Born during 1960, my parents were typical blue collar people and I was an only child. I lived the first 18 years of my life in a housing commission home located in one of Adelaide’s poorer suburbs. My parents had no understanding of the stock market, hence I grew up believing participation was available only to the most intelligent and wealthy members of society. I’d always heard that the stock market could make people wealthy, but to me it was all just a big mystery.
In my early 20’s I tried to find someone that was prepared to teach me about the stock market but regardless of who I approached, I was always given the same negative response.
“Joe the market is very involved and unfortunately you just won’t be able to understand it. You would be best to get a normal job and leave the investing of your money up to the professionals”.
ABOUT ME
I accepted this situation for quite some years before deciding to teach myself. I soon realised that I wasn’t as thick as some were leading me to believe. I read mountains of books and articles about the stock market, spoke to as many industry “experts” that I could find (those kind enough to afford me their time) and also spent countless hours sitting in the public arena of the Adelaide stock exchange just watching what was going on. Eventually I felt I had gained an extensive knowledge of the stock market and was ready to make my first trade.
Not having much money, I wasn’t looking to invest long term. My aim was to buy and sell shares quickly, make a profit each time and build my account balance bit by bit. My plan was to go to the News Corporation Pty Ltd building located in the Adelaide CBD at around 12.30 am each night and buy the first edition of the next morning’s news paper. My theory was, if I read the finance pages before every one else did, I could buy shares in companies making positive announcements first thing in the morning once the market opened. Then when everyone else read the paper, they would buy into the same shares and resultantly push up the price. Sure enough, I soon came across a very exciting “New Discovery” announcement released by a mining company. The company said that it had discovered ten times more gold than they first thought. I looked at the share price and they were around 40cents each. That’s me I thought, if I get in quickly, they should go up to roughly 10 times their present value ($4.00).
I must admit that I was a little nervous but when the market opened I called a stock broker and told him to buy me some of these mining shares quickly, as I didn’t want to miss out. Got them at 41cents! My first trade, you beauty! Well by lunch time they were trading at 30cents and I had to take a loss. I was confused but thought I had just made a mistake in my research etc. so I didn’t give up. On with my second trade, same plan, same deployment, another loss. My third, fourth and fifth trades were no different. In-fact regardless of what type of research I did all I became was an expert at losing money “I had never been this consistent at anything in my life”.
I knew the stock market was exciting but this was not the type of excitement I was looking for. So I stopped and went back to examine my past trades. I back tracked the share price for 6 months prior to me buying and each instance I noticed that the value had risen substantially before the company made its' positive announcement to the market. It appeared that some people knew the company had discovered gold or oil before the rest of us did and had been buying the shares at much lower values than they were when the “New Discovery” was made public. Once the announcement was released, average traders and “mum / dad investors” would start buying the shares but those already with shares would be selling. Often at substantially higher values than what they had paid for them.
In basic terms, if I continued to wait for an announcement to be made to the market or sought advice from a broker, I was always going to be too late. Let’s face it, if making money was as easy as buying a news paper and reading an announcement or relying on a stock broker for advice, then everyone would be millionaires.
I then decided to change tack and start studying shares and how they moved rather than why they moved. By considering all (and not just some) of the trading figures pertaining to shares I was eventually able to accurately identify that a share was about to move in value (and in some cases, how far it would move). I had no idea why they were moving but that didn’t matter, the fact was they were moving and I was now able to join in and piggy back that movement. Shortly after buying the shares, the company would make an announcement and I was now selling (not buying) and at substantially higher prices than I had just paid. Bingo!
This led me to develop a set of straight forward, non-emotional rules that I used in my trading from that point onwards. Due to my new found success I was continuously asked to teach friends and then total strangers what I did because they didn’t know what to do or they just kept getting bad advice from their brokers etc. I took some time out, wrote 2 workbooks and developed 2 workshop presentations. One discussed what I believed were the most important basics of the stock market and the other was a concise step by step explanation of my research strategy. As a result of the feedback I received, I decided to see if other people with similar backgrounds to myself would pay me to teach them what I knew. I hired a small scout hall in clearview SA. placed an advert in the Adelaide Advertiser and waited. Within a very short space of time I was inundated with enquiries, not just from locals but from all over Australia. For the next 15 years I conducted the same workshops nationally, at one stage becoming Ansett Airlines 3rd most frequent flyer. Over time, all that has really altered is the professional presentation of my workshops, not the content.
