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    An Introduction to Stock Market Investing
    An Introduction to Stock Market Investing
    An Introduction to Stock Market Investing
    Ebook231 pages2 hours

    An Introduction to Stock Market Investing

    By Jason King

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    About this ebook

    An introduction to stock market investing covering topics such as Fundamental Analysis, Technical Analysis and Tips. Includes extensive real investment examples explaining why the author bought/held/sold. With a documented track record averaging portfolio returns of 25%pa, the advice given by the author is surely worth considering.

    LanguageEnglish
    PublisherJason King
    Release dateNov 13, 2019
    ISBN9780463575642
    An Introduction to Stock Market Investing
    Author

    Jason King

    Lives in Geelong, Australia. Born 1971 Married with 4 boys Upcoming Books include: - An Introduction to AI Coding - An Introduction to Microprocessors Thank you to Marcus Hayden for the sepia icon artwork used throughout my study books. www.art.mdhayden.com

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      Book preview

      An Introduction to Stock Market Investing - Jason King

      An Introduction to Stock Market Investing

      Published by Jason King at Smashwords

      Copyright 2019 Jason King

      Smashwords Edition, License Notes

      This eBook is licensed for your personal education and enjoyment only. This eBook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient.

      Thank you for respecting the hard work of this author.

      Sepia icons created by Marcus Hayden under paid contract from the author.

      Contents

      Introduction

      How I Got Started

      Investment Basics

      Key Terms

      Investment Categories

      Gathering Data

      Fundamental Analysis

      Technical Analysis

      When I Hold

      When I Buy

      When I Sell

      General Tips

      Case Studies

      AWE.AX

      RFG.AX

      MSB.AX

      APT.AX

      JBH.AX

      NEC.AX

      TEN.AX

      APO.AX

      BLY.AX

      PDN.AX

      PRG.AX

      UGL.AX

      VOC.AX

      ISD.AX

      SLX.AX

      AOG.AX

      OMN.AX

      LNK.AX

      CGC.AX

      Conclusion

      About The Author

      Introduction

      Obviously, with such as sensitive topic as financial advice I must first disclose the disclaimers:

      - I have no formal financial training or qualifications.

      - This is my story, my style, my experience and it may not be applicable to your situation or level of risk tolerance.

      - The discussions, examples and case studies revolve around the ASX300 (Australian Stock Exchange top 300) but the principles I discuss can be applied to most markets and stocks.

      Saying all this, I believe I have a 4 year track record of good results that shows my logic and diligence to set rules and procedures produce fair results. Yes, I have made some bad decisions and lost in more than one investment decision, but over time, my win/loss ratio has moved further in my favour. I hope you consider my story and over time gain the confidence and skills to make your own stock market investment decisions.

      Throughout this book I use real example case studies of stocks I have bought, sold and rejected, explaining why I made the decisions I did and the outcomes.

      NOTE: The cases are real, the decisions are real, the percentages are real - but to protect my financial privacy I have multiplied/divided actual investment values by a set factor, ensuring all ratios remain in tack.

      Back to Contents

      How I Got Started

      My interest in stock market investment really got started when I was asked by my Superannuation fund (aka retirement fund) how I wanted my savings invested. They presented a list of options ranging from very safe cash deposits earning next to no interest, right up to high risk international shares. They had other mid-range options that offered a mixture of investment strategies (cash, property, Australian shares, international shares etc.) with varying degrees of risk and associated returns.

      As a young guy with 40+ years ahead of me before I would be allowed to access my retirement fund, I instinctively went for the highest potential return, understanding there was also a higher than average risk of my investment loosing as well as winning.

      This is where my roller coaster ride began! It was all good when things were going well but when things changed I panicked and changed to a safer investment haven. Then things picked up and I got back on board again. The problem was I had no real knowledge of why things were going up and down and my entry and exit timing was poorly judged.

      I rode this wave up and down for a few years and essentially ended up where I began, realizing I could have just chosen the conservative investment option in the first place and produced the same financial result but without all the stress and wasted time.

      My real frustration though was why I was also hearing stories of people making it big time on the market and yet luck, as usual, appeared not to be on my side? I deduced my investment choices and decisions could be compared to visiting the casino with blind high-risk investments somewhat like a Poker machine where you pull the handle and hope for the best with no influence in regards to the result. Not the sort of game I like to play!

      Sure, common sense dictated that an educated and disciplined investment plan would increase your chances of success, somewhat like playing Poker instead of the machines. Put the cards into your hands and you have more control over the decisions on how the game plays out and the risks associated with a particular hand. Stock market investment does and always will have an element of chance and risk to it, but you CAN put the odds more towards your favour.

      My first step in educating myself was to read a few books and learn the investment and stock market terms. Next, I found an online guru who wrote a weekly article on his stock purchases and investment strategies. I watched him for a while and studied his explanations why he made the choices he did.

      Eventually I dove in and handed over some of my own hard earnt cash putting my savings on the line by copying some of his choices, buying and selling when he did.

      As my confidence grew, I started to pick my own investments taking care to sufficiently research my picks. Over time as my knowledge and experience increased I relied less and less on his decisions and eventually deleted the link to his WEB site from my browser altogether.

      I was now I my own buying and selling as I felt fit. From that decision to start educating myself to going at it alone was about a 3 year time frame. From that turning point in my path, I have continued to develop my own set of rules, thresholds, patterns and key criteria, all the while refining and improving my net results. I have made mistakes and got lucky at times, but over time my success rate has improved.

      Below are some of the key highlights and points of my journey:

      - Until 2012 I rode the insane roller coaster ride, getting in and out of high-risk investment options with typically bad entry and exit decisions.

      - Late 2012 I started to copy the investment strategies of online experts, which stabilised my ride and produced relatively stable but still small net increase.

      - At the end of 2015 I had completely broke free from mimicking others and started calling my own shots. My first year alone (2016) was a huge success, with 2017 not far behind! 2018 was a bumpy ride and although it did not look great from the surface. On the positive side, I made some fundamental investment changes, cashing in on some short term investments and putting large sums into a few medium term investments I saw as having greater rewards. I reaped the rewards of this decision in 2019!

      - The balance trajectory I was on previously is very different from the new trajectory I am on now. (See Figure 1).

      - My 2006 balance was $100,000. (Note, for privacy reasons this dollar value and all others are ratios of actual values. All percentage values remain true).

      - In 2015 my balance was $200,000 which equates to just under an 8%pa increase since 2006. Not a bad result, but not enough to satisfy my higher return expectations.

      - A year later in 2016 my balance had grown to a healthy $275,000 which equates to an approximate 32%pa increase over the 12 months.

      - 2017 was again a positive year rising to $330,000 which equates to an approximate 18%pa increase over the 12 months, or an average of 25% pa over the 2 years.

      - At the end of 2018 my balance was $330,000. It did peak at about $340,000 around June when I sold some of my higher risk stocks and bought into a few more longer term stocks. There was also some major global down turns where pretty much every stock was down. For me to come out at the end of the year flat (0%pa) sounds disastrous, but I had escaped the downturn most other people I know had experienced. At the same time I had moved into some stocks I believe would more than make up for it.

      - What’s in store for 2020? Thus far (October 2019 at the time of writing), I am at $500,000 which is already well over 25% from 2018. This means, since the end of 2015 I have more than doubled my balance – on track with my 25% target!

      If making money in stock investments was so easy and winnable by simply following set analysis routines then why are there not more mega billionaires like Warren Buffet around? Some of the richest people in the world did not make their money day trading, investing in Hedge funds, analysing candlesticks, implementing crossover triggers, short selling etc.

      They made their money establishing a business and growing it. Think Bill gates (Microsoft), Jeff Bezo (Amazon) Steve Jobs (Apple), Mark Zuckerberg (Facebook) etc. In addition, many of these people had a lot of luck on their side such as products that just clicked with customers, right timing, help from other people etc.

      So do not expect to become the richest person in the world with your stock investments, just aim to be wealthy or at least rather comfortable. Be realistic.

      Figure 1 – Net Results.

      Investing long term is said to be the easy option - invest your money into something good, monitor it occasionally and cash in later at your planned return date. Short-term investment is exactly the same process except your set return date is a lot sooner, meaning you will have to keep an eye on it more often.

      If you are a day trader then you must be watching multiple times a day! The shorter your investment timeframe the busier you will be, the more time and effort you need to commit and the quicker you will need to analyse and compute data to make quick and smart decisions.

      The potential benefit is that by making small little profits everyday it could add up to greater rewards than a single long term investment. The downside is that you are more exposed to day to day events and fluctuations and generally have greater risk exposure.

      Getting even deeper into the investment commitment, you can even start to make money not only on upward movement but also on downward movement as well, and even invest with borrowed money. The choice is up to you but the shorter the investment timeframe and the more approaches you are aiming to make money from, the more commitment and market understanding you will need.

      There are basically two analysis views:

      - Fundamental. Looking at the company in regards to cash flow, profits, revenue, debt ratios, activities, external influences etc. This method is heavily based on wisdom, business understanding and market research.

      - Technical. The analysis of trends and charts, making decisions based on statistical and probability analysis. This method is heavily mathematical and formula based.

      You can win (or lose) either way, but although an investor may prefer one method, they will always at least consider the other to verify their decisions. I am more the first category as you will see in my case studies later in this book, but I also spend a lot of time analysing graphs and data as well to help me justify my decisions.

      Some say technical analysists are somewhat arrogant, thinking their mathematical genius is superior to fundamentalist wisdom. I think a balance is required. Stock market charts cannot predict trade wars, terrorist attacks, natural disasters etc. all of which can impact the market dramatically. On the other hand, some fundamental analysis is just based on opinion and speculation.

      I am more of a medium to longer-term investor who watches the market most days adjusting my investments where required. I am constantly watching for opportunities but not necessarily buying and selling at every potential winner. I do not use any algorithms or software (bots) making automatic buy and sells but rather make all my decisions manually.

      You CAN make money successfully without understanding all the terms and jargon. Brokers will try to impress you with all their fancy words and smart suits, but at the end of the day, they are in it for the money and want some of yours! If they were so good, they would not be wasting their time helping you invest your few thousand dollars, they would be too busy rolling in their own investment profits. My tip - do your own research and make your own decisions.

      Have you ever seen those

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