SPEAKER: Nick Radge, The Chartist LOCATION: Sydney DATE: September 2014

ASX INVESTMENT VIDEOS

DISCLAIMER: The views, opinions or recommendations of the presenters are solely their own and do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”). Information and material presented at the seminar is for educational purposes only and does not constitute financial product advice. Investors should obtain independent advice from an Australian financial services licensee before making investment decisions. No responsibility is accepted by ASX for any loss or damage arising in any way (including due to negligence) from anyone acting or refraining from acting as a result of this information or material. © Copyright 2014 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2013.

Trading the share price and not the valuation

Three interview goals

1. Understand charting 2. Learn about momentum

trading 3. Hear Nick’s view on the outlook

for Australian shares.

What is charting?

• The study of the market – often referred to as technical analysis

• Uses indicators such as price and volatility, to identify patterns in charts

Why has charting become more popular?

• Fundamental analysis tells you what to buy or sell

• Charting tells you when to buy or sell

• It gives insights into how the ‘smart money’ views a stock

Is charting as simple as it sounds?

• No. It’s just a tool • What makes it effective is how you

use that tool

Is charting just for traders?

• No. Long-term portfolio investors can use charting to help time their investments

• Use weekly charts for a long-term perspective

Why does charting work?

• The market is driven by investor sentiment

• Charting lets us gauge that sentiment through price patterns and trends

• But don’t think charting will predict where the price is headed

Can you combine fundamental and technical analysis?

• Yes. Use fundamentals to find a group of undervalued stocks

• And use charting to find the best time to buy and sell those stocks

What is momentum trading?

• It’s about trading the trend • When the share price rises, I buy the

stock • When it falls, I sell • The trend dictates my trading

approach

What are the best features of momentum trading?

• It keeps you out of poorly performed stocks, or companies that may fail

• It forces you to cut your losses, by selling early

REA Group – a case study

Is momentum trading the opposite of value investing?

• Price and value are two different things • A rising stock is not necessarily more

expensive • A falling stocks is not necessarily

cheaper

What is the danger of confusing price and value?

• They are not the same thing • Valuations move - Fundamentals are

fluid • We make our money from the share

price • Don’t anchor expectations based on

past prices

Will the Australian share rally continue? Chart of S&P/ASX 200

• Nick’s book – Unholy Grails: A

New Road to Wealth • Available at

www.thechartist.com.au • Or as an e-book via Amazon

• Take a short online course

• Subscribe to the Investor Update e-newsletter

• Play the ASX Sharemarket Game

• Watch another ASX Investment video

KEEP LEARNING

VISIT www.asx.com.au/education #ASXvideo