Оглавление
John Cotter. Cotter On Investing
Publishing details
Disclaimer
Biography
Preface
Chapter 1: Why Buy Shares? Your financial future
Are shares a good investment? The long-term
Figure 1.1: FTSE All-Share Index, 1945-2011
Shorter investing periods
Do you trust yourself or a professional?
1. Professionals aren’t very good at investing
2. Professional costs are high
3. Small is beautiful
4. Invest in what you know
5. Investing yourself is rewarding in many different ways
Is it feasible to invest yourself?
Endnotes
Chapter 2: A Common Sense Approach to Investing. The application of common sense
Back to basics
What’s in it for you?
Invest in what you know
Examples
1. ASOS [ASC]
2. easyJet [EZJ]
3. Straight [STT]
The lessons
Keeping it simple
Chapter 3: The PE Ratio
What is it used for?
Why is it important?
Calculating the PE
Different types of PE
Interpretation of the PE
Using the PE to compare stocks
Examples
Using the PE to compare companies in different sectors
Market comparisons
Figure 3.1: PE of the MSCI world Index
The Rule of 20
Conclusion
Chapter 4: The Mighty PEG
What is the PEG?
The value of the PEG
The GARP theory
Using the PEG
Example
Figure 4.1: ASOS
Trading and the PEG
PEG limitations
Where to find PEG data
Figure 4.2: screenshot of Barclays Stockbroker web page
Chapter 5: Investing for Dividends. High dividend portfolios
Defining the key terms
earnings per share (EPS)
earnings yield
dividend
dividend yield
dividend cover
Figure 5.1: screenshot of Barclays stockbroker web page
The importance of reinvesting dividends
Dogs of the Dow – a portfolio with bite
Does 2008 invalidate the Dog theory?
Three reasons why the Dogs strategy works
Applying the Dogs strategy to the UK market
iShares FTSE UK Dividend Plus [IUKD]
Figure 5.2: share price chart of iShares FTSE UK Dividend Plus [IUKD]
My UK version of the Dogs of the Dow
One final point – maiden dividends
Figure 5.3: share price chart of Medusa Mining [MML]
Conclusion
Endnotes
Chapter 6: Diversification
A story of false diversification
Asset allocation
Property
Commodities
The requirements of a portfolio
The need for balance
Assessing the prevailing market
Figure 6.1: chart of iShare iBoxx Sterling Corporate Bond [SLXX]
Figure 6.2: chart of FTSE UK All Stocks Gilt [IGLT]
Dynamically managing asset allocation
Global diversification
Individual companies
Exchange traded funds
Managed funds
Sectors and stocks. 10/2/20 Rule
The limits of diversification
Your risk profile
Risk/return
Assessing the risk of your portfolio
Chapter 7: Directors’ Deals
What are directors’ deals?
Actions or words?
Not every deal is the same
Categorising directors’ deals
1. Size of deal
2. Size of company
3. Number of directors involved
Check the price of the deal
Following directors’ dealings in practice
Examples. 1. Communisis [CMS]
Figure 7.1: share price chart of Communisis
Table 7.1: directors’ deals in Communisis
2. Kofax [KFX]
Figure 7.2: share price chart of Kofax
Table 7.2: director’s deals in Kofax
3. Salamander Energy [SMDR]
Figure 7.3: share price chart of Salamander Energy
Table 7.3: director’s deals in Salamander Energy
Figure 7.4: share price chart of Volex
Figure 7.5: share price chart of Petra Diamonds
Conclusion
Chapter 8: Charting the Way. Fundamentalists v. technicians
Three principles of technical analysis
1. Everything is in the price
2. Prices move in trends
3. History repeats itself
Figure 8.1: share price chart of GlaxoSmithKline [GSK]
Does charting work?
The shorter the time frame, the stronger the case
The trend is your friend
Case studies
1. Cookson Group [CKSN]
Figure 8.2: share price chart of Cookson Group
2. ASOS [ASC]
Figure 8.3: share price chart of ASOS (over five years)
Figure 8.4: share price chart of ASOS (over one year)
Trend changes
Examples
1. Cookson Group [CKSN]
Figure 8.5: share price chart of Cookson Group
2. ASOS [ASC]
Figure 8.6: share price chart of ASOS
Double tops/bottoms
Figure 8.7: chart of Axis Shield [ASD] with a double bottom
Figure 8.8: chart of JPMorgan American Investment Trust [JAM] with a double top
History repeats itself
Resistance
Support
Examples
Figure 8.9: share price chart of Centrica (six months)
Figure 8.10: share price chart of Centrica (five years)
Figure 8.11: share price chart of Barclays (six months)
Figure 8.12: share price chart of Barclays (two year)
Conclusion
Chapter 9: Investing or Trading?
The trading investor
The selection of instrument to trade
Volatility as a Good Thing
Examples of oversold stocks
Figure 9.1: Barclays at 51p in January 2009
Figure 9.2: Lloyds at 20p in March 2009
Figure 9.3: BP at 302p in June 2010
Figure 9.4: AstraZeneca
Figure 9.5: FTSE 100 Index
Trading
Types of trader
Trend trading
The perfect trend trade
1. The value marker
2. The catalyst
3. Limited downside
4. Trend direction
Example: Communisis
Figure 9.6: Communisis
The catalyst for the trade – directors’ deals
The result
Investors and traders play by different rules
Chapter 10: Exchange Traded Funds (ETFs)
Low cost
Range of ETFs
Table 10.1: most active ETFs on LSE (Jan-Mar 2011)
Short and leveraged ETFs
How ETFs can be used by investors
1. Core investment
2. Trade an index
3. Invest on a worldwide basis
4. Produce an income
ETC hedging and credit risk
Conclusion
Chapter 11: Commodities. The fifth asset class
How to invest in commodities
1. Direct exposure – Exchange Traded Commodities (ETCs)
Range of ETCs
Figure 11.1: chart of Lyxor Gold Bullion Securities Ltd v. FTSE100 Index (dotted line)
Figure 11.2: chart of ETFS Grains DJ-AIGCI v. FTSE100 Index (dotted line)
Table 11.1: most active ETCs on LSE (Jan-Mar 2011)
ETC hedging, credit and tracking risk
Gold and oil
2. Indirect exposure – mining and oil companies
The leverage effect
Example: Medusa Mining
Figure 11.3: share price chart of Medusa Mining [MML] v gold [PHAU] thin line)
Example: Tullow Oil
Figure 11.4: share price chart of Tullow Oil [TLW] v oil [CRUD]
3. Managed funds (unit trusts and OEICs)
Conclusion
Chapter 12: Smarter Ways to Deal
The types of contingent order. Limit orders. Limit orders to buy
Limit orders to sell
The problems of limits
Stop orders. Stop orders to buy
Figure 12.1: share price chart of Morgan Crucible Company
Figure 12.2: share price chart of Morgan Crucible Company
Stop orders to sell
Comparing limit and stop orders
Trailing stop order to sell
Figure 12.3: share price chart of Axis-Shield – I rode it up and all the way down
Stops tighten as price increases
Trailing stop orders to buy
The problem of spikes
The benefits of Advanced Deal Mechanisms. 1. No extra charge
2 Convenience
3. Remove the emotion from the dealing process
Trading with ADMs
Example
Figure 12.4: diagram of a trade using ADMs
What level do you set for limit and stop orders?
Limits
Stops
2. For the mathematician: Average True Range (ATR)
Figure 12.5: web page showing ATR
Disadvantages of stops orders. Price gaps
Figure 12.6: chart of BP, example of a price gap
Stop limit orders
Figure 12.7: screenshot of Barclays Stockbrokers order page
Guaranteed stop losses
A problem of over-trading
My own ADM experience
Chapter 13: My Top Tips for Long-Term Investors. 1. Get online
2. Feed money in
3. Build and reduce
4. The PEG is king
5. Directors’ deals
6. Diversification
7. Following the dividends
8. Use a balance sheet
9. Maximise your tax efficiency
10. Don’t swim against the tide!
11. Sit on your hands
12. Keep your investment brain switched on
13. Be choosy when it comes to the company you own!
14. Follow the Rule of 20
Appendices. PEs and PEGs of FTSE100 Companies
Glossary. absolute return funds
AIM (Alternative Investment Market)
asset allocation
bear
beta
bid/offer spread
blue chip stocks
Bollinger Bands
bull
CFD (Contracts for difference)
chartist
contrarian investing
collective investment
corporate bonds
cum
derivatives
dividends
dividend yield
distance to the market
EPS (earnings per share)
equities
ETC (exchange traded commodity)
ETF (exchange traded fund)
ex
FST (financial spread trade)
GARP (Growth At a Reasonable Price)
Gearing
gilts
high low format
indexed linked gilt
investment trust
IPO (initial public offering)
ISA (individual savings account)
kitchen sinking
leverage
LSE
limit order
large cap
maiden dividend
market capitalisation
mid cap (capitilisation)
moving averages
NASDAQ
NIKKEI
NYSE
overweight
OEICS (open-ended investment companies)
PE (price earnings ratio)
PEG
PIBS (permanent interest bearing shares)
placing
pound cost averaging
preference shares
redemption yield
resistance
rights issue
Rule of 20
scrip (issue/dividend)
SETS
SIPP (self-invested personal pension)
small caps
spiked out
stop order
support
TER (total expense ratio)
trailing stop order
unit trusts
x-dividend (ex-dividend)
yield to maturity
