Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to 87investor,longview,Sussexlad,niord,staffordian, for Donating to support the site

How to Pick Quality Shares

Reviews, favourites and suggestions
OLTB
Lemon Quarter
Posts: 1221
Joined: November 4th, 2016, 9:55 am
Has thanked: 1169 times
Been thanked: 493 times

Re: How to Pick Quality Shares

#314701

Postby OLTB » June 3rd, 2020, 8:18 am

Dod101 wrote:So, OLTB, you can now give us a definition of a 'quality share'. I look forward to that.

Dod


Hi Dod and thanks for the reply below.

All I've done is read a book that gives someone else's definition of a quality share - I wouldn't dare to suggest I can give you a definition of a quality share. What I wanted to do is educate myself more in how to read company reports, understand the language and what to watch out for in terms of potentially good news and potential warning signs that would protect me from previous mistakes such as Carillion.

What the book doesn't tell me is what you have talked about many times - the culture of a company - and that goes a very long way to making a share a 'quality' share along with the stark financial results. What I haven't seen yet is a book that tells me how to measure or judge the culture of a company.

Best wishes, OLTB.

Dod101
Lemon Half
Posts: 6326
Joined: October 10th, 2017, 11:33 am
Has thanked: 1436 times
Been thanked: 2522 times

Re: How to Pick Quality Shares

#314723

Postby Dod101 » June 3rd, 2020, 9:11 am

Thanks OLTB. I was not really expecting an answer but hopefully the book (and others) will give you some pointers at least and that is about all you can expect from books. I do not in the least knock them and have half a shelf of them not a couple of yards from where I am writing this. I never look at them nowadays except for the occasional reference.

Experience in the market is I think the best educative tool and it should help you to pick your definition of a quality share, or rather, help you to avoid the horror shows such as Carillion and to a lesser extent Centrica which I see is about to be demoted from the FTSE100. Not, like say Carnival, because of the effect of the Coronavirus, but because it is such a poor business.

I cannot define culture which I keep on about, at least not at the moment.

Dod

Arborbridge
Lemon Half
Posts: 5181
Joined: November 4th, 2016, 9:33 am
Has thanked: 1188 times
Been thanked: 1910 times

Re: How to Pick Quality Shares

#314727

Postby Arborbridge » June 3rd, 2020, 9:27 am

Dod101 wrote:
I cannot define culture which I keep on about, at least not at the moment.

Dod


That could be the heart of the problem for amateur investors. We believe that there is a simple formula which the great investors employ, and if only they would explain what it is we would all be rich. It just isn't so, in my view. There is much understanding of the underlying facts and figures, but just as much benefit comes about by intuition or "feel" which cannot be taught.

One could spend a lifetime reading books or learning techniques of the great, but some people seem to have the gift of judgement from a very young age, which most of us will never have.

Depressing? Not really - find a technique which seems to work and most of us can bumble along, while the best of us will get lucky and a bit richer.

Arb.

Itsallaguess
Lemon Half
Posts: 5539
Joined: November 4th, 2016, 1:16 pm
Has thanked: 2236 times
Been thanked: 4151 times

Re: How to Pick Quality Shares

#314745

Postby Itsallaguess » June 3rd, 2020, 9:58 am

Arborbridge wrote:
Dod101 wrote:
I cannot define culture which I keep on about, at least not at the moment.


That could be the heart of the problem for amateur investors. We believe that there is a simple formula which the great investors employ, and if only they would explain what it is we would all be rich. It just isn't so, in my view. There is much understanding of the underlying facts and figures, but just as much benefit comes about by intuition or "feel" which cannot be taught.

One could spend a lifetime reading books or learning techniques of the great, but some people seem to have the gift of judgement from a very young age, which most of us will never have.


But you've missed the bit where Dod says that he's got half a shelf of investment books himself, that he's read them already, and which he now occasionally uses as reference, so I think the point being missed here is that there might be strong elements of investment-education gained from those books that Dod has now absorbed and uses as part of his 'mental cultural-assessments' without actively recognising it..

Cheers,

Itsallaguess

Arborbridge
Lemon Half
Posts: 5181
Joined: November 4th, 2016, 9:33 am
Has thanked: 1188 times
Been thanked: 1910 times

Re: How to Pick Quality Shares

#314752

Postby Arborbridge » June 3rd, 2020, 10:16 am

Itsallaguess wrote:
Arborbridge wrote:
Dod101 wrote:
I cannot define culture which I keep on about, at least not at the moment.


That could be the heart of the problem for amateur investors. We believe that there is a simple formula which the great investors employ, and if only they would explain what it is we would all be rich. It just isn't so, in my view. There is much understanding of the underlying facts and figures, but just as much benefit comes about by intuition or "feel" which cannot be taught.

One could spend a lifetime reading books or learning techniques of the great, but some people seem to have the gift of judgement from a very young age, which most of us will never have.


But you've missed the bit where Dod says that he's got half a shelf of investment books himself, that he's read them already, and which he now occasionally uses as reference, so I think the point being missed here is that there might be strong elements of investment-education gained from those books that Dod has now absorbed and uses as part of his 'mental cultural-assessments' without actively recognising it..

Cheers,

Itsallaguess


Possibly - I'm not sure I missed it, I referred to learning techniques and understanding the figures, which is what nearly all investment books are about. I have a few myself and have read the classics, but I don't remember any talking much about quality or culture - except advice about culture not changing very quickly, and other such observations. The touchy feely stuff does not make it into print, and it is so ephemeral too. How could Dod write an essay on his sense of smell? Difficult to imagine.

Maybe it's the "harder I practice the luckier I get"?

Arb.

OLTB
Lemon Quarter
Posts: 1221
Joined: November 4th, 2016, 9:55 am
Has thanked: 1169 times
Been thanked: 493 times

Re: How to Pick Quality Shares

#314760

Postby OLTB » June 3rd, 2020, 10:41 am

Arborbridge wrote:
Possibly - I'm not sure I missed it, I referred to learning techniques and understanding the figures, which is what nearly all investment books are about. I have a few myself and have read the classics, but I don't remember any talking much about quality or culture - except advice about culture not changing very quickly, and other such observations. The touchy feely stuff does not make it into print, and it is so ephemeral too. How could Dod write an essay on his sense of smell? Difficult to imagine.

Maybe it's the "harder I practice the luckier I get"?

Arb.


Thanks Arb

Maybe it's the set-up of the companies as well - family firms with family members that still hold significant stakes in the business with a good representation on the board?

As you say, it's so difficult to learn these things and I strongly believe that experience counts for so much - most people say you learn by making mistakes - and I certainly have - and I expect that eventually I will make better decisions the longer I invest and the more mistakes I make!

Cheers, OLTB.

reggie2020
Posts: 2
Joined: August 25th, 2020, 9:11 pm

Re: How to Pick Quality Shares

#335929

Postby reggie2020 » August 25th, 2020, 9:50 pm

simoan wrote:
Alaric wrote:
simoan wrote:You can't time the market. The future is always unknowable and it's just not possible to buy at the bottom and sell at the top. If you think you can time the market then you're kidding yourself! i


There's an approach which some investors use, for buying anyway. You identify a share that you would like to hold in the longer term. You then buy it only if its price drops below £ X or equivalently its yield exceeds y%. It's a bit like a strategy for buying goods that have a long shelf life from a supermarket . You know from past experience that they will periodically be on special promotion, so you only buy when the prices are good.

I'm really sorry but this is nonsense. Buying anything other than bonds based on "yield" or price=X is proven to be a losing strategy long term. Have you tested this approach over a number of years? Are the results any better than coin tossing? Does it beat the market? And more importantly does Phil Oakley suggest this approach in his book? I'd suggest the answers to the last three questions are "No".

All the best, Si


Are you saying that yield would be the only factor being used to determine the purchase in this scenario, or as one of several factors?

Oakley recommends in the third section of the book what he calls a cash profits yield to value the shares being considered for a purchase and set the price. The first two sections of the book detail how to determine if a company is high quality, and safe.

reggie2020
Posts: 2
Joined: August 25th, 2020, 9:11 pm

Re: How to Pick Quality Shares

#335935

Postby reggie2020 » August 25th, 2020, 10:03 pm

OLTB wrote:
Dod101 wrote:So, OLTB, you can now give us a definition of a 'quality share'. I look forward to that.

Dod


Hi Dod and thanks for the reply below.

What the book doesn't tell me is what you have talked about many times - the culture of a company - and that goes a very long way to making a share a 'quality' share along with the stark financial results. What I haven't seen yet is a book that tells me how to measure or judge the culture of a company.

Best wishes, OLTB.


I'm pretty sure there are a number of books or articles that discuss this, albeit perhaps not as the core focus of the book itself. Part of it will probably be directed by your own internal moral compass. The Manual of ideas has a chapter on investing in a business because of good management for example.

If you can see from a company's annual figures that things aren't as rosy as they make out, that can indicate that the culture of that company or management team isn't one you want to invest in, as does the targets the board set themselves. Oakley gives several examples of this.

moorfield
Lemon Quarter
Posts: 1954
Joined: November 7th, 2016, 1:56 pm
Has thanked: 559 times
Been thanked: 558 times

Re: How to Pick Quality Shares

#337756

Postby moorfield » September 2nd, 2020, 9:21 pm

OLTB wrote:Evening all.

I have just ordered the above book by Phil Oakley in an attempt to improve my share picking. I need to stop trying for the quick returns in the small caps market and go for quality. It will arrive in a couple of weeks (Amazon is out of stock).

If anyone has read it and is willing to offer comments, that would be appreciated.

Cheers, OLTB.


Did you get hold of a copy eventually? - I can't recommend this book highly enough. I've been a big fan of Phil Oakley articles for the last few years and find him a much more convincing read than Stephen Bland viz. buying shares.

My top tip would be to build your own spreadsheet you can use to follow the number crunching he does. PM me and will be happy to share you a copy of the template I've built, with some examples.


Return to “Books and Reading”

Who is online

Users browsing this forum: No registered users and 2 guests