Starting With Shares

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Roger Kinsky. Starting With Shares

Table of Contents

List of Tables

List of Illustrations

Guide

Pages

Starting with SHARES. A BEGINNER'S GUIDE TO SHAREMARKET SUCCESS

Introduction

Chapter 1 What you need to know

Meet Michelle

Trust yourself

Knowledge level you'll need

Types of knowledge

How long is the journey?

Tip

Markets are unpredictable

Tip

Dealing with the uncertainty

Tip

Tip

Tip

Risk and reward are related

Shareholders are owners of a business

Tip

Key takeaways

Chapter 2 Getting into shares

What are shares?

Understanding some basics

Tip

Traders and investors

Tip

Making shares available for trading

Comparing equity capital to loan capital

Tip

Becoming a shareholder

Participating in a float

Purchasing shares from someone else

Tip

Other ways of becoming a shareholder

Tip

Shares you can't buy

Tip

Why share prices change

Important share prices

Tip

Key takeaways

Chapter 3 Profiting from shares

Making profit from capital gains

Taxation and capital gains

Tip

Incurring a capital loss

Tip

Paper versus realised capital gains or losses

Tip

Tip

Profiting from dividend income

Issues relevant to dividends

Ex‐dividend date

Tip

Final and interim dividend

Tip

Dividend yield

Effect of price changes

Tip

Dividend imputation and franking credits

Level of franking

Comparing dividends with different franking levels

Tip

Working out the true value of a yield

Tip

Pitfalls of a high yield

Tip

Considering dividend reinvestment plans

Tip

Tip

Comparing capital gains and dividends

Tip

The importance of return on capital

Tip

Key takeaways

Chapter 4 Is share investing gambling?

Similarities between share investing and gambling

Success or failure involves a future outcome

An element of risk is involved

Tip

A sum of money is at stake

Another party has taken the opposite view

Tip

Differences between share investing and gambling

Shares allow you to limit your loss

Tip

Shares allow you to vary the risk

Shares and gambling have different time frames

Tip

Shares have more useful information available

Tip

Tip

Shares allow you to manage your decisions

Everyone can be a winner with shares

Key takeaways

Chapter 5 Benefits and pitfalls of share investing

Are shares a good investment?

Performance of Australian shares

Tip

Riskiness of shares

Time period of share investing

Tip

Positives of share investing

Investing rules

Golden Rule 1: Use rational decision‐making

Fear of missing out

Tip

Tip

Fear of loss

Tip

Confirmation bias

Tip

Golden Rule 2: Limit your losses but let your profits run

Tip

Golden Rule 3: Practise good money management with your share portfolio

Tip

Golden Rule 4: Diversify your share investing capital

Tip

Golden Rule 5: Invest in good‐quality shares

Tip

Golden Rule 6: Look towards the future with shares

Tip

Key takeaways

Chapter 6 Sectors and shares for your portfolio

Tip

Understanding two key terms

Market capitalisation

Liquidity

Tip

Considering sectors

Industry sectors

Tip

Market sectors

Tip

Share selection using a market index

Tip

Diversification

Tip

Sectors and shares you may want to consider

Tip

Listed investment companies and exchange‐traded funds

Tip

Banks and financial institutions

Tip

Mineral and oil companies

Tip

Retailers

Tip

Real estate investment companies

Tip

Health care

Other quality businesses

Key takeaways

Chapter 7 Setting up to trade

Tip

Reasons for wanting to trade shares

Tip

Deciding between offline and online trading

Offline trading

Tip

Offline orders

Online trading

Tip

Online orders

Pros and cons of investing online

Tip

Finding a broker

Tip

Online facilities

Tip

Understanding CHESS

Tip

Key takeaways

Chapter 8 Getting to know your shares

Using fundamental analysis

General info

Tip

What does the company do — what are its saleable products?

Tip

How well known is the company or its products?

Tip

How long has the company been operating?

Tip

How large is the company?

Tip

How much competition does the company have?

Tip

How long is the company likely to continue operating?

Tip

SWOT analysis

Tip

Financial info

Tip

Profit (earnings)

Tip

Capital

Earnings per share

Earnings trend

Return on capital

Tip

Return on equity

Tip

Price to earnings ratio

Tip

INTERPRETING THE PE

Tip

DECIDING ON A REASONABLE PE

Tip

Future profitability

Tip

Dividend statistics

Tip

Other financial stats

Tip

Obtaining the info you need

Internet search

Tip

Your broker

Offline broker

Online broker

Tip

Tip

Key takeaways

Chapter 9 Getting your timing right

Tip

Using charting to guide your trading decisions

Tip

Obtaining the charts

Accessing charts online

Tip

Your broker

Tip

Types of price chart

Line chart

OHLC chart

Candle chart

Percent chart

Tip

Choosing the time period and time interval for charting

Tip

Identifying trends

Tip

Types of trend

Combined trends

Tip

Identifying trends

Chart inspection or ‘eye method’

Tip

Moving average method

Tip

Tip

INTERPRETING THE MOVING AVERAGE

TIME PERIOD

Tip

Trend trading

Golden Rule 7: Buy shares only when the price is in an uptrend and sell them only when the price is in a downtrend

Tip

More advanced charting features

Multiple moving averages

Tip

Volume

Indicators

Tip

Key takeaways

Chapter 10 Buying and selling shares

Getting down to the nuts and bolts of trading

Parcel value

Tip

Number of shares to trade

Tip

Bids and offers

Tip

Trade price

Tip

Liquidity and spread

Tip

Trading times

Tip

Types of order

Tip

Limit buy and sell orders

Tip

Tip

Market orders

Tip

Stop loss sell order

Tip

Tip

Protection provided by stop loss orders

Tip

Pros and cons of stop loss orders

Tip

Order duration

Tip

Market and share price movements

Tip

Developing your trading plan

Suggested trading plan

Tip

Tip

Placing orders

Tip

Offline orders

Online orders

Daily price movements

Tip

Order estimate

Order confirmation

Order transaction

Settlement

Tip

Amending your order

Receiving your CHESS statement

Tip

Key takeaways

Chapter 11 Managing your shares

Four key activities

Keeping tabs

Tip

How to monitor

Using a watch list

Completing your income tax return

Tip

Reviewing

Reviewing your shares

Tip

Reviewing your portfolio

Tip

Reviewing your trades

Tip

Tip

Tip

Decision‐making

Acting

Tip

Trading frequency

Compiling and maintaining records

Tip

Records to keep

Portfolio details

Tip

Transactions

Contract notes

Shares file

Tip

Capital gains

Sold shares file

Key takeaways

Chapter 12 Turbocharging your share investment

The power of compounding

Tip

Average share growth

Tip

Effect of withdrawing profit

Tip

Power of reinvesting dividends

Tip

Total shares return

Rule of 72

Varied portfolio

Tip

Averaging

Tip

Averaging down

Tip

Momentum

Tip

Dead cat bounce

Tip

Applying principles (rules) to boost returns

Good money management

Tip

Key takeaways

Chapter 13 Let's recap

Important points to remember

Trust yourself

Tip

Choose simplicity rather than complexity

Look forward

An investor and a trader are different

Choose quality shares

Have core shares and satellites

Profit (or earnings) is king

Tip

Capital is important in a business

Profiting from shares

Capital gains

Dividends

Capital gains and dividends

Return on investment

Tip

Power of compounding

Using fundamental analysis

Tip

Charting to time your trades

Obtaining and customising charts

Detecting trends

Tip

Trading

Using a broker

Types of order

Trading plan

Managing psychological factors

Fear of loss (FOL)

Fear of missing out (FOMO)

Confirmation bias

Tip

Managing your portfolio

Tip

Adopt a realistic mindset

Keep a cool head during market downturns

Practise good money management

Key takeaways

Go for it!

Appendix: Details of my portfolio spreadsheet

Index

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Отрывок из книги

Roger Kinsky

The growing interest in shares is partly driven by low interest rates, which make holding cash in a bank account or term deposit a really unattractive proposition. At the same time, Australian property is increasingly more expensive and slipping out of the reach of many Australians. Shares are a viable investment alternative because you don't need a lot of money to get going. In fact, you can become a shareholder with as little as $500.

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You might argue that computers can be programmed to trade shares and computers don't make mistakes. That's true but the fact that computers don't make mistakes doesn't mean they can predict the future with any degree of certainty. Computers need programs and those programs have to be written by a person. They will reflect the programmer's preferences and experiences and, therefore, still operate with in‐built biases.

The uncertainty and unpredictability of shares actually works in your favour because they mean you can be as good as anyone else. You don't need to pay advisors and you don't need to buy an expensive computer program to make a success of share investing. All you really need is an understanding of how the sharemarket operates and how to access the info you need. After you've read through this book, you should have that knowledge — and then it's up to you to apply it to your best advantage.

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