I’ve spent the last six weeks or so trying to get enough information together to enable me to profitably day-trade the ASX. The reason it’s taken me so long is because I’m innately conservative and pure speculation is contrary to what I spent a large slice of my life trying to inculcate in those people uneducated enough to believe I actually knew what I was talking about.
Day trading is straight out gambling – there is no need to know anything about the security involved because traditional historical analysis is wasted; PER’s, 52 week high/low values, management skills, analysts forecasts, rational markets, chart trends, completely useless. Not that those things are of much use anyway as the recent events at NAB, AMP, HIH and BHP (all so called ‘blue chip’ securities, all subject to intense scrutiny, all regulated by APRA, ATSIC etc. etc.) show, which simply confirms for me that no-one REALLY knows what’s going on in the real world and consequently market prices rise and fall due to events totally unrelated to ‘public knowledge’.
Often a security will show significant activity (above average volume) several days before an announcement is made to the ASX for no other reason than the day traders deem it worthy of interest and ramp the price. And for technical analysis (charting) to be useful, one really has to have access to quite sophisticated software, long history data bases and daily price data delivered overnight.
I have developed a process which last year suited me very well and for about three months I traded successfully. Yahoo Finance is a good site which shows biggest gainers, most volume and worst losers refreshed every 15 minutes or so. From these lists I can sift out a couple of penny dreadfuls (shares trading at less than 1 cent) that are shooting up or down or trading at larger than normal volumes. I then have a look at what might be driving the price change and, if I think there might be some upside left, I have a punt. But sometimes what appears to be a simple job becomes tangled up in my weird desire to understand how everything is connected. For instance how a bentonite (a term used to describe clay that is composed of the mineral montmorillonite, a sheet silicate with exchangeable Na, Ca and Mg cations plus colloidal silica…… formed by the devitrification and accompanying chemical alteration of volcanic detritus or tuff. Montmorillonite is a well-known ‘swelling clay’. The Sheet silicate character of the mineral allows a large number of water molecules be absorbed within mineral lattice, swelling the volume of the clay ) deposit may be instrumental in slowing down global warming.
Talking to Ken this morning I told him about why I always seemed to on the internet because in checking out potential trades I usually get sidetracked into looking at stuff unconnected to whether or not a share is going to make me some money. Pacific Magnesium is a case in point. Before Easter PMH options showed a bit of movement, so I googled up an investment report (WHI Securities Investment Research Report dated 12 March 04 ) that showed the company had an 33% interest in a bentonite mine in Queensland. The other company involved is IPOH Pacific (probably Malaysian, it’s amazing how many companies from that country have IPOH in their name), which further research showed has received a grant from the University of SA to look at the assessment of bentonites as remediating agents for metal contaminated soils using innovative bioavailability reduction technology. IPOH is separately working in collaboration with the CSIRO and the University of South Australia investigating and developing new commercial applications for modified bentonite in the environmental and agribusiness sectors. Just as an interesting aside the team leader in the investigation is Lloyd Sansom, Chair, Pharmaceutical Benefits Advisory Committee who was one of my lecturers when I attended Adelaide Uni in the sixties.
How is this connected to global warming ? Well as you will know from reading all the debates on this blog, one of the major contributors to greenhouse gases is methane; and where does a lot of methane come from, that’s right, cow farts. Studies are now underway to try and find a way to introduce activated bentonite into cow feed so that methane is bound up during the digestion process and not released into the atmosphere. Neat eh? – perhaps we can have a bentonite led reduction in greenhouse gases; cattle farmers may be eligible for carbon credits if they feed their cows bentonite. The mind boggles at the potential.