower your profits will be. Buy too little companies and your risk is high, by too much and you risk taking away any high profits from individual companies. Anyone who wishes to go down this route needs to read up a lot of things. My process involves a macro scan of the company, for example I will look at where the company operates; if I don't like the country or countries it operates in I won't invest. I then look at the meso if the country gets a pass; this will involve the companies objectives and if they are achievable in the country they are in...I will then go onto the micro analysis which will look at who runs the company, the companies short and long term strategies, any problems that may or may not occur and finally the company financials. I will taylor make my strategy dependant on the company, BUT also and more importantly if I invest and the facts change then I am more than willing to cut my losses.

 

I shall give what I think is a couple of good examples in the strategy and when to keep and when to cut losses.

 

I am currently invested in a company called MAGP, it is in America so it passes the macro analysis due to the business friendly nature and the progressive tax system in place for oil companies; the companies strategy is to buy small stakes in oil wells to form  a better idea of the geology and when they hit a sweet spot the company then buys up more land in that area to create a larger interest in these wells that have sometimes already been drilled, The company intends to eventually be an operator in multiple wells. Now if we look at the micro analysis, the company is 30% plus owned by the people who run it which aligns my interest with theirs because they are incentivised to maximise shareholder value because ultimately it will make them rich. The main guy who runs the company owns another company that buys and sells mineral leases, in some cases they don't even have to search for leases because people come to them to sell. The main woman is a landswoman who has built and sold 3 previous oil companies for multimillion dollar profits. The short term ambition for the company is to reduce costs in line with the current oil price, they recently released news that they reduced costs by 30%, it is also their ambition to become an operator in 2 wells of which they already have the permits for. In the long term they aim to sell the company on, the woman has stated that this is her last project before retirement. The company financials have grown income year on year, with little dilution in comparison to its peers but more importantly finance that is mortgaged on its current assets at 3% a year which is peanuts.

 

 

My second example is a company called NEW, I was invested a long time ago and it is a company that cointreau (love the name) may or may not know. Essentially they were an oil company with permits in Belize and Denmark, both of which pass the macro analysis. The company had big ambitions to first drill Belize with a 3 well program and then drill Denmark. Belize had questionable credentials and Denmark was a fairly good shot for gas (I believe it was a case of not if but how much) if memory serves me correctly. The strategy was to farm out the assets and get other companies to pay for work that needed to be done. The guy who ran the company was very ambitious and a great PR man, he sourced the same projects from a contact he knew and he was fairly successful beforehand. The company financials were non existent.

 

I have chose these two companies because I believe they are a great example for many reasons, firstly these companies were of about the same market caps and yet they have very different risk profiles, one is slow and steady the other is pretty much flip of a coin stuff...This is also a good example to highlight you need a good strategy on top of a good analysis.

 

MAGP for me is a buy and hold strategy, it has all the makings to be a bigger company, at the moment oil stocks are unloved and they can still double their money on the current oil price.

 

NEW is a trade strategy. I bought heavily and sold my initial amount before the first duster in Belize, after the first duster I sold the profit I had at I think was a 75% loss on the previous close. Had the first drill bit hit I would be fairly confident the second and third would hit and simply would have rebought with the money I took out although at a smaller amount of shares.

 

 

After that almost essay like answer I will sum it up. Knowledge is power,but strategy is key to using this knowledge when investing your hard earn cash.

 

if any of you may be wondering what my credentials are to offer up this advice, I am a 20 something who has been investing since 2007. I have a Ba in International Business and current am finishing a double masters degree in International Business Management. When I finish I want to get into fund management (whether that happens or not is a different story). I'm sincerely apologise if anyone feels I have lectured or I come across as I think I am better, Im just trying to help

 

For what its worth I made a decent profit on NEW when everyone else lost their shirt and I'm down 50% on MAGP, of which I have 1 Million shares that I will sell when the Board sells. (If the facts changed I would have sold without thinking about it and I'm fairly confident of making money on it over the long term). I believe everyone should diversify and this includes shares, bonds, property. PM and others.

 

ATB 

 

Shaun

 

Please note that I am not saying buy either NEW or MAGP, my personal preferences are energy companies and they seemed like a good example.

[Cointreau]

Have I mentioned AFC Energy before? Here comes a told ya so. The shares were languishing at 8 pence a month ago.

They are now 45 pence on the back of their first two orders.

The company is looking to have 1 gigawatt of fuelcells in the pipeline by 2020.

Not recommending that anyone buy now as the sp is on an upwards spike. Just keep this one on your radar. 

[HelpingHands]

By how much will Tesco shares drop this morning?

http://news.sky.com/story/1469652/tesco-loss-to-be-among-biggest-in-uk-history

[HelpingHands]

http://www.bloomberg.com/news/articles/2015-04-21/spoofed-market-is-latest-reason-to-sweat-for-u-s-stock-managers

[Cointreau]

Huge deal for AFC today. 300MW.

The water produced as a by product is a big factor in the middle east.

http://www.bloomberg.com/news/articles/2015-04-23/fuel-cell-maker-targets-sales-in-dubai-with-abramovich-backing

[oliversw5]

The company looks pretty solid with great backing, just have a bad gut feeling about it which for me rules it out sadly. Saying that I ruled out Ukog simply because of the director and that has 10 bagged...can't win them all aha

[ApisMellifera]

Great thread!

I'm have been sitting on the fence to pick stocks for some time and (still) reading/studying plenty of fundamental/technical books.

... Have a newbie question: ....  

I was just wondering which stock broker you guys use or is worth looking into?

[HawkHybrid]

in this case, I'm of the opinion 'you get what you pay for'

a trusted reliable broker is usually worth their commission.

depending on the frequency of your trades and your use

of facilities, means that some will offer better value than

others. maybe decide on how you plan to trade and then

shortlist candidates?

 

HH

[KDave]

I have only used a couple of platforms - HSBC's investing platform (just the basic SS ISA one) and iWeb share dealing which is a Halifax spin off I believe.

HSBC used to be have no annual charges but now charges 10.95 per quarter. Trade fees were 12.95 a pop which is very expensive I have since learned.

iWeb charged me £200 set up fee, then no annual charges and £5 a pop to trade which is much more reasonable. Suits me down to the ground as I trade smaller sums without the trade fees eating into the initial capital and profit and can go long/forget about the investment for the rest of my life if I want without worrying about fees.  

There are no doubt much better deals out there just depends what your strategy is. 

[lightjaw]

I use hargreaves lansdown. For normal trades it costs 12.99 per trade i believe but goes down in price if you trade more. The best thing to do however in my opinion is to use their monthly savings facility where you set it up to invest monthly into funds or shares automatically. There are no fees for buying into funds and only £2 a trade for other shares. Well worth it.

[BaldyBob]

I use AJ Bell Youinvest for my SIPP. Custody charge is between £20 and £100 per annum depending on size of your pension.

For buying shares, If you set up investments to execute on the 10th of the month it is only £1.50 per trade. NormL trading fee is £9.95 ( £5 for people who trade too much ?)

For general strategy I am a defensive value investor. Not as exciting maybe as momentum investing or gambling on the AIM, but this is my pension we are talking about. I don't do funds or trackers.