The great ASX bull market rolls on…
— Yesterday marked the S&P/ASX 200's (Index: ^AXJO) (ASX: XJO) ninth straight day of gains, its longest such gain in nine years. Today marked the tenth day. Can we do eleven? Watch this space.
— Over in the U.S., overnight the Dow closed at another five-year high, and the S&P 500 is off to its best start to a year since 1989. Both indices are within sight of their all-time highs set in 2007.
— The Australian Financial Review reports Commsec and Nabtrade are claiming a big pick up in trading volumes during the holiday season.
Official: It's a bull market
The Australian sharemarket has risen by more than 20% in the past six months — usually the definition of a bull market, as Bell Potter Securities research director Peter Quinton noted in The Age.
Bulls, bulls seemingly everywhere.
But where were they in 2009? And 2010? And 2011?
And where were they as recently as November 2012, when global markets shuddered and sank on Barack Obama's re-election?
As is my want, I looked back on an issue of Take Stock from around then.
Titled "I liked the stock so much I bought it myself", I said I was chomping at the bit to add stocks to my self manager super fund. That was in addition to the Motley Fool Share Advisor recommended stock both Investment Analyst Scott Phillips and I bought in September.
We weren't waiting around for the next bull market to appear before buying what we saw as a company firing on all cylinders, trading at a modest price.
Lo and behold, in the short time we've owned the shares, they are up around 25% on our purchase price. Even better, for Motley Fool Share Advisor subscribers, they're up around 66% since we first recommended the company to subscribers of our 'best of the best' stock picking service.
I received a call today from Fred.
As it turns out, Fred had not been following our recommendations, instead trying his hand at technical analysis, something as far removed from Foolish investing as subtlety is from Julia Gillard's partner Tim Mathieson.
Not surprisingly, Fred's foray into technical analysis, the art of investing by looking in the rear-view mirror, had "ended in tears."
Source: Investmentplan.com
Thankfully, Fred has seen the light.
Or more likely, he's seen the dark side, shed the tears, done his dough, and wants to be a Foolish Investor.
I recently defined Foolish Investing as…
"Through long hours, hard work and experience, Motley Fool Share Advisor Investment Analyst Scott Phillips and myself will continue to put the odds of picking winning ASX stocks firmly in our favour."
Quality of business comes first, including competitive advantage. Growth prospects are important, including the length of the runway ahead. Valuation, including dividend yield, matters too, obviously. In a nutshell — Foolish Investing."
Investing — not rocket science
Let me add another string to our Foolish bow, something I told Fred. Investing need not be rocket science…
— Start early.
— Keep the fees low.
— Invest regularly, and forever.
— Avoid debt.
Technical analysis is not for us.
It wasn't for Fred either. He found himself not being able to keep up with the trades, and worse, much worse, selling at the bottom of the market and buying at the top.
A recipe for total investing disaster
Put it all together, mix with ice, and you've got a recipe for total investing disaster.
Now we don't propose to have all the answers.
For example, regular Motley Fool Take Stock readers will know we're not for making market predictions.
We leave those to others…like Richard Coppleson of Goldman Sachs who was quoted in The Australian Financial Review as saying…
"I've given a huge number of indicators over the last six months, which were reason as to why to buy the market and why it's going higher and nothing has changed my view, that the Aussie market will be at least +15 per cent higher (+20 per cent for the accumulation index – that is, including dividends) by the end of the year — but to be honest I think that call be very conservative and this could be one of the big ones that we have seen before coming out of massive bear markets…"
We applaud Mr Coppleson for his bold call, just as we did in November when he said…
"Bottom line is, stop waiting for any big sell-off. Stop waiting and it's time to just go in and buy."
We are not ones for getting giddy with excitement at the rise and rise of markets, just as we're not ones for going weak at the knees in the face of a market crash.
No, dear Fools.
We remain cool, calm and collected…whatever the market, whatever the winning streak, and whatever the price of gold.
Is now a good time to buy?
Naturally Fred wanted to know if now was a good time to buy shares.
I prefaced my answer with the following two points, something I made Fred fully aware of…
1) Past performance is no guarantee of future performance.
In the stock-picking business, we try to build a winning scorecard over time. We do our best to get as many winners and as few losers as possible.
In the long term it's the total value of your portfolio that counts. That said we're dead-keen to have as many winning recommendations as possible… and that's why we put in the long hours, turning over hundreds of stones, continually in search of the next investing winner.
2) Keep control your investing emotions.
Don't plonk all your cash into the stock market now. Do so over time.
Resist the incredibly strong urge to sell up when the market is going through one of its periodic corrections or even crashes. If you haven't invested using debt, if you are invested in strong companies, the passage of time will heal your short-term investing pain.
"Should I buy now" is the the single question I'm asked most often. My answer usually surprises…
When it comes to building a market-beating stock portfolio, the time to get started is always "right now".
As ever, whatever the market, bull, bear or something in between, I wish you happy, profitable Foolish Investing.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691).
