I stuck this into the beginners' guide in this forum to give newbies an idea... A couple of DST members have wondered why I have my money lying in a bank account if my expectations are for a rise in UAE stock market shares in October. The answer is straightforward. I am not interested in risking my money and have become very conservative with what I do with winnings. There is absolutely no way I can be certain the general market will rise 5 to 10% in October as I expect it to. I can be fairly certain the bank will pay me interest, however. Besides, I never trade stocks. Is there any value in listening here to someone not invested in the UAE stock market or who will not trade? I leave that up to the forum, but maybe some background information would help.
I know lots of members may feel there is a need to always "do something" in the market. My work is done over at NYMEX trading crude oil futures, so that is where I get my trading "kicks." Otherwise, as a UAE stock market investor, I am very boring and a very unprofitable client for my brokers. But I have been fortunate enough to have made easily over a 300% annually over a 8-9 year period. That's a staggering return on my investments in UAE stocks right up to the point I sold my last shares in August 2008. I have yet to calculate the exact overall return on what has been 20% of my average networth throughout that period.
I purchased as many shares in four companies as I could for the children at prices close to IPO levels in the late nineties before there was an actual stock exchange. When they started ADX and DFM I purchased close to IPO prices in another 5 companies from 2003 to summer of 2006.
In total I really doubt I made over 30 trades throughout that period.
The first time I sold any shares was in the summer of 2005. About 40% of my holdings and looking back, I really should have sold everything. Then I sold the rest of my shares in 3 phases in 2008. I always participated in every rights issue available to me and reinvested any cash my investments yielded every year.
I consider myself lucky and fortunate not to have lost a single dirham but it would have been very easy to borrow from the bank or decide to go beyond my means and enter the market with everyone else as Sorouh and Artc kept going up right until the market crashed in 2008.
There was very little technical analysis involved, very little time spent looking at balance sheets and investigating the companies I had invested in. The total cashed I had spent reached 20% of my average net worth by the time I bought my last shares in the UAE in 2006 and I always was willing to call time on my investments should they have gone sour. The initial decision to begin buying local shares was a fortunate one as well. I may have thought that it was an ill-fated one. The Nomura bubble report in 2005 made me sell what soon became beloved shares very reluctantly at the time.
There you have it. I would say 70% of money I made in UAE stock markets has been gaining interest ever since Aug 2008. The remaining money I used to purchase gold in 2006-7.
There never was any trading, only a very basic look at charts to confirm it was the right time to sell. There was also the feeling things were getting out of hand and overvalued here. I have always tried very hard to focus just on the numbers pertaining to my ROI. It did feel bad seeing stocks go up once I sold shares I'd carried for years. It was also tempting to "wait" for stocks to return to 2005 values, but my understanding of markets led me to believe they never would anytime soon.
Would I invest now? No, because the circumstances are very different now than in the last 20 years, and looking at history, it is unlikely for stocks to simply do a "V" and never look back at the lows after a severe crash. It could be different this time though. If someone puts a gun to my head I would buy select companies here that are better value than the stocks which are doing very well nowadays.
I have always been willing to risk money to see big returns. This post has been about a positive experience but later I might discuss the painful ones. I do not consider my DPW IPO experience a painful one because for me, the IPO amount was minimal and I am willing to see what these shares will do 10 to 15 years from now.
In April due to some basic knowledge I gleaned regarding stock market recoveries I decided to purchase HYG and JNK in the USA using 5% of my total net worth. The shares have done much better than I expected them in half the time I was willing to hold them. I am now completely out of them. I've learned to not care what shares do I after I sell them because the most important thing is to be thankful you have not lost any money.
LOL
I hope there is no misunderstanding here.
Like I have said and hinted before in my posts here... I have lost money before and there is no need to reinvent the wheell (See "Focus on Yourself").
If some DST members want to keep agonising over what volume means to a certain stock, for instance, that is their business and others may or may not find value in their posts. I will say something about that. There are incredibly smart people who have looked into these things for decades. They are armed nowadays with powerful computers to try and discover meaningful patterns in markets and forecast prices. Maybe some of these people sell trading systems or subscriptions to people who want to make 500% to 5000% a year. It could be true. All I know is that scalping the WTI crude oil market is hard work and a risky business if I cannot accept losses.
I'm here to make people think twice and think of their misconceptions about what it takes to make money in markets. I am sure there are many readers who see my posts as redundant, but when I visit a medical forum, for instance, I appreciate a comment or post that has taken time and some thought to answer my concerns.
My point of view that I want to convey is simply the following:
I am not interested in looking at other markets or assets to try and "figure out" the direction of ADX or DFM tomorrow or next week. By definition that would mean I am "trading", repositioning myself quickly to sell high and try and buy lower. I am only saying that method of trying to make money in a market is suspect and if it does work, it will not even come close to the gains a "passive" investor might make in a confirmed bull market.
If some DST members want to keep agonising over what volume means to a certain stock, for instance, that ...
...have you ever thought of writing for 24/7...they'll love you!
In a roundabout sort of way, i kind of agree with you.
There are probably only a handful of scripts in ADX/DFM worth looking at.
Sure, there are a lot more than that to make a quick buck, but unless you are either smart, and i mean (very) smart, or very very lucky, you can loose just as quick as you can win.
If anyone hasnt read any of Warren Buffets books/stories, i suggest you grab a copy.
His approach to investments is probably the simplest and yet most effective...in the long run!
Sure, there have been guys who have out paced Mr Buffett, but those same guys have gone "backwards" in real terms over a longer period.
His approach is do your homework, do some more, and when you think you know everything about a company, do some more!
Only then, and only then when you are 100% happy, make your investment, sack your broker, turn off the computer, and go and take a long holiday and sit and wait!
101 Reasons to Own the Worlds Greatest Investment is a great read.
You dont have to believe everything that is written, but it will for sure open your eyes to a simple and effective way of investments.
Faye, keep the posts coming, i do like to hear your views.
if Mr Buffett was here...i wonder which ones he would choose!
...let's just say he went for these... and bought them at the begining of January... i dont mean the bottom (in March)... i mean the beginning of the year... the year of the "great depression!"...and lets say he spread his investment equally over the stocks...1dh/1dh...
if Mr Buffett was here...i wonder which ones he would choose!
GPIC, on a light note, given the limited disclosure here, will Mr Buffett be able to be 100% satisfied with his information about a company on DFM/ADX?
Your list did not include some stocks open to FI (such as ARMX, SOROUH, RAKPROP, Ajmanbank, DIB, UPP, DIC) - because you don't consider them worth looking at / investing in?
BTW, you are absolutely right about sit-back and see capital appreciation approach.
The question then we have to ask is whether our daily / weekly trading has consistently outperformed the market. This approach works quite well when a stock trades in range-bound for sometime.
Your list did not include some stocks open to FI (such as ARMX, SOROUH, RAKPROP, Ajmanbank, DIB, UPP, ...
Randomwalk
...this wasnt meant to be a comprehensive list...the companies you have listed are great companies ... I would invest in these for sure.
There are a lot of great companies in the UAE, some better/stronger than others. Some, i am not so sure about...!
The point i was trying to make is select a strong portfolio, stick with you decision and sit back.
Sure, the price may be dh4.13 one day... and then dh3.70...another day... but in the long-run they will go up!
The UAE is in a fantastic position, and i dont just mean geographically. Once they have "ridden" of their bad debts this will be the place to be.
They have everything infront of them.
...natural resource...and a nation of people willing to make it happen...! Where in the west would you get a man to work all day for $10...!
Once the dust settles, the vision of the UAE will go forward.
...if anyone thinks that Dubai will become a ghost town may as well just pack up and go. Its here to stay...and i think anyone who sticks it out will benefit (100%) in the long run.
Dubai is definitely picking up and many who thought/wished it would become a ghost city would be disappointed. A great success always faces a great challenge so does Dubai. Many have earned a lot in Dubai / UAE, many still or will continue to make money - those who lost have our best wishes.
Many have earned a lot in Dubai / UAE, many still or will continue to make money
...sure, i couldnt agree more.
...but its not just about making money.
Dont get me wrong, you need money to put food on the table, and a roof over your head, but i do believe achieving a goal is more worthwhile.
If your goal is to make money, and that's it...what happens if you dont? Does that mean you have failed! Does that mean you will be left sad!
If your goal was to judge a market whether it goes up or down, and you achieve this, surely this will give you greater satisfaction. Making the money is a bonus...!
Elaborating on my initial post...
In reply to sam111sam, maybe some are missing one of the points of my post. As a so-called investor who dumped money into a basket of UAE shares at very low initial prices without doing any research or analysis, and definitely not a-la-Warren Buffett, I was very lucky, fortunate enough to have made one sole dimension to my investments the most important factor in exiting my trades: When to get out.
If I have not already stated it or hinted at it in my initial post above, I was initially reluctant to purchase shares in the UAE. The fact is I was influenced by someone who is a serious investor.
I deliberately wrote about my success investing in the UAE to make people think differently and remember that period in the UAE shares markets (2002-2008). If it is not clear to some by now, I am not at all interested in getting a pat on the back. I may have made over 300% a year over 8-9 years but it would serve people well to remember that there were all kinds of people of all nationalities and ages making returns on stocks such as ARTC of over 2000% in less than a few months because of bank leverage. My experience with my acquaintances and contacts is that maybe at best 25% of the outrageously gutsy and successful speculators held on to their gains by saying Enough Is Enough, Let Us Take Money Off The Table.
Some of these people were traders and some were buy and holders during what was certainly a real bull market. A real bull market is one that is backed by favourable macroeconomic circumstances. In our case, a crude oil bull market since 2000, the "Greenspan Put" post Nasdaq Bubble and a global property market boom.
What happens in an equities bull market? Share prices rise.
Had I exited fully at the peak of the bull market in middle 2005, I would be talking of thousands of percent annualised returns over 5-6 years. That would also be if I failed to re-enter the market in a year like 2006 or 2008 either deliberately or luckily.
Again, what I actually did was sell in 2005, and then three times up to August in the year 2008.
In 2005 I was influenced by Nomura and my own perception of a stock market bubble when the mania in stocks was really getting ridiculous. In 2008 I decided that stocks are dying.
There are people who made much more than I made during the bubble in the UAE.
The post was meant to show that I was lucky to have decided to buy UAE shares very early on. Although it suggests a casual approach to the markets here, it masks experience gained from hundreds of hours of research done reading books and forums on the internet.
If I remove luck or being fortunate from the picture here, why did I make money and sam did not? To put it simply maybe I could say he failed to see what I was seeing: a real bear market in overvalued shares after September 2005.
Stocks that I never owned like Artc and Aldar and Sorouh rose very sharply during 2006 to 2008. They were evidently bullish stocks when you looked at their charts. I never invested in them because of my overall approach to my UAE stock investments. The markets gained broadly and sharply in the fourth quarter to different stages in 2008. Some people can rightly call me an idiot for not entering then. This year I have not bough a single UAE share and can be called a loser for that. I have mentioned this before elsewhere on the blog and I will repeat it again now. I knew what I wanted my money to do in a broad investment class called the UAE shares market. The stocks I entered were never selected for any particular reason. As we saw, all stock rose impressively, but certainly at different rates. I will not kick myself for not ever purchasing Artc.
Now sam is right about investing in "proper" markets if you want to do it Warren Buffett style. If I want to do it WB style I would certainly pick up 2-3 companies' shares in the UAE, but I don't trust data here to begin pretending that I have a decent analysis of those companies.
I am also not putting down security analysis. During the late nineties I spent months analysing and researching stocks in sectors in which I had stong technical training in. I settled on 6 stocks. 5 of them failed as investments miserably, and the two that survived are still 90% below their all time highs where I could have made a killing if only I had honestly REALLY realised what a stock market bubble was. Now the two companies are still 70% below where I bought them. One company continued up unaffected by the crash and helped me substantially reduce my annualised Nasdaq Bubble Loss on Investment over 10 years when I sold it last year.
My investments in the energy sector in North America have proven enormously successful, significantly more so than my UAE stock investments, but I promise you that particular success took a lot of hard work, hundreds of hours, and a comprehensive understanding of market behaviour the last 300 years to help give me an edge in deciding when it is time to do something like exiting, and when I have an edge, a stronger chance of winning. I could buy back what I owned now at much lower prices but I will not, because I don't do things a-la-Warren Buffett and I don't believe in reinvesting in bubble stocks of the past, like real estate stocks in the UAE. I am preparing for new industries and sectors that will capture the news' attention a few years from now. I could be well wrong about those but at least I am not leveraged or investing over 70% of my cash.
It might also interest sam that I am against being a short-term trader when it comes to making large return on investment figures. I am interested in making my investment gain 500 to 10000% over their life.
You can't make such money trading crude oil for instance. That's a living.
The will is certainly always there to risk money grow ridiculously, on my part.
It's a truism that making a lot of money is hard. I enjoy looking into these things but I don't have time for tips on the internet, rumours heard somewhere or nonsense written about companies by the companies themselves, or their PR lackeys in the media industry. That includes Thomson Reuters.
Some people who have time may want to fact-check Reuters or Bloomberg reports and articles. They are not always as accurate as we want to believe they are. I got fact-checked by someone regarding ADCB yesterday, which illustrates something important about trusting anything you read. 90% of the time you have to do the work yourself.
Sorry to bore anyone here but I feel that such stories and opinions are necessary here, otherwise there is no real reason for this forum, which is to help people not lose money.
Thanks for sharing your thoughts and experience in this forum.
I have experience very negatively in local market, as my timing in the market was at the height of bubble. I entered market, when Emaar was Dh 28 per share in late 2005, and it just slid every year in past four years. I am not sure whether it will reach Dh 28 again in next 10 years. If it reaches then also it will be very dangerous, as it will reflect the state of hyperinflation in the GCC or world economy. The point is, all past ascertaion about the capital market looks so unpredictable. Some people say stock market is mirror image of economy. GCC economies had more then $600 billion surplus between 2004 and 2008 (approx), however some of the local market were worst performers in entire world, where was BRIC stock markets were having biggest gains.
In current situation, in the local markets i am bit concerned about the amount of Goodwill being carried in the books of account. Goodwill was created during the boom times, hence there may be some difficulty for companies to get the desired cash flow to justify the existance of Goodwill.
Any way, whatever bad data or news coming from matured market, GCC has great potential as it has growing middle class, has locational advantage and wise leadship. In most probability we will survive, though at the price of high mental stress.
Thanks for the posts, they were a good read and im sure many like me found them useful. Its always a plus when more experienced traders/investors share their experience.
fayesloan wrote:
My point of view that I want to convey is simply the following:
I am not interested in looking at other markets or assets to try and "figure out" the direction of ADX or DFM tomorrow or next week. By definition that would mean I am "trading", repositioning myself quickly to sell high and try and buy lower. I am only saying that method of trying to make money in a market is suspect and if it does work, it will not even come close to the gains a "passive" investor might make in a confirmed bull market.
All the points you made, including this one quoted above are indeed excellent pieces of advice. But what is it exactly you are suggesting for new investors/traders?
You are out of the market i gather.. So i assume you dont think this is a confirmed bull market, hence the title 'must be invest or trade'. What will it take for this to be a confirmed bull market, and for you to get back in?
Your advice here about preffering bank deposits at current rates seems to imply its not the right time to be in the markets..
Once again, thanks for the posts, and i hope you share more of your experience with us.
Last edited by dov222 on Sat 03 Oct 2009 00:26; edited 4 times in total
Any way, whatever bad data or news coming from matured market, GCC has great potential as it has growing middle class, has locational advantage and wise leadship. In most probability we will survive, though at the price of high mental stress.
Hi Masu
I agree 101% with what you have said, and couldnt add anymore...!
dov222-
Don't read too much into the fact I am out of the UAE stock market. What if my UAE stock market mission is over? There is an assumption that stock prices must exceed their highs. What if they don't for 20 years?
I'm rarely interested in profiting off price fluctuations or upward momentum. I am absolutely certain there will be people who will get rich anyway during a time that I personally think is very risky for stocks in general everwhere. As I mentioned above I did not buy more stocks like Artc and Al Dar when they were rising in 2006 to middle 2008, or any stocks during the fourth quarter 2007-8 rally or during the rally this year. There are people with the appropriate trading strategies who are making a lot of money consistently, so what I decide to do is not indicative of anything other than my personal risk appetite at this stage. I happen to believe stocks are already severely overvalued globally and that maybe I can afford to wait to pick up what I have in mind to buy at a much later stage. Yes if I knew stocks were going to rise in 2009 so fast in a big way I would have been leveraged like Bear Stearns to take full advantage...
Earlier I mentioned seeking risks that may return up to 10000%.
Maybe Syrian and Iraqis stocks will give us those opportunities in the next 20 years. Just a thought...
...well, as it is proven later, fayesloan can provide content and has time to publish it...so, it seems his best is neither invest, nor trade, but write...well, therefore from the very beginning I was under the impression that he wants to start an Internet publishing business
...well, as it is proven later, fayesloan can provide content and has time to publish it...so, it seems ...
It takes a good amount of time, concentration and effort to compose an excellent write up. We might read the same in just 5 or 10 minutes, but not the case with the writer. He might have put all those as points first, then a draft, then some corrections, then re-arranging the sentences to make sense to first timers too, then reading again, etc., etc., etc. I mean, it more than saying TASI up or Oil down or Bloomberg said or CNBC said or I ‘feel’ or I ‘expect’ kind of comments.
Along with asking for a seat next to him, we also have the right to refuse to believe or agree with what the writer says. But it would be more justifiable if done with proper counter points or arguments.
Prop wrote his impression about fayesloan’s; and I am looking forward to get enlightened by Prop’s view on Invest or Trade or to a link to that thread if he had already said somewhere here.
Trade and invest is in my opinion the winning combination. Trade frequently to generate funds and invest small portions of it gradually to preserve capital.
Trading is a business activity and should be dealt with in proper manner. It is not related to emotions, feelings etc.
On a personal note, my time is limited resource and I prefer to read, collect and analyze data, which can help me take the right decisions.
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