Brainy's Share Market Toolbox Brainy's
Share Market Toolbox
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Share market
Investing and
Trading Tips

Starting out with investing or trading?
or perhaps not happy with your progress?
Looking for some sensible and logical answers?

Are you starting out with investing or trading?

We need to be very careful about what we listen to - or perhaps more importantly, be selective about the information that we take on board. There are some professionals in the finance industry who continue to peddle generic out-dated advice. Some of them want us to leave our money invested with them (in the market, or in managed funds), and to ride out the ups and downs. They use weak excuses like: "you can't time the market", and "share market returns are better over the (very) long term". But these throw-away lines can be easily dispelled.

Did you know that a share market correction or a bear market comes around about every four years on average? See correction and bear market details... This means that investing in the share market using the simple (and outdated) buy-and-hold approach is not really much good for our finances - it does not optimise the use of our funds. On the contrary, it might be great over a selective time period; but over many time periods this can be shown to be not very good advice.

Some of the finance industry professionals have a barrow to push (vested interests). Some of the Wall Street "Words of Wisdom" that we hear are actually furphies. See Robert's list of Share Market GEMs (and the downloadable supporting document) for some useful, and some not-so-useful, pearls of wisdom.

Here are some more helpful snippets for you to consider:

Not happy with your investing progress?

Perhaps you have been investing in various financial instruments, or just in shares, and for some reason you are not happy with the progress. Perhaps the financial advisor, or the broker, or someone else who has been giving you "advice".

Did you know?

Are you aware that the share market performance of companies
is closely correlated to the opinions of the market participants? 

Amongst all those people who are playing the market, many have an "opinion" about what a company's shares are worth. Mind you it is their "opinion", which might or might not match someone else's "opinion". Economists, analysts and brokers are all really good at crunching the numbers to arrive at a figure for share value; but whether this figure is close to actual or not is another matter. At any one point in time a large well-followed company like BHP or CBA will have several analyst buy/hold/sell recommendations which might not be all the same.

On the price chart,
once a company's share price is in a rising trend,
it is likely to continue rising.

And conversely, once a company's share price is in a falling trend,
this is also likely to continue.

So, why would we buy a company's shares if the share price is "falling"? Some experts say that it is a buying opportunity, because the shares are cheaper than before. But they won't admit to you that the share price might get even cheaper. 

Remember what happened to the likes of ABC Learning Centres, Babcock and Brown, and many others during the GFC in 2008? Their shares got cheaper and cheaper and cheaper, and then they folded, with little or no returns for shareholders.

So, buying shares when the price is falling is based on hope and wishful thinking that the price will turn upwards at "sometime" in the future - who knows how long we have to wait?

Technical Analysis is nothing to do with tea leaves

Price charts summarise the underlying opinions and emotions
of the market participants. Every chart tells a story.
It pays to understand the stories in the price charts.

For those who can spot a rising trend, and who know how to interpret the chart patterns and support and resistance zones on price charts, there is a lot of benefit.

Read more about technical analysis...

And whatever you do, please use sound risk management, and a Stop Loss approach.

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Robert Brain provides various support to both new and experienced traders and investors.
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Beware the sharks in the ocean.
And whatever you do,
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The information presented herein represents the opinions of the web page content owner, and
are not recommendations or endorsements of any product, method, strategy, etc.
For financial advice, a professional and licensed financial advisor should be engaged.

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Last revised: 16 September,  2014.