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charlie

Free Capital: How 12 Private Investors Made Millions in the Stock Market

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Hey, it's on my Amazon wish list. I try and buy multiple items at one time to save on postage which seems to double the price of the book (!).

 

Hope you capitalise on the best feature of being a published author - instant credibility.

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I just ordered this book on amazon.

 

The best book on trading I ever bought has been long out of print.

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Did any of the investors achieve their wealth via technical analysis of equities or markets in general?

 

There is one who uses technical indicators on individual stocks in conjunction with short-term newsflow. Relative strength (which is well known) and TD indicators (which are not - but Google has more).

 

Nobody in the book makes money just from "markets in general", although the geographers (top-down investors) are closer to that.

 

I've wondered about making money from fundamental analysis of markets in general...with ETFs everywhere maybe it is possible to always be long the cheapest obscure market in the world on simple value metrics. But I haven't tried this.

 

Do you see any advantages or disadvantages in trading in the UK market in comparison with other markets, such as the US, Canada, or Hong kong - for example ?

The advantages of the UK for me (and most people in the book) are familiarity and time-zone. Absent these factors, I suspect the others you mention would be more attractive. But UK is better than many European countries. Eg Peter Gyllenhammar (chapter 10) invests mainly in UK despite living in Sweden.

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I think the Canadian markets are pretty solid, the TSX / TSXV anyways. I have access to the U.S. markets but I stay away ;)

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why is 'nigek' annoyomous? Its nigel, why are you annonomus? its obvious isnt it. i dont understand. is he really called nigel? i still dont no how to make it speak. can annyone help with making kindle speak the book.

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why is 'nigek' annoyomous? Its nigel, why are you annonomus? its obvious isnt it. i dont understand. is he really called nigel? i still dont no how to make it speak. can annyone help with making kindle speak the book.

This thread is about the book in general, and the techniques employed.

I don't want to get into discussions of individual personalities here.

 

USING THE TECHNIQUES...

 

In the interests to sticking to techniques discussed in the book, I am going to post a chart that looks interesting. Personally, I like to start with the charts, and then dig deeper, when the charts look good.

 

I wonder if this Company will stand-up, and continue to look interesting, as I dip into fundamentals?

 

UK:ENGI / Energiser Investments PLC ... update-5yrs : 1year-chart

ENGI.gif.jpg

 

THE GOOD THING is that they have announced a profit, and remain "realistically" cautious towards the property market:

 

Energiser Investments PLC (ENGI.LN):

a United Kingdom-based investment company announced Thursday it made a pretax profit of GBP182,000 for the six months to June 30, 2010, compared with a loss of GBP147,000.

 

MAIN FACTS:

-EPS: 0.57 pence (2009: Loss 0.52 pence)

-Net Cash: GBP72,000 (2009: GBP8,000)

-The directors do not intend to recommend a dividend.

 

-Notwithstanding the improvement in the company's net assets, the Board is cautious about the outlook for the U.K. property market at present.

 

-Having said that, the Board is evaluating some new opportunities in this sector with a view to expanding the Group's property portfolio.

 

/see: http://asia.advfn.com/p.php?pid=nmona&article=44589716&symbol=ENGI

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USING THE TECHNIQUES...

I wonder if this Company will stand-up, and continue to look interesting, as I dip into fundamentals?

 

UK:ENGI / Energiser Investments PLC ... update-5yrs : 1year-chart

A quick look at the financials shows:

ENGI

Market Cap.--- : GBP 0.80 m

Net Debt ------- : GBP 2.38 m

Shares In Issue : 32.04 m

Net Tangible Asset Value PS * 0.80 p

/source-: http://asia.advfn.com/p.php?pid=financials&symbol=L^ENGI

/website: http://www.energiserinvestments.co.uk/

 

Upon seeing this, my conclusion is : This company is TOO SMALL,

And is really suitable only for those who are looking to invest in shells.

And I really prefer to do that when I can buy below Book Value. At 0.80P, this is not so here.

 

Advfn is rather useful for these quick checks on UK companies.

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Charlie

 

I don't suppose you learnt when each investor was born?

 

I do think this has a huge impact on ones personality traits. As for making them a successful investor, I don't know.

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All but two were in the age range 44-56 at interview in 2009/10. The other 2 were in their 60s.

 

I think this age range and upwards is inevitable if you're looking for people who have made several million as portfolio investors, ie without selling a business, inheritance, a lottery win, or very high earnings.

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All but two were in the age range 44-56 at interview in 2009/10. The other 2 were in their 60s.

 

I think this age range and upwards is inevitable if you're looking for people who have made several million as portfolio investors, ie without selling a business, inheritance, a lottery win, or very high earnings.

 

Sorry, I was referring to the time of the year. Think in terms of astrology.

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I have a very jaundiced view of books such as this.

 

Ask 1000 people how they made a fortune from their investments in the stock market and 988 will tell you they didn't make a fortune - they either lost a fortune or lost a little or broke even or made a little.

 

The 1000 of them all have different life experiences, different outlooks, different risk appetites etc. etc. but, somewhere, if you analysed them to the n'th degree, you might be able to come up with general (and, I would suggest, trivial (or obvious)) rules.

 

I think the sensible thing to infer is that the 12 who made a load of money were LUCKY (no specific or rational explanation for their success, just a mish mash of cryptic inferences) and accept the fact that reading how they did it will make no difference whatsoever to your own chances of success.

 

One of the best proofs of this is to reflect on the number of people who have made a fortune (either investing, or in business) and then lost it. You'd think if they were clever enough (had some sort of intrinsic method or system) to make the fortune once, they'd just keep on making it.

 

Ask a 100 people what they invested in after the credit crunch and try and deduce what from the 12 that say gold?

 

And, of course, where are the guru stock-pickers making a fortune? Trying to make money writing stock-picking newsletters of course.

 

I would have thought it was very obvious how to make money from the stock market - become a stock broker.

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I would have thought it was very obvious how to make money from the stock market - become a stock broker.

0471770892.01._SX140_SY225_SCLZZZZZZZ_.jpg:yachts_1455760c.jpg

 

It will be interesting to see if any of the twelve can make it from comfortably well-off to seriously wealthy

 

I have seen that David Webb has done that in Hong Kong over a not so long a period.

 

When I met him at a Mensa Christmas party in late 2010, I asked him if he had any tips.

He said, " Why don't you invest in the same stocks that I do. "

 

I ran some numbers, and discovered that the stakes he held were worth at least HK $500 Million - And I consider that to be seriously wealthy.

 

If we ever see a serious correction, I will probably copy some of his investments. And I even started a thread on GEI to keep track of his investments.

 

Here's the Link: "Stocks & Ideas of David Webb" (of Hong Kong)

http://www.greenenergyinvestors.com/index.php?showtopic=12762

 

Maybe we should have more threads like that on GEI. (?)

 

BTW, when I was having my own best run of money-making by investing in Junior Mining shares, I found it very hard to get anyone interested in playing the same game. At that time, everyone was obsessed by property, and they were sure that easy money was being made there. Something unpopular like investing in Junior mining shares seemed far too risky for most.

 

I think it is great when you can find something that is lucrative, and remains out of favor. You can quietly and unceremoniously build a nice return, while people are busy risking their money elsewhere. When they join the party, and prices get bid up, there may still be another period of good returns. But in a popular market, the risks become bigger.

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TWO REVIEWS have recently been posted on Amazon - They are both very complimentary (*****/ 5-stars)

 

Amazon Customer Reviews : http://www.amazon.co.uk/product-reviews/1906659745/ref=dp_top_cm_cr_acr_txt?ie=UTF8&showViewpoints=1

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NEW THREAD - Putting the Free Cap analytics to work...

The "Free Capital" / Analytics Thread (UK co's)

A spinoff from a discussion about the book

==============================================

The original thread - discussing the Guy Thomas Book, FREE CAPITAL, 12 Private Investors

... has inspired me to start this new thread, to look at companies with some simple analytic techniques.

The idea being to identify and monitor some companies that may be deserving of investment.

 

Given that most of GEI's members are in the UK, I will encourage here a focus on UK-quoted companies.

But we can later start one for companies based in the US, Canada, Hong Kong, or other markets.

/see: http://www.greenenergyinvestors.com/index.php?showtopic=14693

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I think it is great when you can find something that is lucrative, and remains out of favor. You can quietly and unceremoniously build a nice return, while people are busy risking their money elsewhere. When they join the party, and prices get bid up, there may still be another period of good returns. But in a popular market, the risks become bigger.

 

Yes, but how often do you back the wrong horse and quietly forget about it? I think it's human nature to do that. If your investments in junior miners had turned out to be a bad investement what would your conclusion have been then? My observation is, I think, a true on - when you hit on something like that it us just as much a matter of luck as judgement.

 

How many people can beat the market on a long term basis? Answer - none. The so-called great fund managers simply find a sector and ride it. The ones that get lucky may be lucky for 20 years. But then things change - their luck runs out and their star falls.

 

Not long before Madoff was found out one of the UK's most respected fund managers paid a glowing tribute to his ability to read the equity markets and described as a leading investor in, and mover of, the New York markets. As we now know, he wasn't investing at all. It's all smoke and mirrors and if you make some money - just be happy you got lucky. If people were actually able to consistently read and beat the markets, they'd suck all the money out of the markets themselves.

 

I think it is fair to say that whenever anyone makes any serious money the first thing they invest in to make sure they hang on to their wealth is ... property.

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Yes, but how often do you back the wrong horse and quietly forget about it? I think it's human nature to do that. If your investments in junior miners had turned out to be a bad investement what would your conclusion have been then? My observation is, I think, a true on - when you hit on something like that it us just as much a matter of luck as judgement.

 

How many people can beat the market on a long term basis? Answer - none. The so-called great fund managers simply find a sector and ride it. The ones that get lucky may be lucky for 20 years. But then things change - their luck runs out and their star falls.

I don't think that is true.

 

There are many investors that go on beating the market year-after-year. Like Warren Buffett, and the Tisches (of Loews Corp / L) who have beat the market by a wide margin over decades. I do not think I have that degree of success, but it took courage to sell my London property, and put most of the money into Junior mining shares in 2001.

 

Though many thought I was crazy, I did it with the knowledge that I was buying something cheap, and out-of-favor, that was beginning to show signs of a turn. Had I not been rewarded, I might have turned elsewhere, befoore losing much of the money. But emerging signs of a turn kept me onboard in those early years.

 

Maybe this long term chart of ASA (a Major Gold stock) will highlight the opportunity that I jumped on back in 2001: (I bought more than this one stock, but it does show the pathway and the timing of prices changes in Gold mining stocks, which I acquired after selling my Flat.)

 

ASA / ASA Corp (holds South African Gold shares) ... update

ASA1980.gif.jpg

 

Note: Something that has taken similar courage, and willingness to think "outside the box" is: the building up of the Fringe Section on GEI. Tackling these subjects that are still so out a favor now in the mainstream (even amongst the average GEI poster!) brings a real feeling of deja vu to me. As with gold investing in those years, I honestly believe that many of these subjects will be accepted by the mainstream within 3-5 years. (Meantime, about halfway into THIS VIDEO you can learn about how a willingness to discuss UFOs have ruined careers in the Military, and in Politics.)

== == ==

 

BTW, I now have a copy of the Free Capital book, and have begun to read through it, and discovered this surprising error

Bulletin Boards - Comments from Free Capital (pg. 23)

===============

 

Advfn : A "Tower of Babel, but encyclopedic."

 

Motley Fool : "More restrained." / PaulyPilot's Pub, Oil&Gas Board

 

Interactive Investor : "A board on almost every UK quoted company.+

 

Green Energy Investors* : "Relatively cerebral, macro discussion."

 

Stockopedia : "Relatively new site, with web 2.0 features."

 

= = = = =

*Wrongly gives the address as: http://GEI.com / not the actual: http://GreenEnergyInvestors.com

 

GEI.com will take the surfer to SearchFusion.com, not our GEI site

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Lee Trevino hit a magical iron shot, one that appeared to curve around a tree trunk, duck under branches, soar over a bunker and bite a few feet from the pin. “Signor Trevino,” called a Roman from the gallery, “are you always that lucky?” “Signor,” replied the U.S. Open champion, “the more I practice, the luckier I get.”

 

http://quoteinvestigator.com/2010/07/14/luck/

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Bold as brass,

 

Just because YOU haven't made money in the stock market doesn't mean others can't.

 

I will post a few stock picks on this thread to show that you can make serious profits consistently.

 

Here is just 1 pick. Let's check in 6 months and 12 months to see how it does.

 

CVR.V http://corre.com/

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Bold as brass,

 

Just because YOU haven't made money in the stock market doesn't mean others can't.

 

I will post a few stock picks on this thread to show that you can make serious profits consistently.

 

Here is just 1 pick. Let's check in 6 months and 12 months to see how it does.

 

CVR.V http://corre.com/

 

Any chance of making that say 10 picks? I think that's the minimum number of shares I would be happy investing in. I'm happy to stick 10 picks in a spreadsheet and update it say every month to see how it's doing.

 

On the 'just because I haven't made money in the stock market' ... some years ago I got a load of shares in a company that bought a company I was a shareholder in. It was the usual 'shares for shares' deal. I couldn't sell the shares for 18 months and had to sign an employment contract saying I wouldn't leave within 18 months, start up a rival business within 5 years etc.

 

When the time came to sell them it was all a bit frantic and I ended up legging off to Charles Stanley with my share certificates in hand ... so I actually got to meet and chat with a broker - who was a very pleasant chap of about 50 years old who I got the chance to quiz up. We had quite a long chat during which I said ... 'if you know so much about the market, how it works, what moves it etc. etc. - why are you a broker? Why not trade on your own account, make a fortune over a few years and retire?' He just smiled and said something like 'if it were only as easy as that'.

 

You're right by the way - I've never made a penny from a share I've bought - even the bloody Tesco shares in my SIPP haven't moved much in 10 years or more.

 

I'd love to see if you, or anyone on here, can put a portfolio of say 10 shares together - buy and sell as often as you like - and show you can make money. If you can, and other people follow your purchases with purchases of their own, presumably that will only do your portfolio good?

 

As I say, I'm happy to do the donkey work, keep a spreadsheet updated and post it here every month.

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I think the sensible thing to infer is that the 12 who made a load of money were LUCKY (no specific or rational explanation for their success, just a mish mash of cryptic inferences) and accept the fact that reading how they did it will make no difference whatsoever to your own chances of success.

 

The book does say quite a lot about the probability that the 12 investors have been lucky. For example the first chapter, available free online, has a couple of pages on luck

 

http://www.guythomas.org.uk/investment/freecap.php#introduction

 

The first chapter also says "...this book is a work of observation; it makes no claim that what the investors have done is easy, or that there are simple recipes whereby anyone can do this."

 

And, of course, where are the guru stock-pickers making a fortune? Trying to make money writing stock-picking newsletters of course.

 

But none of the people in the book are newsletter writers, or trading coaches, or share tipsters or commercial authors of investment books. The first chapter also says something about this...

 

"It would have been easy to write a book using real names about a different class of investor (or purported investor): those who are seeking publicity for investment seminars or coaching or share tips which they want to sell. But the claims of such self-promoting ‘investors’ usually do not withstand close scrutiny, and they are ultimately less interesting than the publicity-shy but genuinely successful investors in this book. "

 

But in the end, the potential reader must make up his own mind. Nobody is forced to read the book!

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Bold,

 

Do you honestly think there are 10 hugely undervalued picks out there right now? Finding one idea is hard enough and you want 10 ! ;)

 

 

 

Any chance of making that say 10 picks? I think that's the minimum number of shares I would be happy investing in. I'm happy to stick 10 picks in a spreadsheet and update it say every month to see how it's doing.

 

On the 'just because I haven't made money in the stock market' ... some years ago I got a load of shares in a company that bought a company I was a shareholder in. It was the usual 'shares for shares' deal. I couldn't sell the shares for 18 months and had to sign an employment contract saying I wouldn't leave within 18 months, start up a rival business within 5 years etc.

 

When the time came to sell them it was all a bit frantic and I ended up legging off to Charles Stanley with my share certificates in hand ... so I actually got to meet and chat with a broker - who was a very pleasant chap of about 50 years old who I got the chance to quiz up. We had quite a long chat during which I said ... 'if you know so much about the market, how it works, what moves it etc. etc. - why are you a broker? Why not trade on your own account, make a fortune over a few years and retire?' He just smiled and said something like 'if it were only as easy as that'.

 

You're right by the way - I've never made a penny from a share I've bought - even the bloody Tesco shares in my SIPP haven't moved much in 10 years or more.

 

I'd love to see if you, or anyone on here, can put a portfolio of say 10 shares together - buy and sell as often as you like - and show you can make money. If you can, and other people follow your purchases with purchases of their own, presumably that will only do your portfolio good?

 

As I say, I'm happy to do the donkey work, keep a spreadsheet updated and post it here every month.

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