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Basic questions - easy money

Investment discussion for beginners. Why you should invest your money, get help getting started
Pastcaring
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Re: Basic questions - easy money

#417800

Postby Pastcaring » June 7th, 2021, 6:09 am

Sim2335 wrote:I’m new to investing, so had couple of basic questions

If I buy a lot say 100 less likely to lose it all?

Why not just go for big compines how can you lose, e.g Amazon

And finally is this almost graunteed to make money invest in ea sports few months before Fifa 22 comes out once it’s out stock bound to go up and withdraw money?


EA no idea.

The rest ,basically yes,it is easy,it is virtually impossible to lose money.

You asked the doom,gloom and groupthink board.Every company in the world is going bust because ( insert name of company here) went bust.

20 years ago if you asked the same question,you would get exactly the same answers .Today exactly the same answers,20 years into the future,exactly the same answers.The key is "we all" "everybody else".You are talking to the herd.
Now the details.Computershare is an Australian company ( where I live),been around for 35--40 years or so.I don't own shares .They are a share registry,transfer agent,pension fund clearing house.The bookkeepers that you get in touch with basically .

At AGMs a couple I see there love Computershare,every time I see them "have you looked at them yet",I have never looked at them.Today I did,for 30 seconds.

1999 they were $2 a share,today $16 a share,that is good.However much you spent they have multiplied it by 8.I would think they have a dividend reinvestment plan,a lot of Australian companies do.I have no idea what they yield,if the yield is low then double your shareholding over that 22 year period,reasonable yield,triple it .

So you spent $2K in 1999 and bought 1000,you now have 2000 shares X $16.. 2K turns into $32K,the magic of compounding and do nothing. Or you have 3000 shares,so 2K grows to 48K.

In 2040 you will know what they are worth.For the next 19 years this lot will repeat "we would all" "how come everybody else isn't doing that" "they will go bust overnight because ( insert name of company here )went bust.
$ cost averaging is useless,for obvious reasons,put the lot in in one go.

Think for yourself,if you want to be part of the herd and be told must be diversified,must do everything the salesman tells me to do,must be part of the groupthink,then you are in the right place.

I don't think Computershare are going bust,if they do then you will have plenty time to get out .I am 100% certain you will not go to bed on Monday night and wake up on Tuesday morning to headlines of ' they have gone,everybody lost all of their money'.

A share that has made a few million $ for me is Commonwealth bank.The govt sold it in 1991 for $5.40 a share,call it $6K per thousand.Using the DRP ( I did) that $6 K grows to $600K now.I spent more than $6 K over the years,and bought more..I think it is a good company and continue to buy more using the DRP,and live off the $ 6 figure $ they pay me in divends.

Knowing exactly what they ( CBA. ASX) have done over 30 years this lot of groupthinkers have spent 30 years saying,must diversify,too much money in one company,must rebalance,must top slice,they are going bust,how come everybody else didn't do that.The rubbish they have come out with for 30 years is exactly the same rubbish they will come out with for the next 30 years if they lived that long.

To compare the 2 companies CBA ASX was around $20 a share in 1999.You spent $20 K to buy 1000 ,using the DRP you have around 3000 shares now,possibly a few more,they are at $100 a share now. $20K grows to $300K,isn't compounding great.

CPU ( I think that is Computershare) the same $20K bought 10,000 shares,using the DRP you now have 20,000 shares or 30,000 shares so you have $320K or $480K.Well done Computershare.

Good luck mate,think you yourself.Don't follow the crowd,don't be a fool spending an entire lifetime saying " how come everybody else didn't do that".

Looking at the CBA annual report for 2019 ,page 286 is the shareholder breakdown. 8345 people own between 10,000 and 100,000 shares.That's me,I'm one of them.The rest of the population ( 26,000,000) provide me with so much amusement as they spend 30 years fooling themselves that they got it right,and I got it wrong.Because

If it was that easy we would all be doing it.

How come everybody else didn't do that.

Itsallaguess
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Re: Basic questions - easy money

#417801

Postby Itsallaguess » June 7th, 2021, 6:22 am

Pastcaring wrote:
Sim2335 wrote:
I’m new to investing, so had couple of basic questions

If I buy a lot say 100 less likely to lose it all?

Why not just go for big compines how can you lose, e.g Amazon

And finally is this almost graunteed to make money invest in ea sports few months before Fifa 22 comes out once it’s out stock bound to go up and withdraw money?


You asked the doom, gloom and group-think board.

Every company in the world is going bust because ( insert name of company here) went bust.


That's a very good reminder that anyone starting out in investing really does need to understand what 'Survivorship Bias' is when taking views on the subject -

Survivorship bias -

Survivorship bias or survival bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility. This can lead to some false conclusions in several different ways. It is a form of selection bias.

Survivorship bias can lead to overly optimistic beliefs because failures are ignored, such as when companies that no longer exist are excluded from analyses of financial performance. It can also lead to the false belief that the successes in a group have some special property, rather than just coincidence (correlation "proves" causality).

For example, if three of the five students with the best college grades went to the same high school, that can lead one to believe that the high school must offer an excellent education when, in fact, it may be just a much larger school instead. This can be better understood by looking at the grades of all the other students from that high school, not just the ones who made the top-five selection process.

Another example of a distinct mode of survivorship bias would be thinking that an incident was not as dangerous as it was because everyone communicated with afterwards survived. Even if one knew that some people are dead, they would not have their voice to add to the conversation, leading to bias in the conversation.


https://en.wikipedia.org/wiki/Survivorship_bias

I think it's very important not to be overly influenced by anyone who dismisses investment risk, especially if it looks like they might be using a very highly concentrated investment approach that carries little in the way of diversification.

Diversification is very important, and in my view, those that completely ignore it don't do so with experience behind them, but often with hard experience ahead of them....

Cheers,

Itsallaguess

Pastcaring
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Re: Basic questions - easy money

#417802

Postby Pastcaring » June 7th, 2021, 6:36 am

Dear me getting old.

Amazon (AMZN).I don't own them either,I've looked but never pulled the trigger.I don't think they are going bust either,if they do you will have plenty time to get out.

Their history is ( rusty memory mind) floated 1997?.US$20 a share roughly.1x 2 for 1 split,another one more,then a 3 for 1 split.

So one share at $20 grows to 12 shares at circa $3200 each.I nearly pulled the trigger on them in 2015 ,but didn't.

If I have to spend more than 5 minutes a year on investing matters I can't be bothered.

The last share I missed was APT ( ASX).Put up on here at $15 ish around August 2018.I thought it was a bubble for mugs.They went up to $160 I think,and now around $95.

Easy come ,easy go,great fun though.

Pastcaring
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Re: Basic questions - easy money

#417803

Postby Pastcaring » June 7th, 2021, 6:57 am

Itsallaguess wrote:
Pastcaring wrote:
Sim2335 wrote:
I’m new to investing, so had couple of basic questions

If I buy a lot say 100 less likely to lose it all?

Why not just go for big compines how can you lose, e.g Amazon

And finally is this almost graunteed to make money invest in ea sports few months before Fifa 22 comes out once it’s out stock bound to go up and withdraw money?


You asked the doom, gloom and group-think board.

Every company in the world is going bust because ( insert name of company here) went bust.


That's a very good reminder that anyone starting out in investing really does need to understand what 'Survivorship Bias' is when taking views on the subject -

Survivorship bias -

Survivorship bias or survival bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility. This can lead to some false conclusions in several different ways. It is a form of selection bias.

Survivorship bias can lead to overly optimistic beliefs because failures are ignored, such as when companies that no longer exist are excluded from analyses of financial performance. It can also lead to the false belief that the successes in a group have some special property, rather than just coincidence (correlation "proves" causality).

For example, if three of the five students with the best college grades went to the same high school, that can lead one to believe that the high school must offer an excellent education when, in fact, it may be just a much larger school instead. This can be better understood by looking at the grades of all the other students from that high school, not just the ones who made the top-five selection process.

Another example of a distinct mode of survivorship bias would be thinking that an incident was not as dangerous as it was because everyone communicated with afterwards survived. Even if one knew that some people are dead, they would not have their voice to add to the conversation, leading to bias in the conversation.


https://en.wikipedia.org/wiki/Survivorship_bias

I think it's very important not to be overly influenced by anyone who dismisses investment risk, especially if it looks like they might be using a very highly concentrated investment approach that carries little in the way of diversification.

Diversification is very important, and in my view, those that completely ignore it don't do so with experience behind them, but often with hard experience ahead of them....

Cheers,

Itsallaguess


I will repeat,the endless amusement the 26,000,000 people and you provide for me.Now it is survivorship bias.Well done.

Come back in 6 years.CBA using the DRP you will have around 8,000 shares.They need to be at $125 each to be worth $1,000,000.Tell me then you are right .Tell me how that is just 36 years of survivorship bias.

If that happens then I'' LL have between $5 and $6 million.

I wonder if survivorship bias produces better returns than compounding.

Show me how well you have done by following the crowd.

Padders72
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Re: Basic questions - easy money

#417808

Postby Padders72 » June 7th, 2021, 7:19 am

You are the guy who got lucky with an Aus bank shares and has a chip on his shoulder because others who have been burned before caution that diversification is a safer plan long term are you not? I remember now. I am sure you are the best advisor for a complete novice with a faulty spellcheck and a gamestonk inspired confidence that all investments are a one way ticket to riches. Unless of course you in fact are the OP just trolling for a bit of fun that is.

The UK market equivalent of your plan would be to put everything 50:50 into Natwest and Lloyds. It might work it might not but it might lead to some sleepless nights too.

Itsallaguess
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Re: Basic questions - easy money

#417809

Postby Itsallaguess » June 7th, 2021, 7:37 am

Pastcaring wrote:
Come back in 6 years.

CBA using the DRP you will have around 8,000 shares.They need to be at $125 each to be worth $1,000,000.

If that happens then I'll have between $5 and $6 million.

Tell me then you are right.

Tell me how that is just 36 years of survivorship bias.


I'm sorry, but your inability to see that this is a classic case of survivorship bias does not actually stop it being one...

The huge irony is that for some very experienced investors, carrying out a period of highly-focussed investment like that can clearly be very rewarding, but to see someone doing it that, by their very own admission, doesn't spend more that 5 minutes a year thinking about investment matters, and has, crucially, already 'won the game', and already has enough capital and income to see them through the rest of their life, well, continuing to hold everything in just two stocks and carry out long-term dividend-reinvestment back into them is just bonkers, sorry....

If you don't need to make it any more, then the important thing is to stop risking it....

Good luck with your approach...

Cheers,

Itsallaguess

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Re: Basic questions - easy money

#417860

Postby XFool » June 7th, 2021, 10:45 am

Reading all of this thread, I am coming to the conclusion that possibly the best investment advice to give the OP is: DON'T!

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Re: Basic questions - easy money

#417875

Postby XFool » June 7th, 2021, 11:22 am

Pastcaring wrote:Dear me getting old.

If I have to spend more than 5 minutes a year on investing matters I can't be bothered.

So this must be your 5 minutes for 2021? ;)

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Re: Basic questions - easy money

#417885

Postby Dod101 » June 7th, 2021, 12:05 pm

I have no idea about Australian banks but I must say I am mildly surprised how well Toronto Dominion Bank has done for me in the short period that I have held them. I bought them on 7 October 2020 at Can $64 and today they are $87.96, an increase of 37%, plus a dividend yield, even after withholding tax, of around 3%. I am totally naive about Canadian banks but was advised by a cousin who is an accountant and lives near Toronto that they were about the most conservative and innovative of their banks (they can be both at the same time apparently) And they were as far as I know completely unaffected by the financial crisis of 2008.

I think in this country our banks have been so badly run that we forget how well they can be run. Not so good for the customer mind you in that there are fees for most things. We forget about the fact that we in the UK are getting totally free banking in many cases. I got a statement of my charges for the various accounts I have with HSBC recently and against each and every one was a big round zero. Somebody is paying and it is clearly the shareholder.

So up to a point I can understand Pastcaring's attitude and if he has had the success he tells us he has had he is entitled to feel a little smug.

Dod

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Re: Basic questions - easy money

#418090

Postby 1nvest » June 8th, 2021, 11:38 am

Dod101 wrote:I think in this country our banks have been so badly run that we forget how well they can be run. Not so good for the customer mind you in that there are fees for most things. We forget about the fact that we in the UK are getting totally free banking in many cases. I got a statement of my charges for the various accounts I have with HSBC recently and against each and every one was a big round zero. Somebody is paying and it is clearly the shareholder.

... or taxpayers.

Banks nowadays are no longer custodial. When you deposit money that becomes their money with which they can speculate like mad knowing heads they win, tails the taxpayer bails them out. And when so even questionable borderline fraud will still unlikely lead to any imprisonment, just the loss of their job along with ££millions in a lump sum payment.

Despite the failings of the state regulations permitting such win/win for some and the high cost to taxpayers that can involve, since the 2009 financial crisis to address that the policy seems to be towards lowering the state/taxpayer risk by loading/raising the depositors risk. Evidence that Parliament doesn't serve those that elect it, but rather their own interests.

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Re: Basic questions - easy money

#418095

Postby Dod101 » June 8th, 2021, 11:52 am

In making my comments I had no intention of reopening the discussion about regulation or rather the lack of it in the UK. Fundamentally it comes back to culture. To see how our banks can be run we need to go back to the independent Bank of Scotland under Sir Bruce Pattullo and his predecessors.

Looking at the ridiculous way that HBOS and RBS were mismanaged in the run up to the banking crisis of 2008/9, we have got to ask what on earth the Bank of England and its regulators were doing (well we know the answer to that, sweet FA) or thinking, to allow that sort of situation to exist. And of course why investors thought that it was a good idea to hold either.

My point for this thread however, is that it need not be like that. The Canadian banks as I said are staid, boring and profitable as well as providing a service to their customers and it may be that the Australian ones are similar.

Dod

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Re: Basic questions - easy money

#418227

Postby XFool » June 8th, 2021, 8:53 pm

1nvest wrote:Despite the failings of the state regulations permitting such win/win for some and the high cost to taxpayers that can involve, since the 2009 financial crisis to address that the policy seems to be towards lowering the state/taxpayer risk by loading/raising the depositors risk.

My understanding, such as it is, is that it is not to transfer the full risk to "depositors" (although that is the idea favoured in conspiracy theory sites) as to the bondholders/preference shareholders.

It may be remembered that last time preference shareholders lost a few years dividend payments, courtesy of the EU. But if there is a next time they can expect to lose capital.

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Re: Basic questions - easy money

#418253

Postby XFool » June 8th, 2021, 10:44 pm

Meanwhile, with Pastcaring in mind: viewtopic.php?p=308319#p308319

To answer my own question in that post: "Is this an 'insane' investment tactic?" On the evidence to date, no it wasn't. Now if only I'd followed by own advice(?) big time. :lol:

ICG (ICP) has today released another spiffing set of results: LSE

And RICA has since become 'popular'... Oh dear! :o

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Re: Basic questions - easy money

#418314

Postby Gerry557 » June 9th, 2021, 10:15 am

Pastcaring wrote:
Sim2335 wrote:I’m new to investing, so had couple of basic questions

If I buy a lot say 100 less likely to lose it all?

Why not just go for big compines how can you lose, e.g Amazon

And finally is this almost graunteed to make money invest in ea sports few months before Fifa 22 comes out once it’s out stock bound to go up and withdraw money?


EA no idea.

The rest ,basically yes,it is easy,it is virtually impossible to lose money.

You asked the doom,gloom and groupthink board.Every company in the world is going bust because ( insert name of company here) went bust.

20 years ago if you asked the same question,you would get exactly the same answers .Today exactly the same answers,20 years into the future,exactly the same answers.The key is "we all" "everybody else".You are talking to the herd.
Now the details.Computershare is an Australian company ( where I live),been around for 35--40 years or so.I don't own shares .They are a share registry,transfer agent,pension fund clearing house.The bookkeepers that you get in touch with basically .

At AGMs a couple I see there love Computershare,every time I see them "have you looked at them yet",I have never looked at them.Today I did,for 30 seconds.

1999 they were $2 a share,today $16 a share,that is good.However much you spent they have multiplied it by 8.I would think they have a dividend reinvestment plan,a lot of Australian companies do.I have no idea what they yield,if the yield is low then double your shareholding over that 22 year period,reasonable yield,triple it .

So you spent $2K in 1999 and bought 1000,you now have 2000 shares X $16.. 2K turns into $32K,the magic of compounding and do nothing. Or you have 3000 shares,so 2K grows to 48K.

In 2040 you will know what they are worth.For the next 19 years this lot will repeat "we would all" "how come everybody else isn't doing that" "they will go bust overnight because ( insert name of company here )went bust.
$ cost averaging is useless,for obvious reasons,put the lot in in one go.

Think for yourself,if you want to be part of the herd and be told must be diversified,must do everything the salesman tells me to do,must be part of the groupthink,then you are in the right place.

I don't think Computershare are going bust,if they do then you will have plenty time to get out .I am 100% certain you will not go to bed on Monday night and wake up on Tuesday morning to headlines of ' they have gone,everybody lost all of their money'.

A share that has made a few million $ for me is Commonwealth bank.The govt sold it in 1991 for $5.40 a share,call it $6K per thousand.Using the DRP ( I did) that $6 K grows to $600K now.I spent more than $6 K over the years,and bought more..I think it is a good company and continue to buy more using the DRP,and live off the $ 6 figure $ they pay me in divends.

Knowing exactly what they ( CBA. ASX) have done over 30 years this lot of groupthinkers have spent 30 years saying,must diversify,too much money in one company,must rebalance,must top slice,they are going bust,how come everybody else didn't do that.The rubbish they have come out with for 30 years is exactly the same rubbish they will come out with for the next 30 years if they lived that long.

To compare the 2 companies CBA ASX was around $20 a share in 1999.You spent $20 K to buy 1000 ,using the DRP you have around 3000 shares now,possibly a few more,they are at $100 a share now. $20K grows to $300K,isn't compounding great.

CPU ( I think that is Computershare) the same $20K bought 10,000 shares,using the DRP you now have 20,000 shares or 30,000 shares so you have $320K or $480K.Well done Computershare.

Good luck mate,think you yourself.Don't follow the crowd,don't be a fool spending an entire lifetime saying " how come everybody else didn't do that".

Looking at the CBA annual report for 2019 ,page 286 is the shareholder breakdown. 8345 people own between 10,000 and 100,000 shares.That's me,I'm one of them.The rest of the population ( 26,000,000) provide me with so much amusement as they spend 30 years fooling themselves that they got it right,and I got it wrong.Because

If it was that easy we would all be doing it.

How come everybody else didn't do that.



Great Results. Im happy for you. Unfortunately not having a time machine wont help @Sim2335. He wants to know where to bung his wad now. Sounds like he is happy to "risk it all" on one stock. He has the right idea, trying to find something that might improve in the future although he is taking about a short timeframe, 2022 to take it all out. Not invested for decades like you.

Im not knocking holding for decades, in fact you gave a good reason why long term matters. Sim asked "how can you lose?" and you have knocked everyone who pointed out that you can lose and gave examples of big companies that have.

As for your comment "I don't think Computershare are going bust,if they do then you will have plenty time to get out" Share prices dont stay on highs when there is a lot of bad news. Thats no saying that you cant make a profit. Maybe you have the experience to see when a decline is going to be a permanent fall and get out before everyone else and while your sell price is higher than your buy price. Again this would have to be an a much longer time scale than sim is currently looking at.

You make some good points, compounding, time in the market. Maybe you could polish your crystal ball and tell him what share for the next 30 years and how much to put in.

He could bet all on red or black or just pick 7 winning lottery numbers. Its quite easy apparently as I read all about 100m euro lottery winners every month and you only have to risk a couple of quid. Don't listen to the group think that say you are never going to win.

There are several ways to get richer, I'm open to all thoughts.

I suppose everything is quite hypothetical as Sim has only give very limited information. No amounts specified, no risk appetite, no context to his financial situation. Will he lose his shirt if it goes wrong or will it be some pocket change that he wont miss.

What do you have against pound cost averaging?


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