Forecasts are not facts (how I learnt the hard way)

Forecasts are not facts

There’s a huge difference between forecasts and facts. They’re pretty much at opposite ends of the spectrum. You’d be silly not to realise that, wouldn’t you? I mean, this is completely obvious….. right?

Well, unfortunately, I’ve fallen well and truly into the silly camp on many occasions where I’ve unintentionally treated forecasts as hard facts. The future earnings numbers are there printed on the page, clearing away the fog of an uncertain future, so it must be true. Then given that this is going to happen, and based on the current stock price, this is definitely a good investment! Buy!

One great example of my ‘forecasts are facts’ mistake was with a little company called ‘Cool or Cosy’, [Read more...]

Can you really follow Buffett’s number 1 rule – never lose money?

never lose money

This post appears as a guest post over at Modest Money, so head on over if you’re keen to read more! But for those of you who need a break from reading, and would rather sit back, watch and listen to this post as a fun, animated slide show instead, check out the video below!

Hope you enjoy!

Take a Spin in this Stock Investment Simulation with Silex Systems

Silex Simulator

I’m always on the lookout for great investment ideas. And I came across one just last week that got me a little excited – Silex Systems (just the name alone makes it sound like a great investment, right??). A bit more speculative than I’d normally consider, but it sounded like it had great potential.

Unfortunately for me, I work with a firm that also performs financial audits for many listed Australian companies, and for independence reasons, we can’t invest in any of those stocks. Of course, Silex Systems happens to be one of them.

Despite my minor frustration, I watched some interesting events unfold over the next couple of days, and thought it would be a great example to share with you as potential investors. [Read more...]

The Liebster award! (and a few things about me)

liebster

I’m so thrilled to have been nominated for a Liebster award by the brilliant Debt Debs, which was extremely kind of her! This award seems to be focused on newer, smaller blogs, and our tiny Islands here is definitely among some of the smaller new blogs out there (but we do like the serenity here ;) ). What made me really happy was in Debs nomination she mentioned that she found the blog ‘comforting’, which is one of the things I’m really striving for here – thanks Debs!

To make things official, Debs has asked 5 questions which I need to answer, and then I need to make my own Liebster nominations. Sounds like great fun – here we go! [Read more...]

Make yourself miserable by expecting the best you’ve ever seen

Make yourself miserable

Most of us are investing to create a better life for ourselves. To provide for our future selves, achieve financial independence, or some other specific goal.

But often when it comes to investing, we can very easily make ourselves miserable along the way, regardless of the returns we achieve.

“Surely if you made 20% annual returns for the past 5 years, you’d be much happier, and feel better about your achievements than someone who could only manage 5% annual returns over the same period?”

Well, let’s have a listen to two such investors discussing their returns and see what we can learn… [Read more...]

The treasure hunt – how to find individual stocks to invest in

Treasure hunt

In an earlier post, we highlighted some benefits of investing directly in stocks. But one of the problems many people have is “where do I start??”. Picking individual companies can be daunting at first, especially when there is such a large universe to choose from, but there’s plenty of great ways to go about it.

If you’ve decided that some direct stock investments have a place in your broader investing plans, here we’ll look at a few ideas to help get you started.

Some ground rules

Finding the right investment will not solve all your investment dreams. This is only a first step. You’ll need to learn how to behave, how to treat your investments well and how to deal with the tough times. [Read more...]

There are millions of possible outcomes you’ve never even considered

Millions of possibilities

Prediction. A multi-billion dollar industry. We are obsessed with it as risk-averse humans. We want to know what will happen before we proceed.

And when someone tells us, we feel at ease. Just by having an ‘expert’ tell us what will (or might) happen, we feel like the risks have been removed. No wonder there are so many people getting paid to give their personal views of how the world will unfold.

With any investment, there are always a huge number of possible scenarios that can eventuate. [Read more...]

Checklists aren’t sexy, but they’re critical for good investing

Investment checklist

Whenever you make a reasonably important decision in life, chances are you will have run through some sort of checklist. For significant purchases like buying a house, a car, a fridge, a holiday, you will most likely have a very specific set of criteria that is unique to you. You’ll diligently work through your checklist, making sure your most important criteria are satisfied.

But for some crazy reason, many people don’t use any sort of checklist when deciding to buy shares in a business, a decision that could have a huge impact on their future financial well-being.

A checklist is a tool to help you make good decisions consistently, or to increase the odds of making a great decision. It is essentially a summary of all the important criteria that you need to consider before making your decision. It is such a powerful tool that most of us have embedded many little checklists in our minds for making the smaller decisions in life. [Read more...]

Incorporating the benefits of property into your share investment plan

 

Property

Ah, property. The asset of choice for most Australians. We love property, and one of our biggest aspirations is to own our own piece some day. We don’t seem to have the same aspirations when it comes to owning parts of successful businesses (i.e. shares) though. Probably because houses are so tangible, and therefore look so sturdy as an investment. It’s pretty easy to get your head around what you’re buying. You can also proudly show it off to people, if that’s what excites you. Not many people will be as impressed with your certificates for 500 shares in BHP.

There are always debates around which asset class is superior, property or shares. But if you’re familiar with earlier posts where we compared index investing vs direct shares, you’ll probably guess that I’m not necessarily going to fight for one or the other here (although shares are what I prefer to invest in). There are major pros and cons of each, which will vary depending on who you are and your own circumstances.

But what I thought I’d do is describe how we can have the best of both worlds in some ways. Take a couple of the major benefits of property, and bring them into the share investment world. [Read more...]

How NOT to react to market headlines

 

How NOT to react to market headlines

My first real foray into the stock market happened about 15 years ago. I’d been working a couple of part time jobs, earning my first dollars, and it wasn’t long before I’d saved up enough to put some money to work in the stock market.

Being a bit of a complete novice at the time, I just plonked these funds into 4 different companies I’d read about in the newspaper. Companies I knew next to nothing about. But it was pretty exciting to put some hard earned money on the line, and I had a pretty great feeling about them.

One of these was a construction services company called Coates Hire. But what it did isn’t all that important. What happened with that investment, and how I reacted, is much more important for you to hear. [Read more...]