Ask the Experts

I was wondering whether you are aware of any formal tuition that is currently offered by educational institutions within Australia which would teach the same principles and practice of common stock valuation as that taught by Graham and Dodd at Columbia Business School in the 1930s. Alternatively, what are the best options for aspirational value investors seeking to undertake tuition in security analysis, but not wishing to study the full scope of modern finance.

There are no 'official' value investing courses in Australia, so please excuse our biases as we list some other useful resources to learn about value investing without spending a lot of money. The first resource is books; The Intelligent Investor by Benjamin Graham, One Up on Wall Street by Peter Lynch and Common Stocks and Uncommon Profits by Phil Fisher are great for starters. Our Investor's College feature articles are completely free (we recommend beginning from issue 80), as are Warren Buffett's Berkshire Hathaway letters to shareholders, which are a must. We also wrote Value - The Intelligent Investor's Guide to Finding Hidden Gems On the Sharemarket, which walks you through the analysis process from the ground up. So for very little outlay, there's a wealth of information on value investing out there, you just have to know where to look. As an aside, if you haven't trialled The Intelligent Investor before now is the perfect time with our end of financial year special offer. Again, please excuse our biases.

I bought my Woolworths shares on 12/3/09 & sold them on 16/4/09. Woolworths went ex-dividend on 23/3/09. Am I entitled to the dividend payable on 20/4/09?

The short answer is yes, because it's the ex dividend date that determines entitlement. Dividend dates are a constant source of confusion, which is why we produced an Investor's College article titled Dazzled by dividend dates?. This should hopefully clear up any confusion.

What types of companies pay out dividends and when do they pay out dividends?

Generally, companies usually aren't compelled to pay dividends or distributions. But there are various types of companies that tend to pay out a higher proportion of earnings than others. For example, companies structured as a trust, such as listed property trusts, are legally obligated to pay out close to 100% of earnings as distributions. But as we've seen recently, these distributions can dry up quickly if a company stumbles under the weight of its debt. Mature companies with low growth profiles also tend to pay handsome dividends.

Companies usually pay dividends twice a year after the half year and full year accounts are ruled off and issued to the market. If you want to see a company's history of dividends and the dates, you can become a member of Income Investor for free, simply by providing your email address. This FREE Investor's College article titled Dazzled by dividend dates? will also help clear up any confusion you might find with the various dates attached to dividends.

My wife and I are each 68 years in good health with small part time employment ($440 per month ea )- we own our unencumbered assets jointly- comprising a home woth about $600 000 and recently converted property to cash on call (BankWest 6.85%) of $800 000. We have recently created our own self managed super into which we have placed our allowable initial contributions of $150 000 each (total 300 000) and plan after 1/7/08 to replicate this contribution from cash on hand.We have other capital income (repayment loan) of $1000 per month. We estimate we need about $4500 per month or less to live barring abnormal expenses. Given our ages and absence of other income or resources we need to adopt a conservative investment strategy beyond that of the bank west invest e.g. by investment in shares preferably of the high dividend franked type and maybe apply averaging- we are new to the "game" but try to stay "educated" and read the financial literature to stay abreast- its time however to turn theory into practice. Have found your articles very informative- just as we have found compelling the arguments in favour of indexing - Vanguard offer a number of scenarios. Their returns of high income and general funds appear to rank high in the list of top funds. They also offer a 30 %growth and balance cash related investment fund thats of course very conservative. Given that we have no hassle with a "boring" but safe investment strategy have you any comments on what investment route to follow that allows for minimal loss of sleep but at the same time will involve some risk and a safe return say in excess of (% )pa? and is tax wise with proper use of our super.

We can't provide personal advice but any time you are making serious financial decisions it pays to speak to an expert. Unfortunately many of those 'experts' have dished out terrible advice in recent years, so it pays to shop around until you find someone you feel comfortable with. A couple of things worth keeping in mind are how your expert gets rewarded. You need to make investments that are good for you, not necessarily good for him. And don't invest in anything you don't fully understand. Much better to educate yourself for a couple of years than steam ahead only to lose what has taken a life time to build.

Tax advice should always be sought from a specialist tax adviser or your accountant as well. If you know what your risk tolerance and return expectations are, have plenty of patience and you surround yourself with experts that have your best interests at heart and not their own financial goals, then you are well on your way to achieving your aims.

Hi there.I am a student and I'm really interested in making some extra money. I was told shares are a good idea. I have a small amount of money, around $5,000. I really want to invest the money but i really have no idea about shares. Could you tell me please how I can get started and what I have to do to invest the money.

If you want to invest directly in the sharemarket it pays to understand as much as you can before you begin learning lessons the hard way, by losing money. Rule number one is never to invest in anything you don't understand. The Intelligent Investor by Benjamin Graham and Warren Buffett's letters to Berkshire Hathaway shareholders are a great way to begin what is a long journey - there are no shortcuts. If after reading these books and analysing the annual reports of a few companies you don't feel comfortable investing on your own, you might want to consider investing through a fund manager (watch out for high fees) or you could take up a free trial with The Intelligent Investor newsletter.

If you get to a point where you are comfortable investing on your own, you need to set up an online brokerage account. Either google for some names - there are plenty - or it is often easiest to call your bank, which will usually have a brokerage service.

Can you please explain how to settle a Margin Call from the time I sell until the money goes in the bank then on to the lending entity. I did have a stockbroker who has handled the last two but I found the service lacking and got rid of him and the Portfolio Management system. Now I have to meet any future Margin Calls myself and have no idea what to do.

The best thing you can do is anticipate a margin call. Before you receive the dreaded call from your margin loan provider, put some extra cash into your account to create a larger buffer. The easiest way to do this is through direct debit, give your provider a call to get the relevant bank account details. If you do receive the dreaded call, usually you only have 24 hours to act before some of your shares are sold to meet the margin call. To avoid this you will need to transfer cash immediately, again the easiest method is by direct debit. The last thing you want is to have to sell your stock(s) at their lows, so it pays to be prepared and act well in advance.

I am very new to the stock market. I am from India. Right now I am working in BPO. I want learn about the stock market and all kinds of assets. Could you please tell me how I can prepare myself to become an Intelligent Investor? I also want to know which investment type will suit me, I am 21 year of age.

If you are interested in stocks, then before investing a dime you need to increase your understanding of the stockmarket. Reading is the best way to begin and there are no better references than The Intelligent Investor, written by the legendary Benjamin Graham, and his star pupil Warren Buffett's letters to Berkshire Hathaway shareholders. The earlier you can start investing successfully the better. And, of course, you can always sign up for a free trial of The Intelligent Investor newsletter for coverage of stocks listed on the Australian Stock Exchange.

Hi, I have been faced with the question by a peer of mine on what the reasons are behind the 2007/2008 stock market crash. Are you able to provide the main reasons for this crash?

The Crash of 2008 (by George Soros) provides a good summary of the major trigger events.

I would like to know what the allotment methods are for an initial public offering (IPO). How can I get preference in the allotment? Can you please suggest some books or articles where I can get more information on IPOs.

There are no books that we know of that relate specifically to IPOs. The process of evaluating an IPO should be the same one you apply to any business; is the price cheap given a fair assessment of the company's future earning capacity?

Unless it is a very large IPO where there is a sufficient supply of new shares allocated to the public, the only other way to move yourself to the top of the list is to have a good relationship with the broker handling the deal. While some floats work out very well, especially assets sold by the government, the best opportunities we generally find at The Intelligent Investor are not the ones delivered by the postman.

I have completed a software using the daily download from ASX that give me the start ,the high ,the low ,the end, number of volume, the ASX code for each Australian company on ASX etc…But I need to complete, or I should say for drawing more statistic analysis the total shares issue by company. I've searched high and low on the ASX web site and I haven’t found such a list. For certain this list has to exist somewhere. Would you know or give me some indication where I can locate this rare beast.

We don't know of any such list. The only place we know to get the number of shares on issue is directly from a company's annual or half-yearly report.