Jack's Survival Tips
As the actor who always keeps his cool in a fix, if trading in today?s sharemarket, Jack Nicholson might operate in accordance with his movies something like this...
As Good As It Gets
We all miss those 15 glorious years after the sharemarket crash in 1987 when the bulls roamed freely and anybody could make money. Forget the days of double-digit returns and reassess your expectations. Search for realistic returns, 6 per cent a year above inflation is healthy in a market like this.
One Flew Over The Cuckoo's Nest
You would have to be crazy to put all your money in speculative companies that have great ideas but no earnings history. Buy stock in companies that make things that people use every day ? for example, food. Go for stocks trading on low price earnings multiples that have good fully franked dividend yields.
Easy Rider
Do not chase trades that are not there, slow and steady wins the race now. Solid research and patience will be rewarded. When a low-risk, sensible trade emerges, if you are sure, invest and monitor closely, with rigid stop-loss controls.
A Few Good Men
Now, more than ever, the skill and experience of your financial planner is vital. It may be a good time to forget the no-frills, discount brokers. Look for a full-service planner who has a solid reputation and specialises in blue-chip stocks, and keep an eye out for experienced advisers who have been through bear markets before, not just 28 year olds who have seen nothing buy easy markets.
The Postman Always Rings Twice
Bear markets do not last forever. Once the speculative excesses are worked off by fall share prices, bull markets resume. Use this time to brush up on your study. Read more books (and magazines!) about the sharemarket, and don't lose interest now, the more you prepare, the easier it will be to make money when the bull returns.
If you can think of any other Jack Nicholson movie that neatly fits today's market, we'd love to hear it. E-mail granth@advantageone.com.au
Acknowledgement: Leverage Sept 02
date of article: 1 November 02
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