Articles

In recent articles I have been illustrating some of the difficulties that a market can present in trading, and Santos (STO:ASX) has been giving more than a few of them lately! In Issue 305 I showed a weekly chart which had the market sitting on the mid-point of the range from the June 2008 all-time high and the October 2008 low. At the time, I said that we needed to wait for a signal from the market, either that it was going to hold above the 50% level or that it was going to head lower. Chart 1 updates this earlier chart.

"I am not good at maths. I just freeze in front of the computer. Numbers confuse me. Calculating when to buy when to sell is so hard, why doesn’t someone just tell me?" Does this sound familiar to you? Is someone you know in that situation? Is it you?

As investors, we are understandably focused on achieving the highest return possible. The higher our return, the more money we make and the sooner we can retire. So it is of course important that we make our money work as hard as possible.

How can it be? I speak here of GTP. They have gone into administration in the last few days. Administration is like Chapter 11 in the USA – it is a last gasp before the final blow is dealt. It happens generally because a company has significantly more debtors than it has cash. This happens because usually its model or management or a combo of both is flawed. And for shareholders and lenders it is like throwing more good money after bad and one day comes when financiers say enough is enough.