Share recommendations - investment

[undesign]

Hi there

With all the share/investment/trading threads going on I've decided to start a new one focused solely on the purchasing of JSE shares (preferably Top 40). My idea is as follows -

1) I haven't invested directly in the stock market for some time, itching to get back.
2) I have a long term investment horizon (10 years+)
3) Already have substantial Satrix investments and long-term monthly RAF and pension contributions
4) Looking to spend the odd R5k per month, occasionally extra lump sums
5) I don't have a minimum trading cost so volume is not an issue
6) Basic strategy to build investment porfolio (low mainenance important):

- Buy quality blue chip shares which are historically priced low and which you would anticipate recovery (even if only a year from now) unless fairly obvious fundamental issues exist

- If that share dips further you buy more to rand average

- Buy quality blue chip shares that are priced normal but with expectation of substantial growth

- Almost no selling (given the investment horizon), unless very serious circumstances?

TL;DR In short, buy blue chips low and wait for inevitable recovery, plus the odd punt on expected high growth blue chip. Based on basic fundamentals without too much research.


Anyone care to kick off with a share recommendation?

 

[undesign]

Ok, I kicked off with a few Sasols this morning.

 

[undesign]

And more Zeders today. LT agri play.

 

[Hendrix]

What's your reasoning behind sasol?
Think they under-valued?

 

[Hendrix]

Are you buying your satrix etf's though a broker or through the satrix investment plan?

 

[HavocXphere]

buy blue chips low

So how exactly do you decide when such a blue chip is low? Just eyeballing the chart, or something more specific?

 

[undesign]

What's your reasoning behind sasol?
Think they under-valued?

If you look at historic prices it seems lowish, P/E of only 8 - and it is a solid blue chip company.

Are you buying your satrix etf's though a broker or through the satrix investment plan?

Satrix investment plan

So how exactly do you decide when such a blue chip is low? Just eyeballing the chart, or something more specific?

Lots of chart eyeballing, then a bit of reading up. Or vice versa. That's about it. I'm taking a very relaxed long term approach and view...

 

[marco]

So how exactly do you decide when such a blue chip is low? Just eyeballing the chart, or something more specific?

Now to get the Relative Strength Index or Indicator of a stock.
Go to sharenet website and above in the "Quick Share" box, type in the share, ie. CML " enter"
A page will open with a chart for the day and other info on CML. Take note of the PE. Price to Earnings ratio of 12 is "normal" Some stocks thrive on 30+. As the stock price increases so does the PE making the stock more expensive but if the Earnings increase with the next set of results, the PE ratio will drop.
So with good stocks, the PE will increase and then decrease when the 2 yearly results come out.
You will see that CML has a PE of 19.6. This is high but as the next set of results are expected to be good, it has a Forward PE of 14.6.

On the top LHS, click on "Technical Charts". A new page will open with the chart of CML. Here you can get indicators and change the time frames. On the bottom of the chart you will see the RSI graph.
Above 70 is overbought so don't buy in that area. Around 40 is a good indicator to buy at as it is oversold.

These are all the technicals that you need if you know nothing about charting.

Now do this with all your blue chips you have shortlisted and dump those that have the highest PE's and RSI's. This will give you the Cheap Oversold stocks.Then start with fundamentals and future prospects of the stocks.

 

[HavocXphere]

Lots of chart eyeballing, then a bit of reading up. Or vice versa. That's about it. I'm taking a very relaxed long term approach and view...

Cool.

These are all the technicals that you need

Technical. Singular. PE is a fundamental analysis tool, not technical...

Now do this with all your blue chips you have shortlisted and dump those that have the highest PE's and RSI's.

You mean low RSI...

And yes I know about RSI - I've written code to calculate it from scratch in the past. marco, honestly, if I need your help I'll let you know. Promise.

 

[marco]

Cool.


Technical. Singular. PE is a fundamental analysis tool, not technical...


You mean low RSI...

And yes I know about RSI - I've written code to calculate it from scratch in the past. marco, honestly, if I need your help I'll let you know. Promise.

No Havoc. You must dump the stocks with HIGH RSI values. Not the stocks with LOW RSI values.
The LOW RSI gives you an indicator when to get INTO a stock.

 

[HavocXphere]

No Havoc. You must dump the stocks with HIGH RSI values. Not the stocks with LOW RSI values.
The LOW RSI gives you an indicator when to get INTO a stock.

I see - I was under the impression that you're looking at a DB of stocks and extracting the ones you want.
http://en.wikipedia.org/wiki/Database_dump (IT terminology for an IT forum )

But I see you meant dump as in throw away, so I'll concede your point.

 

[marco]

I know some TRADERS that trade quite successfully using the RSI only. They choose stocks that continually oscillate and buy at lows and sell at highs.
Now Havoc. You think I am a total dork at investing. I have been trading and investing since you were in nappies. It took me many years to find a method that works for ME and it has worked very well. You try beat 85%pa and keep up with that for years.
Now don't diss me for trying to give some advice.

 

[HavocXphere]

Now Havoc. You think I am a total dork at investing.

You are mistaken. I am glad that your investing is going well & hope you achieve your retirement target. I, like DJ, do not object to you utilizing your strategy but rather to you selling it as gospel to all & sundry when it is in fact in often dangerous advice.

Your RSI & PE approach is quite respectable. Its all the other advice you've given (near zero diversification, past performance etc) that kill your credibility. Sure experienced people will be able to incorporate your advice into their own strategy, but this is an IT forum...handing out that kind of advice as gospel here is irresponsible. And then when DJ or I shoot you down you point to your 70/85/90% return as proof that it isn't irresponsible...still completely oblivious to the fact that its a sample of 1...and not even a representative sample of the crowd you are advising. ("have been trading and investing since you were in nappies" vs programmers).

I know some TRADERS that trade quite successfully using the RSI only.

And others trade by looking at meteorology charts & are quite successful at it since they know that (&how) meteorology affects the price of heating oil. You on the other hand are selling the meteorology angle while forgetting that meteorology charts are *dangerous* trading tools if used by people without the requisite knowledge needed to interpret the charts. And then you're completely surprised that people give you flak for it...