Am I making a mistake by delaying investing?

bowlhead99

fairleads wrote: »

Can you spot the buy sell opportunities in this graph of a popular share? Some of us did and made a profit more than once

I must admit, I'm struggling to see any selling 'opportunities' which would have been visible without the benefit of hindsight.

For example, with the hindsight of looking at this one year graph after the fact, one can see that the last week of December 2015 would have been a great time to sell before the markets got all panicky and the share price dropped about a quarter.

But at that point, the share price had been sitting at 520p (+/- 5%) for about 4 months. So, it is pretty unlikely that someone would have formed the expectation that 540p is a stunning opportunity to sell. For context, the first 8 months of 2015, not shown on the graph, were nearly all spent in a range 540p to 640p. So, if the price is just knocking on the door of that range at 540p around Christmas 2015, there are not many, even with their Yahoo Finance tools, that would have decided that was a great week to dump their HSBC.

After the 25% drop over the first three months of the new year, the price just dipped below 420p briefly before recovering along with the rest of the global market. During that sharp recovery, the price goes up 10% or so in a couple of weeks. But is 460-470p in late April a great 'selling opportunity'?

In the context of the share price starting the year at 540p, and having been 640p a year earlier, and the overdone market panic rapidly receding in many major markets, then no, the 12% recovery from 420p to 460-470p and then flattening out for a week is not a great selling opportunity. It is a mug's selling opportunity. On the graph of course, you can now look back and say I wish I had known to sell then and buy back after a month.

After the 460 price in late April came a light drop. Perhaps the savvy investor with their Yahoo Finance tools would know that this was only short term and use the opportunity to top up their holdings. You could have been a buyer in the third week of May for about 430p. And then, after two months you would be at 490p and it flattens out again for a little bit. Hmm, what to do at 490p?

Presumably, if you are the kind of person who dumped everything after a 12% rise in the couple of weeks' recovery in April, you might also be willing to dump everything after that 15% (but less sharp) rise to late July. After all, the price is now 5% higher than it was in April, and it's just gone up by 15% in only a couple of months, and the one-off valuation boost from weakening sterling on the Brexit referendum (>10% appreciation of dollar assets and revenues) is baked into the price.

So despite being a good bit lower than the start of the year, this is another opportunity to sell. Especially as it goes flat at around 490p from July 19 to July 29. OK we've had our fun, we've got our 15% rise, now it's looking relatively high (and 5% higher than that late April peak) so it's time to sell, go back to the sidelines and see if we can get in cheaper.

However, if you did that, you would be screwed, because when exiting at 490p there wasn't another buying opportunity below 480p and now it's 580p. By grabbing the 15% 'win' from late May to late July, you miss the 35% you'd have got by simply holding to late August instead.

So, can I see the 'sell opportunities' on the 1 year graph? I'm not ashamed to say 'no not really'. We might be at one now, as the price is back where it was in mid-2015, so perhaps now it's time to take a rest and sell HSBA. But then, wasn't it also a good time to take a rest and sell while it laboured at 540-550p for most of August? If I'd done that I'd have missed the random 30p growth spurt over the last week.

So, as for selling opportunities on your 1-yr HSBA graph, I can see some of them like everyone else, now they've already occurred and we have the luxury of seeing what happened after them; but it was much more difficult to see them as they were actually occuring in the context of the wider global banking markets. I'm sure if you are a chartist you would say stochastic this and bollinger that and SMA the other, and Yahoo Finance highlighted lots of great selling dates to you and you acted on them all correctly...

"The tools would have provided the info". Sure, the tools provide info - but you have to look at that info and decide whether this occasion is one where the info is giving you a signal that will turn out to be correct, or one of the many times when it isn't. That's difficult, and the fact you made money on shares in HSBC by dipping in and out a few times doesn't mean you could do it again in the next bear market.

AnotherJoe

fairleads wrote: »

Can you spot the buy sell opportunities in this graph of a popular share? Some of us did and made a profit more than once

Only retrospectively. If you did well its just luck. If there was a "system" to this, which is the essence of your claim, that by reading graphs you can foretell the future, bigger institutions would have been all over it like a rash and cleaned up. You are mistaking luck for skill.

namecheck

Thanks to the OP who started what has become an interesting discussion.

However, to me, it demonstrates why finance - personal and otherwise - is a bit of a mystery and a minefield to many people. And therefore unsurprising that so many posters on the Savings and Investments forum ask what are perceived to be naive questions or ask for information which is already available, albeit not always easily found.

fairleads

Its pretty obvious to me that many bloggers would find greater benefit and enhanced wealth if they forego some time spent blogging on the web and spent it learning the basics of investing for profit.
Yahoo Finance has several free tools that when combined give a very good insight into the future direction of a share or index. Its then up to the individual investor to make the decision to invest/sell or not.
If you feel success is down to luck, so be it.

talexuser

Why not prove it by giving us a concrete prediction with your simple tools rather than some retrospective graph which frankly anyone could come up with?

fairleads

talexuser wrote: »

Why not prove it by giving us a concrete prediction with your simple tools rather than some retrospective graph which frankly anyone could come up with?

Unfortunately i can't because by and large the Yahoo tools do not give an investor a long term forecast/prediction, but rather highlight a turning point. I am currently out of the market and have been for a few days but have to say that if i’d stayed in a few days longer my profit would have been greater. So now i’m looking for a buy signal. However, the tools, as at market close today, do not present a clear buy signal but possibly a period of consolidation. This applies pretty much to all the popular shares/indexes that i target. September is a quarterly reporting/accounting period for unit trust funds in which case we could have a mini top around month end. And it’s any ones guess as to what the market will do between now and then. More consolidation, a minor dip, or an upturn, take your pick.
So as the market is a bit toppy with consolidation more likely, it is possible i will be out of the market for quite a while, but tomorrow is another day!
ps, some one once said, the harder i work the luckier i become

AnotherJoe

fairleads wrote: »

Unfortunately i can't because by and large the Yahoo tools do not give an investor a long term forecast/prediction, but rather highlight a turning point. I am currently out of the market and have been for a few days but have to say that if i’d stayed in a few days longer my profit would have been greater.

So now i’m looking for a buy signal. However, the tools, as at market close today, do not present a clear buy signal but possibly a period of consolidation. This applies pretty much to all the popular shares/indexes that i target. September is a quarterly accounting period for unit trust funds in which case we could have a mini top around month end. And it’s any ones guess as to what the market will do between now and then. More consolidation, a minor dip, or an upturn, take your pick.
So as the market is a bit toppy with consolidation more likely, it is possible i will be out of the market for quite a while, but tomorrow is another day!

What on earth is a turning point other than a prediction?

Anyway, your prediction currently for the rest of this month is that either nothing will happen, or prices will fall, or they will rise but at the same time, they will be higher by end of the month? Which means it isnt "anyone's guess", as you are saying it will be higher by end of month. So why arent you buying then?

Anyway, just post here when you buy next, and then when you sell.

talexuser

fairleads wrote: »

Unfortunately i can't...

Oh I see, so that really proves it then, doesn't it.

fairleads

Guys, nothing in life is perfect and if the info i've given you is not to your liking then DYOR.

EdGasket

Come on fairleads there are plenty of shares out there; surely your 'tools' can give a sell or buy for at least one of them?

I'll stick my neck out and put a Buy on UAI at 181p with at least a 10% gain target and a Sell on ASHM at 355p target 300p.