4 techniques to engage with the sharemarketand how to use them to “time the market”

Or what we learned from Alan Hull’s presentation to the Brighton East Stock Doctor User Group October 2016

Warning

• Alan Hull warned something like this. “I’ve written hundreds and hundreds of pages on these subjects and tonight I’ve had to condense it down to a handful of slides” (In other words he had to leave out a lot when speaking to the Brighton East stock doctors group.)

• This is my summary of his summary. It’s probably inaccurate

• I’d recommend you go direct to Alan or his books or websites to get more info on his formulas and advice.

What’s going on here

• You’ll find very brief summaries of 4 investment techniques promoted by Alan Hull (note…Alan has others…we’re only covering 4 here)

• You’ll also find thoughts on “how to time the market” with these techniques….that’s explained after we run through the techniques

Technique 1.

a very brief summary.

Only buy stocks with

both characteristics

Look for stocks with good

fundamentals

Look for Stocks with rising share prices

This is the system used for the

3hourInvestor portfolio

Lincoln has great tools to allow us to follow this system efficiently including filters and charting tools such as MMA.

Alan Hull also sells newsletters & tools to related to this system.Critical skills. (a) use a system to tell you when to sell and (b) what and when to buy. Must be disciplinedDo not try this system without frictionless ability to sell out when the system says sell.

COH an ideal stock for active investing

Nice looking MMA. Little

volatility

COH is a star stock. It hasStrong fundamentals

It’s share price is rising with relatively little volatility

Active investing looks to buy fundamentally good stocks growing like this and holds them until they start to decline.

Technique 2:

Investigate stocks with all

these characteristics

Buy if suitable

Div Yield > RBA rate

Fundamentals are sound

PE<15

Market Cap/Net Tangible Assets <5

(P/A ratio)

Unlike active investing. Buy stocks when prices are low. If prices go down, buy more as PE, Div Yield and Market cap /NTA will improve.

More on income investing

Income investing is not passive set and forget

We only profit if the business has sound fundamentals and continues to pay

dividends

We must check the business

fundamentals regularly (I’d say at

least 2 x per year and monitor for changes)

If we see fundamentals

declining, then it’s time to sell

Do not use this system to buy

cyclical stocks such as mining stocks

Lincoln has many tools to help us identify stocks suitable for income investing.

Alan Hull also sells tools and services to help with income investing

Technique 3.

Take ASX 200 stocks

Rank by speed of growth (ROAR)

Buy the

top 10

No attention is paid to FundamentalsWith this technique we are simply buying the fastest growing stocks

Alan provides “risk, money management Rules and guidelines”

If you follow this system, you’d want to Be confident of being able to buy in andSell Out when the system says to. (sell when they drop out of top 40)

No friction, just do it.

Technique 4.

Take all ASX stocks

Find those with growth over 100%

(3 mth ROAR)

Buy the

top growers

• No fundamentals.• Actively check for stops daily• Use tighter stop losses than for other systems• Sell out quickly• Stocks will have little liquidity• Many stocks will be “penny dreadfuls”, • however they’ll be growing at phenomenal rates• And will likely be volatile• Typical hold 1-2months then sell quickly

Timing: when to use the different systems

At this point in the cycle you’ll find a lot of Income Investing stocks that fit the criteria. Using this method

can be highly profitable at this phase as it finds undervalued stocks

Here you might find that stocks with good fundamentals grow quickly. (active investing)

Here you might find that the market is no longer paying attention to fundamentals. Stocks that go up, go up further. This is where the approaches in the blue chip report and active trading might give fabulously great returns.

You probably won’t find ANY stocks suitable for Income Investing.

During the down phase do not use active investing or active trading type approaches. Don’t buy for price gains in a down market.

However during this phase we might start looking for deep value stocks suitable for income investing.

Note this chart was copiedfrom Alan Hull’s website

More on timing.• The timing aspect is the key thing that we learned from Alan’s presentation

• It seems that matching the technique we are using to the phase of the market will help us maximise our returns over time.

• How will we use this information?. • Personally I’ll be adding a few extra scans into my routine to help me understand

where we are in terms of phase of the market. • If there are loads of income investing opportunities available then perhaps we’re

down near the bottom. If there are none…we’re likely close to the top.• Right now…there are no income investing opportunities that fit Alan’s scanning

criteria. That suggests we’re at or getting close to the top.• Does that mean the newsletter portfolio should get out of the market and go to

cash? I think not…we’ll simply stay in growing stocks until the market says sell and then we’ll be out and waiting on the sideline until the signs tell us its time to re-enter the market.

Links to Alan Hull

• Alan Hull’s website. www.alanhull.com

• Alan seems to have several strategies that suit different stages in the market and different types of approach (trading, investing, income)

• He also covers US markets.• Furthermore he educates his clients to help them improve.• We very much liked is presentation and his approach..thanks Alan.

• Again…read the warning …I’m sure I’ve left out much more than I should have. Also please note I have no financial interest or ties with Alan Hull.

• Happy investing.