Subject: IC940727: Questioning Investment Experience - Sheng Zhu

From: "Gray Zhu, 800-289-2498, 212-279-6700" <[email-masked]>
Date: Tue, 26 Jul 94 22:51:57 CDT

==================    IC940605: Investment Club  ======================

0. Stock picking contest and EXPANSION plan ............ Gray Zhu
1. What is DJ news? .................................... Yuan Jiang/Gray
2. How to ftp FAQ of misc.invest ....................... Gray Zhu
3. Questioning Yuan Jiang's "Investment Experience" .... Sheng Zhu
                                           Comments .....Gray Zhu
_______________________________________________________________________
   (be sure to read the Disclaimer in the end if you have not read)

=============================================================
0. Stock picking contest and expansion plan ............ Gray

Somebody suggested to us to hold a stock picking contest. I wonder if
you have enough interest to participate, let me know if you have the
intention to share with us your picks. Please pick from investor's
point of view, not from trader's point of view.

There is something everybody can and should contribute. 

Although we are a 500 member club, most of us are learning. I do not
want to brain-wash everybody by sending my point of view most of the
time, and my time is limited even though I barely survive.  Don't you
think we could have more contributors if we had more people to
subscribe?

Apparently, you are staying with ICnet because some of the information
is useful, otherwise, you could have "unsub"-ed.  Should you hide this
nice ICnet from your friends, or should you send a message let them know?

Here is what we should do: EXPAND this NET to 2000 members.

Please send a message about ICnet to every friend you know, and
possibly to the organizational e-mail mailing lists you know. When we
get bigger, we can set up a committee or consol team to organize and
manage this net, and we can plan a well scheduled, systematic
investment lecture series. Don't you think this is going to help?

Let me know if you have any suggestions or questions, as always.
============================================================= 

1. What is DJ news?

Yuan Jiang: It's Dow Jones News of course.  It covers all companies
listed on the markets.  Of course, some comapnies don't generate much
news.

Gray: you can get DJ news on Prodigy, which may be the
cheapest. During non-market hours, the DJ news is included in the
monthly fee ($15?), during market hours, they charge like $3.5/hour
after using some hours per month, don't bother to do that if you are
an investor rather than a trader. There are other places you can get
the News, like DJ News/Retrieval (online service) and many real time
quote providers.

Reuters (RT) news is also very quick as well. other business related
includes: PR newswire, First Call (FC) etc. FC provides earnings news
sometimes faster than others.

A full service broker should be able to tell you the news. Actually,
he/she should call you about any significant development of your
holdings, if he is not, come to me :-)

=============================================================
2. How to ftp FAQ of misc.invest...
 
>Please tell me the ftp site for (Frequent Asked Questions) or send me
>FAQ files:

Availability of the FAQ:
    via news: 
        posted monthly to misc.invest,misc.answers,news.answers
    via anonymous ftp: 
        host: rtfm.mit.edu
        path: /pub/usenet/news.answers/investment-faq/general/*
    via mail:
        address: [email-masked]
        required msg body: send usenet/news.answers/investment-faq/general/*

=============================================================
3. Questioning Yuan Jiang's "Investment Experience" - Sheng Zhu

Subject: Re: IC940725: Investment Experience - Yuan Jiang 
From: [email-masked]

> I first select a group of comapanies that are foundamentally sound, and
> then buy low sell high.

Everyone probably knows buy low sell high, the key is how to judge
when is high or low, and how to judge a company to be "foundamentally"
sound. Would you explore more on that? more specifically?

> I find that you actually don't have to know the industy well to
> judge whether a company is good or not.

Although you don't necessarily need to know an industry to judge a 
company, but you do need to know some "foundamentals" of the company to
make a buy. Good price and service can indicate a company is either doing
well, or doing very poorly.

>Why not let your friends or Wall Street Journal to tell you whether a
>company is good or not?  To be able to buy low, you have to know the
>company is sound before every
>one else thinks so.  When you heard the news that Crysler's incoming gained
>40%, everyone has known.  It should been the time to sell.  There are
>several situations that you can buy low:
>1) Market swings down, but there is nothing foundamentally wrong with the
>economy/market.  The down swing caused by the low dollar a couple of weeks
>ago was an example.  Gray recommended "buy".  That was the time.

Market timing is dangerous for average investors. In a long run, market
trend is more important than market swing. Market swings not without reason
could be indicative to future market trend.

>2) An artificial bad news about the company.  When the company's newly
>released earning is down and spending is up.  Everyone takes it
>as a bad news.  But you know that the company spent a low in last
>quarter promoting new products, and the spent money is busy at work
>to bring in more income in the future.

It's usually not easy to find out how a company is spending except big
charge items. Is there any way for individual investors to check out
whether a company is spending in good way? Average individual would sense
good when a company is spending more, and earning more. Without inside
information or detail, spending more and earning less is usually a bad
sign.

>3) Other company's (often an leading company in the industry) bad news
>brings down the stocks of the whole industry.
>
>Before a "buy", I always go to the library to check the DJ News to
>see whether there is any new development that could affect the foundamental
>condition of the company.  This step is time consuming for me (because
>the news is not at my finger tip), and often prevents me from acting
>quick.  For example, a couple of weeks ago, I wanted to buy more stocks
>during the market down swing and when Gray recommended "buy".  But
>I was too busy at work to go to the library.  When my work is not busy,
>the market is up again.  It would be a nice if I can work with a broker 
>who can check the DJ news for me.
>

You would really need a full service broker if you want to follow the
market that close. No one would be able to follow each piece of news, to
check out latest development of the company, to catch daily activities of
Wall St movements. Only professionals can do that. Ask Gray, how much daily
reports you receive from your analysis department, how much news you catch
from your company's broadcast, and how many phone calls your staff make to 
check out latest development of a specific company? Not even easy for a
professional with support of full-time staff and analytics department.

Would be more interested to learn the result (return) of your investment.
Some examples and specifics would be more helpful and appreciated.

Sheng Zhu

--------------------
Gray's comments:

When to invest depends on you are an investor or trader. Investors are
different from speculators/traders. The former are the ones investing
for long term, and for ownership of a company, the latter are the ones
making money by purchase and sell frequently. Of courses, they are all
for the money. Whether to be an investor or trader depends on your
interests and time. If you are an investor and trade less than 10
times, you'd better find a trusted full service broker, because the
time and effort you spend on the research may well over the commission
expense, you could use the time and effort to make more money by doing
what you do well. If you are a trader, you know a lot about stocks,
and you have time, there are cheap places you can go to, like E-trade,
National discount charge $25 per trade. I think, if one does not know
much or not have the resources, and wants to save commission, he may
end up with paying some "tuition" in the beginning. I primarily talk
to investors, we talk "dollar-cost-average", "accumulating" more
often. Traders talk "short", "option", "cover" more often.

>Ask Gray, how much daily reports you receive from your analysis
>department, how much news you catch from your company's broadcast, and
>how many phone calls your staff make to check out latest development
>of a specific company? Not even easy for a professional with support
>of full-time staff and analytics department.

Everyday, 1-10 pieces of reports, ~2 hours news conference plus news
announcement on the speakers any momemt, ~150 phone dials, ~4 hours
talking on the phone, watch news and quotes every second on the
computer screen, in addition to numerous paperwork including trades,
comfirmations, letters ... etc.

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