Originally Posted by
SparkyTheClown
Skiwi, I personally would NOT choose an unlisted, difficult to trade company if I was entering the world of sharemarket investing. There are far too many risks for a "newbie" investor to easily mitigate against. I'm hardly a newbie (and don't claim to be an expert) but I think I'm sophisticated enough to say "I am an investor, not a company insider, therefore my investment horizon, risk level and company awareness is different".
First concern - liquidity. You will find it easy to buy into ANY company. Selling out may be harder, particularly if you need to sell the shares in a time of distress, either for the company or globally. Knowing there are buyers who can meet sellers is a key criteria. Think of it this way. If you bought $10,000 of shares, but on average, only $3000 gets traded every day, then it will take you 4 days to sell your holding without introducing your desperation to sell as a factor in the share price being offered. One of the reasons why I chose Diligent over Xero as my tech stock high growth play is because Diligent tended to always have better liquidity, so I could sell out more quickly if I needed to.
Second concern - there are many fine NZ companies in "unsexy" industries like retirement village operators, who make excellent profits, have liquidity for their shares, and projected growth. I strongly recommend you read up on Ryman Healthcare and Summerset, both of whom have appreciated 25% plus since the beginning of the year. I like Ryman so much, I bought more shares at $3.51, a few days after their chairman announced he has bought around $100k of shares at $3.60 (insider buying is a VERY good sign). Ryman is my biggest holding in my portfolio.
Third concern - a good investor needs to devote time to analysing their holdings every week. If you can't spend around an hour a week researching your stock to see if the reasons why you bought the stock remain, or that you haven't learnt something new that causes you to sell out, take some profits, or buy more, or hold with confidence, then you need to question whether individual stock holding is for you.
This brings me to a key point - mutual funds. Your KiwiSaver provider may also offer you a very similar fund to the one your KiwiSaver dollars are applied to. You could easily invest your money into such a fund where professionals do the research, lose sleep, and take care of all the paperwork. Some good fund managers I like include Milford Asset Management, PIE Funds Management and Fisher Funds. (My KiwiSaver is through Fisher Funds). Ok, so you don't get the spectacular upside, but you do get risk mitigation, which is surely a consideration for a "newbie" investor.
So in conclusion
- Don't invest in EstarOnline. The stock is too illiquid for a newbie.
- Choose an unsexy stock with proven growth potential if you want to go share picking.
- Consider a good fund manager to reduce involvement, risk and stress until you are more comfortable with share picking.