Re: US debt and long-term savings strategy - what do you think ?

carrera d'olbani wrote:
On Mar 29, 12:08 am, BMJ <parametric_equat...@xxxxxxxx> wrote:

carrera d'olbani wrote:


Good qualifications and


skills will be needed for that.

Good investing does *not* need much education.


The point of my posting has been that in the not-so-distant future, it
will not be possible just to invest money into stock in the stock
exchange and get rich. The returns will be low (and picking up the
right stocks for getting rich will be difficult). One will not be able
to invest without the careful selection of the stocks (which is
mentally-intensive work and will not be available for an average none-
too-clever investor). One will need to create an opportunity, e.g.
create a high-tech manufacturing or novelty products in order to
succeed.

I can give an example. There is a company called Silex on the
Australian stockmarket which develops the new technology for
enrichment of uranium by the novel laser method,
http://www.asx.com.au/asx/research/CompanyInfoSearchResults.jsp?searchBy=asxCode&allinfo=on&asxCode=SLX

As one can notice, their stock price started to raise recently. That's
because they got the novel technology. (And also because the uranium
mining and uranium-realted companies are the new darlings of the
Australian stockmarket... the Australian government is now toying with
the idea to build nuclear powerstations.)

One should never discount the effects of rumour in the stock market. It
happens not just in the technology sector, but in mining and oil as well.
Typically, there's a lot of activity, accompanied by a rapid rise in the
price, but the trend can quickly reverse. (Been there, suffered for it.)

That's one reason I've kept away from stocks like that and concentrated on
those that are stable and provide value. But that requires looking at what
the individual companies do and what their respective financial situations
are. Things to look for include debt level, level annual revenue (companies need an income in order to function), profit, and how long it's existed (has it survived at least one major economic downturn or will the hint of a recession wipe it out?)

But that takes work and most investors don't want to do that. They
prefer the approach of get-rich-quick-with-little-effort. There's an axiom in the stock market, which is proven time and again: bulls make money, bears make money, but pigs get slaughtered.


I know a guy (a Research Scientist and modeller) who worked in that
company from its inception. I heard many stories of the management's
studpid decisions and their greed. They had to jump from one horse
onto another. (E.g., change the technology and financing partner.)
Their stocks were rated as "junk" for a while.

And rightly so.

I just recently learnt
that their stock price rose (from this article, where the day traders
on the stock exchange lament that there are no stocks which would give
good returns, except the said Silex... so that they have to go and get
the jobs of a bank clerk or the support staff in the bowling alley.
Which supports my point of view which I stated in the beginning of
this posting). Here is the link to the article:
http://www.smh.com.au/news/business/its-a-crisis-were-all-doomed-to-get-proper-jobs/2007/03/30/1174761749022.html




Well, if you want to make money like a day trader, then you'd better have yourself measured for a barrel, because that's what your wardrobe will quickly be reduced to.

I get all sorts of "how to get rich" brochures in the post, most of which I promptly put into the recycling bin, because that's all they're good for. One needs to look carefully at stocks that are worth investing in. They're stable. They consistently make money. They're robust. They have low debt levels.

Peter Lynch, a former mutual fund manager, said in one of his books that one should select stocks based on a very simple rule: if one can't explain what it does to a young child in a few words, perhaps one shouldn't invest in it. Remember, dull and boring is what consistently makes money, not flash and dazzle.

Making money from stocks takes time and patience, neither of which requires a university degree. Those that I've made the most money from or have increased in value the most (and maintained it) were those that fit Lynch's rule. But, at the same time, I often waited for several years for them to provide good returns. Until then, they didn't do a lot, possibly paying dividends, so at least I got something from my investment.

But I only started making some decent money from my investments after having been a shareholder for several years. Now I have a much better idea of what I'm doing. I just don't know when I'll make money or how much.
.

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