Brainy's
Share Market GEMs

This information is just one of the many tools
in Brainy's Share Market Toolbox.

“May your losses be small, and
may your profits run like blazes.”

Please note: There is no guarantee that there is any truth
in any of these “gems” (watch out for the furphies).

You should not take any action on anything that you read here without consulting a properly licensed,
qualified and trustworthy professional.

Share Market GEMs
Summary List

1. Important considerations

First off in Robert's list of share market gems are some important considerations.

• The share market is like an elephant 
• The best time to prepare for the next bull market is before the bulls have bolted
• The 3-Ways Rule - Trends
• Only invest in something that you understand
• Understanding the market past
• The investor's first job is to preserve capital
• Buy low, sell high

2. Company performance

• Blue chips - Are they really "blue chip"?
• Blue chips can disappoint 
• Don't fall in love with the company
• Today's darling can be tomorrow's dog
• Up by the stairs and down by the elevator
• Public Floats and IPOs 

3. Financial returns

• Past performance is no guarantee...
• What's most important? - Dividends or capital or TSR (total return)?
• The Rule of 72
• Never bet the house

4. Investing and trading facts

• The dangers of rushing in
• Psychology, fear and greed 
• For every seller, there needs to be a buyer
• The greater fool theory

5. Emotions and psychology

• Hope, fear and greed 
• Calmness
• Hold your nerve <- Furphy?
• Beware herd behaviour
  

6. Profits and losses

• You can't win them all!
• The win-loss ratio
• Be prepared to sell!
• Stop Loss = How to minimise losses
• Consecutive losses
• Cut losses early
• The first loss is the cheapest and the best
• A Stop is a Stop!
• You can't go broke taking a profit - Furphy!

7. The markets and more...Strategies for investing and trading

• Know your market indexes (XJO, XAO, DJIA...)
• GICS Codes (Global Industry Classification Standard) can be useful
• Key world indexes - Dow Jones and more

8. Research and education

• Education
• Fundamental analysis 
• How much research is enough?
• Watch the news?

9. Key concepts for investing and trading

• The trend is your friend 
• Time in the market is more important than timing  <- Furphy!
• Technical analysis (charting) — very useful!
• Funda-technical analysis 
• A rising tide lifts all boats <- Furphy!
• Bear markets and corrections come around too frequently
• The daily close price is most important

10. Investing and trading - Wisdom

• Keep your eye on the ball
• A routine is critical
• Risk analysis and management is vital 
• In order to change the outcome you need to change the actions
• A long journey starts with a single step
• Maintain perspective
• Remember your Investing/Trading Plan 
• Beware the value trap of cheap stocks 
• Beware the greater fool principle.
• The markets can remain irrational longer than you can remain solvent
• Don't try catching a falling knife
• One man's measure is another man's yawn.

11. Strategies for investing and trading

• Buy on weakness
• The price is running
• Beware the “up-chase”
• Buy on rumour, sell on fact
• Trade on index adjustments (re-balancing) 
• Wouldn't buy the index? — Don't buy a stock
• Watch out for a lack of liquidity 
• Pyramid your buys
• Dollar cost averaging? <- Furphy!

12. Market tops and bottoms

• The market leads the economy 3-6 months
• Bull market top
• Bear market bottom
• Accumulation and distribution
• Volume behaviour
• Market indices diverging
• Advance Decline indexes
• New Highs and Lows

13. Time-of-Year observations

• Bad-news Friday
• January Barometer — As goes January, so goes the year
• Sell in May and go away
• The weekend and holiday sell-off
• June tax-loss selling
• Europe & US summer vacation (August)
• Confessional season profit warnings (May-June and Nov-Dec)
• Reporting season opportunities (February and August)
• Reporting season tardiness
• September (and October) — a bad month?
• September (and October) — a good month?
• Christmas rally = Santa Claus rally 
• Federal elections - go nowhere

14. Cycles and Seasons

• The 18-year property cycle
• The 4-year US Presidential Cycle
• Lunar effects

15. Brokers, fund managers and the big boys

• Fund Manager returns
• “Smart money”
• Big end of town
• How to invest a large amount without anyone noticing
• Broker & analyst valuations and recommendations
• Who can you trust?

16. General observations

• When Wall Street sneezes, other markets catch a cold
• The world's largest economies
• P/E – Price/Earnings Ratio
• Profit takers – they do exist
• Bull and Bear market durations 
• Bulls and bears on the 200day MA
• Money is made in a bear market
• The market abhors a vacuum
• Black Monday 1987

17. Shares and other financial instruments

• Shares are dangerous
• Shares might not be shares
• Derivative products
• Leveraged products
• Leveraged finances

18. Commodities

• Supply and demand equation
• Global prices impact local stocks
• Volatility Index - VIX and XVI 
• Gold and $US
• Australian iTraxx index
• Libor
• Baltic Dry Index (BDI)

19. In summary
    

• Self-fulfilling prophecy?
• How old is Technical Analysis?

Toolbox Members can download the
Share Market GEMS pdf booklet.
 

And beware the sharks in the ocean!.