What's your experience on stocks speculation?

Question

Do you make net gain or loss in speculating stocks?

What's the basic you use for speculating stocks?
For instance, technical analysis, fundamental analysis, rumors, news etc.

How long have you been dealing in stocks speculating?

Please specify if you are/were a fund manager, stockbroker, financial adviser etc.

Thanks.

Answer 1

After years of experience as an amatuer investor, I've come to the same conclusion as a lot of people -

Frantically buying and selling stocks just loses you money

You're not a genius (even though you think you realise your past mistakes and will do better in the future)

Technical Analysis is no better than seeing signs of the zodiac in clusters of stars, imagining patterns in graphs that just aren't there. They don't actually predict the future, no matter how many jargon terms like 'head and shoulders pattern' you make up.

You have no more power to predict future stock prices than anybody else no matter how hard you study different stock-picking systems

I would have made far more money in a broad-based index tracker fund such as the US Wilshire 5000 or UK FTSE All Share, left it alone and let it grow by compound exponential growth over many years. I would also have avoided losing money through stocks not performing as predicted and through all the dealing charges.

If you must deal in stocks, the system that seems the most calm and logical is Warren Buffett's Value Investing method. He's the 2nd richest man in the world and made virtually all of it by growing his own shares in Berkshire Hathaway, that he manages, into billions of dollars over many decades.

Berkshire Hathaway is a collection of businesses with big super-catastrophe and general insurance businesses at its heart, but also investing in coca-cola, gillette, etc, and wholely owned subsidiaries. Businesses must make above average Return On Capital Employed.

He has taken Benjamin Graham's Value Investing method and modified it a bit. BG invested in bargain stocks after crashes. WB invests in great businesses at fair prices, not average business at cheap prices. He only invests in 'Fortress Businesses', protected from competitors by high-entry costs, patents, international brand names, etc. They can command high prices for their products and make above-average profits. For example, every corner-store has to stock Gillette razor blades because the public have seen the heavy advertising for decades and demands that they are stocked. The profit is higher than on a generic brand. They can raise prices and the public still buy them.

The best book on his method is The Buffettology Workbook, from Amazon, etc, which explains 'Fortress Business' in more detail.

'Fortress Businesses' are the opposite of 'Commodity Businesses' where a company sells the same or similar product as hundreds of other companies from around the world and can't make unusually high profits due to competition.

Doing Value Investing yourself is difficult, almost impossible, as company accounts are so misleading due to accounting conventions. I merely invested in Berkshire Hathaway Class B shares. These are around $3500, whereas Class A shares are $100,000 and hence difficult to afford even one share. Both trade like ordinary shares (Ticker BRKA and BRKB).

Warren Buffett is in his 70s, but has named a sucessor (and another 3 that he trusts) to keep using the same methods.

Value Investing is a form of Fundemental Analysis. However, fundemental analysis on its own, predicting future performance from annual accounts etc, isn't sufficient. You also need, wisdom, experience, to be a good judge of character when looking to appoint or invest in honest management, that aren't paying themselves fat bonuses and stock-options. This is where Warren Buffett and his sucessor comes in. He's made 15% or more a year compounded for several decades.

His Annual Shareholders Meeting in Omaha is a bit of a hero-worship session by some investors who have grown rich, but ignore all that. Bill Gates is a friend and board-member.

The shares are trading at a P/E of 13.22 at the moment (09 Jan 2007).

This is not recommendation to buy. I'm not a financial advisor. You have to decide what your aims and timescale are.

Answer 2

The stock market seems crazy
I use fundamental analysis mostly
I mostly look at earnings, mergers and other news and invest in companies having low PE and whose business has being running good for few years.
The market is full of surprises even when you think it will rise i falls. Speculation sucks.

Answer 3

hi,speculation is who will want to make ins ted returns on there investments because they r earning at this same day.some time they will earn some time they will lost also.so,my suggestion is better to go for long term investment on u r stocks like take delivery.it will give better return on u r investments plz depend up on worth ful broking house.if u want contact call me 09290004080.

Answer 4

speculators will never gain continously . it is better to do delivary based trading