Daily Talk Forum

It does seem that forex has taken the limelight in trading simply because its so easy for new traders to take positions and exit. however, not a great deal is spoken of stocks and shares and this is an area which i would like to help out in.

We are at a time in history that happens every 20 +/- years or so. There really has never been a better time to take advantage. There are many stocks that are truly underpriced from a dual perspective combining technical analysis and fundamental analysis.

There are a vast array of training programes out there, some excellent and many downright rubbish, particularly those that focus only on graphs. They work for a short time but never long term. Perhaps your asking why that is? Simply, there are far too many factors that shift price and graphs do not state all that is going on, even when comparing past analysis, all graphs do is give you a time based analysis for which can be (and usually are) used to supply another piece of information to the researching of your particular chosen stock(s).

In this particular thread I will be giving you all that I have learnt, absolutely free, no gimmicks just truth.

Today we will start with; what stocks do I pick?

Have you ever heard the term "stick to your knitting"? This term is common throughout business. Basically it means, stick to what your good at and what you know. Now that doesnt mean to say to stop learning. By sticking to what you know and what you enjoy doing, your internal motivation will at least maintain, hopefully increase. It is true, there are hundreds of thousand of stocks, to monitor just 0.001% will send you to the senil hospital quicker than reading this post (why do you think professional stockbrokers have a shelf life of approximately 5 years!)

By sticking to what you know and what you enjoy, you will find that your learning will take you to a greater advantage. Simply start of with 1-5 stocks, 5 stocks at the very most (recommend only 1-2 max for beginners). Choose just one sector that interests you the very most, something that really lights your fire deep inside and not flimsical whimes of passion as the interest will soon be lost. This could be any sector from banking, pharmacueticals, metals, IPO's in your chosen sector, Health, Innovations, IT, Electricals, Motor's, Education, Hospital equipment - just forget Deltex Medical :-) etc etc the list goes on. This is your very first step...do nothing else until you find the sector that most interests you, really stimulates you. By doing this one task first, you will immediately illiminate months if not years of pure frustration, this i promise you.

Once you have chosen your desired sector, begin to write a list of all the companies that you known in that sector, dont cheat by searching on the net, you must do this from your own head. Once the list is complete, start by going through all the companies that you have written down and crossing off the companies that do not interest you. If you have crossed of all the companies in your list then you have alot of work ahead of you. Keep going over and over the list until you have between 1-5 companies that really do interest you. Now, go through these companies and find the top 1 and 2 companies that light your fire. These are the 1-2 companies you should concentrate on. Hopefully there will be at least one company that interests you.

To show you this is a proven method, there are many professional research companies out there, but the really successful ones employ people to only research stocks they are interested in. For example a few excellent stockbroking and/or research companies include GNI Touch, Day by Day, MF Global, Cheviot (probably best to forget schaffer's options). Some research companies will have researchers that only research one stock, albiet, these researchers are reserved for high net worth clients. These researchers known everything about their chosen stock(s) and sector. Ask them about a different stock or sector and they wont have a clue! They are professionals and they specialise. A little like an ear/throat/nose specialist...pointless asking that specialist whats wrong with my right foot! A silly analogy but you get my point. It is the same in the "pits", you see them on CNBC, stockbrokers/traders in their respective "pits" trading on various stocks. Each member of each team has one sector only to trade. You must strive to become as professional as they are...there is money to be made in Stocks/Shares/Bonds. One tip, really is a good idea to stay away from penny stocks, sure if the stock increases by 5 pence you have doubled your money but then its much easier for the stock to go down and thus loose your entire capital.

Once you have chosen your sector and your stock(s) to watch you need to know what to look for. This section is the hardest to teach and no single one indicator will make you proficient. So, forget about trading only using elliot waves, forget trading using only chart patterns, forget trading using only trends and all the other single indicators out there.

In fact, forget all about using any type of indicators for the time being, they will be used later, but you will be using them all together at the same time...perhaps you see why now that it is imperative to only choose 1-2 stocks as a beginner! Choosing more will send you mad and your motivational levels will decline faster than Maslow and his heirarchy of needs could figure out himself. Now this is a blatant plug but it is for your benefit. The PH ebook library I set up is full, crammed, jam packed with trading books, get yourself a diamond status and you can download over 100 books for free. They are excellent material, absolutely invaluable. (The PH library is the library I set up with the immense and invaluable help of dailytalkforum / GFN admin and many other notables and is at Private HYIP.com and is part of the GFN network...the same network as this forum...free to join as well, become a diamond member and you will have access to download well over 100 completely free ebooks from stocks, shares, trading, marketing, the net, wealth books etc, well worth your time)

To delve into teaching all the indicators out there would require years of my time, would be happy to do so if renumerated appropriately though :-) For now, it really is best to concentrate soely on the two prime indicators, that being, fundematal analysis and technical analysis. Learn the basis of these first. Fundemantal analysis researches the company in question, their spread sheets, cashflow forecasts, debt structure, cash holdings, global markets, market share, management structure etc. Technical analysis examines past data typically generated from graphs and charts (also known as charting) and this is where the hundreds of different indicators such as the elliot wave come into play. It is so important I will state again, never, never use only one single indicator, it will break down on you.

It is equally important to never ever subscribe to any one (usually just one persons website) who only uses one or two indicators to give you those buy / sell signals. If it really worked long term they would never sell their signals...ever because they would be making too much money for themselves. However, there are one or two truly legitimate trading signal companies out there that do offer buy/sell stock signals, they do this because they employ teams of individual researchers to do the work and they need subscribers to pay for the staff and as such give high quality signals to keep their clients, thus people benefit. One such company is called Gorilla Trades, we use them ourselves where I work...two or more heads better than one :-) In fact we use them soely to recieve signals so we can perform further research on them. It saves the time to search for them ourlseves. Granted we have not yet used them to buy stocks as in the monitoring phase. In the future I will post a PDF of our companies trading that clearly shows profit / loss to which we are a little over 400% profit (note: there are still many, many open trades so this profit has not yet been realised) This will give you an idea of what a professional portfolio should look like for diversification, but please remember, there are many working on this, not just one or two people.

That sums it up for today. Next time I will delve deeper into you learning about the two prime indicators and their many broken down sub indicators for you to have a clear idea.

Alan

Hi Alan, thanks for your tips and advice above. Should investors be looking at investing in stocks specifically from what country or should they get a mix of US, Euro, Aussie, Thai stocks etc Also, how do you see the Thai market performing in the next few years?

Hi Admin, Thanks for the question, and my pleasure regarding the tips :-) I will perform a little research concerning major global stocks and get back to posting here. I will say for certain that investing in stocks in the very short term is rather risky unless one is skilled at scalping. For the Thai market I will have to perform some very indepth research.

Alan

Thanks Alan, we have some Thai members here that maybe interested in Thai Stocks

Here is just some news that I have been able to gather. The news is the up to date and most recent available.I have requested our overseas brokers to begin research into Thai Markets and they will get back to me, this may take a few days though so please bear with us (its horrendously busy due to the upturn in markets over last 3 days….will be short lived though).

Here is what I have located from today.

Talks between Thailand and Cambodia failed on Monday to end a week-long military stand-off over an ancient temple on their border, which regional neighbours feared could turn violent. Hundreds of troops at the temple will hold their positions, negotiators said after eight hours of talks on an issue that has whipped up nationalist fervour in both southeast Asian nations.

Thailand's Air Transport Department has suspended low-cost carrier One-Two-Go Airlines' domestic service for one month because of its failure to follow adequate safety procedures for its pilots. One-Two-Go's grounded service affects regular flights between Bangkok and seven other Thai cities on which it operates eight McDonnell Douglas planes.

Recovery from a cyclone that tore into Myanmar's Irrawaddy delta in May, leaving at least 138,000 dead or missing, will cost more than $1 billion, a report by the United Nations and Southeast Asian nations concluded. The estimate, released on Monday at a meeting of foreign ministers of the Association of South East Asian Nations (ASEAN), covers the most urgent needs such as food, agriculture and housing for the next three years. "It's a relief to confirm there is no mass starvation, or outbreaks of epidemics," Singaporean Foreign Minister George Yeo told a news briefing. "But there is a need for help, we need money, we need assistance."

Results are consolidated and unaudited. BankThai is 42 percent owned by a consortium led by U.S. private equity fund TPG Newbridge. In June, Malaysia's CIMB agreed to buy a 42 percent stake in BankThai from the Bank of Thailand's bailout arm for about 5.9 billion baht ($177 million). ($1=33.31 Baht)

Thailand's economy is expected to grow 5.3-5.5 percent in the third and fourth quarters from a year earlier after an estimated 5.8 percent in the second quarter, a senior Finance Ministry official said on Monday. "The ministry expects growth of 5.9 percent in the first half and for the third and fourth quarters, it should be 5.3-5.5 percent," The economy grew 6 percent in the first quarter and 4.8 percent in the whole of 2007. The ministry has kept its full-year growth forecast at 5.0-6.0 percent, but it is unlikely to hit the top end of the range due to high oil prices and political uncertainty. The ministry's 2008 growth forecast is broadly in line with the Bank of Thailand's 4.8-6.0 percent, but the central bank is due to review its projections on July 28.

Siam Commercial Bank (SCB), Thailand's third-largest bank by assets, reported a 35 percent rise in quarterly net profit on Monday, higher than expectations, helped by fatter net margins and strong fee income. SCB, Thailand's oldest bank, reported an April-June net profit of 5.82 billion baht ($175 million), up from 4.31 billion baht a year earlier. That was above the 5.64 billion baht forecast by 12 analysts surveyed by Reuters, but down from 6.79 billion baht in the January-March period. Its bigger rivals have reported much lower than expected quarterly profits, due mainly to higher operating costs and bigger provisions than forecast, despite stronger lending. The second half is looking weaker for the sector due to higher inflation, rising interest rates and domestic political uncertainties that are likely to hurt consumer confidence and loan demand, analysts said. SCB's quarterly profits were boosted by a 23 percent rise in non-interest income, mostly from fees related to retail products and treasury services, it said in a statement. But loans have grown only 1.6 percent since the start of the year to 882 billion baht, as major companies repaid short-term working capital.

As soon as we are able to find stock recommendations (assuming we do find any) I will post immediately.

Alan

On a quite note as to investing in Euro/US/Aussy stocks, it is always a very good idea to diversify through different countries. One thing that must be taken into consideration though is the cross currency effect. It is always most advisable to typically invest in your own currency unless you are proficient in forex. I have a list of US stocks (7 of them) that are highly recommended, however, the three days that have passed in the market rally make them not viable anymore. Soon as I get info I will post.

Alan

Ok, just this moment located a PDF regarding Thailand. We are still working on research. Hope this helps anyone who is interested.

Please be assured it is safe to download this PDF (and all my PDF's) They are either created by myself or come from highly reputable & professional companies.

Alan

I must say I am a little dissapointed no one downloaded the PDF, took quite some time to get that research from Cheviot in the UK! All I can think of is that persons are a little wary to downloading, and I understand that but I can assure you all everything i post to download is absolutely clean, my career hinges on it. All it takes is someone from my company to view my website history at work (where I post the daily news from) see what ever I have written and if anything out of the ordinary, reprimand me. Im really not going to put myself in that position.

Anyway onto the first of the two indicators mentioned at the start of the thread.

Fundamental analysis

This type of analysis is one of the two main types, the other being technical analysis, using charts, predominantly the most popular, particularly in forex (also known as charting).

There are so many sub indicators in this category that to cover all exhaustively would literally take me a substantial amount of years. What I wish to present to you is the basics and the truth of those basics so you armed with a strong foundation upon which to build. The stock market and its undoubtebaly vast array of listed companies are mind bending and even to the full time professional gives an almighty headache coupled with teeth grinding. The absolute key is to find a niche/sector that you are truly inspired by. If this niche/sector has particular ties with your own passion or love then this can work to great advantage. For instance if you love the mind/body/spirit, like I do, then to sub specialise in drug companies not only helps you obtain enormous amounts of information you can use yourself/for clients but also binds intrinsic and extrinsic motivation. Previously here I mentioned not to go anywhere near Deltex Medical, well, I love mind/body/spirit and one particular company in the health/medical sector is a company I know, Deltex Medical, the one stock in that sector I watch.

OK back onto fundamental analysis. For those who do not know or are not sure, fundamental analysis, in its basic term means, the study of a share price in relation to the companies underlying financial situation. One of the most popular indicators in this category is the P/E ratio, or price earnings ratio. Typically the higher the ratio the more speculative the stock is likely to be. For instance a P/E ratio over 75 is very high and very high risk. Such companies rarely give dividends as they use the surplus profit for research and development to expand their business. As such, if they succeed, their share price capital increases substantially and this is where larger profits can be made. So what is a high P/E ratio? This does depend on the company and stock and further self study is needed. Typically, high P/E ratio companies are seen on the NASDAQ, new emerging company’s that offer large potential for growth. These are tomorrow’s potential monsters, like Microsoft, or perhaps the next GlaxoSmithKline. These companies typically focus on future technologies or drugs(medication) to treat the symptoms of disease (rarely do they treat the root cause as when that’s cured there is no money to be made), and analyse future trends where markets can be created with vision. A famous story, cut short, that stimulates such vision. Two salesmen sent to non advanced country to seek potential to sell shoes. One came back and said, don’t bother going there, no-one wears shoes. The other comes back and says, we must go there, no-one wears shoes! Such is vision and such companies thrive on it. As a tip, if you decide one of the stocks to watch is in this particular sector there are subtle sub indicators to watch for, such as the company’s management, political stance (can make or break a company) cash flow forecast, directors, directors shareholdings, major shareholders and their position etc. This does not mean the company will succeed but with vision, cash flow, management structure and political standing, it does stand a better chance than those without (these are the not so well known sub indicators which you must be aware of). These are the things that many will not tell you. Such a company that has all these attributes is Coca Cola, their management structure is second to none. I know this personally as the hotel I managed in Swindon UK (The DeVere hotel) used to lease the entire hotel to Coca Cola and the likes of British Aerospace, Vodafone etc so I used to see all their seminars, presentations, conferences and training as I worked…all for free :-)

Let’s look at companies and their P/E ratios and their risk values (in terms of volatility of share price) as an idea. Abbreviations in brackets are the stock exchange ticker.

Any P/E ratio over 70/75 is very high.

Barr Pharmaceuticals (BRL) P/E ratio 51.91 (medium/high to high risk)

Agilent Technologies inc (A) P/E ratio 21.03 Medium risk

Apple Inc (APPL) P/E ratio 30.63 Higher Medium risk

Boeing Co. (BA) P/E ratio 11.10 Medium Low risk

Petroleo Brasileiro (PBR) P/E ratio 15.45 High Lower risk

Notice how all the high risk are pharmaceuticals or technology.

And so on. To calculate the P/E of any company simply take the trading share price (the ask price or the price you paid) and divide it by the EPS (earnings per share) over the last 12 months. This information is readily available on Yahoo finance (better than Google, though Goole finance has better graphs).

In a nutshell, the higher the P/E ratio the higher the expected earnings growth is. The lower the P/E ratio the lower the expected earnings growth is (though relatively more stable). This can be seen from banks who typically have “N/A” as their P/E ratio. Please bear in mind the P/E ratio is only one indicator and by far does not tell the whole story. Never use the P/E ratio indicator by itself, this is financial suicide.

Hope this helps.

Alan

Hi Alan

Thanks for providing the research, I am sure that it will be valuable to some of our Thailand based members. As the search engines index the page we will get more targeted traffic to the reports that you are producing. Alan is a respected member on our forums and often provides pdf downloads and e-book give always and I can assure that the downloads are safe and virus free

Thank you Admin. More targeted traffic is certainly a very good thing. I am still working on writing up indicators for this thread after work at home as and when I have time though getting my wedding fully organised for next month takes up most of my time. Rest assured I shall post when these write up's are completed.

Alan