I am writing this blog for a discussion when look at the recent stock market development.
The topic is that a good stock is it really matter?
Yes, it is really important when you adopt buy and hold strategy which allow you to ride on the uptrend waves. However, people who learn about fundamental they tend to ignore the noise as they say noise will not affect the nature of the business. Is it such thinking can really make you profit in long run.
Investment world is getting sophisticated day by day and thing is getting more vulnerable as Malaysia adopt open economy and globalization.
we have seen many value trap when they adopt fundamental investing. there is nothing wrong of fundamental investing but there is some thing wrong when they ignore totally of the technical. When they totally ignore the important of technical. When thing get sour, they gonna bite the bullet and swallow the pain.
Its very simple, if this a fundamental good stock, it should not move against the technical trend. If they move opposite direction, there must be some thing wrong with it.
One thing i am pretty sure. There will not be every lasting forever going up stock. If they have not drop for the past 10 years, will they continue going up for another 10 more years. Those day people adopt buy and hold and keep it for long term is easy. But these day business environment is getting more competitive.
Given one example :
20 years ago, Genting is the only CASINO operator in SouthEast Asia.
Today, we already see the evoluation for phsycial gaming into online gaming. On top of that, we also see more casino is building up in SouthEast Asia. Let me share with you some statistic on this.
You may refer to this to understand better gaming industry.
65 casino in 32 cities.
Can you imagine how many competitor coming out?
One thing for sure is business environment is getting more challenging when a business is really profitable. Very simple, outside there is plenty of multi billionaire holding lot of cash is waiting for a good investment opportunity
Remember those day when we are chatting during 90 era.
Evolution Stage 1
People are using ICQ
Evolution Stage 2
Later people go to Yahoo Messenger, MSN messenger.
Evolution Stage 3
Evolution Stage 4
HP Evolution Stage
1. NOKIA - FAMOUS MODEL 3310
2. MOTOROLA - FLIP MODEL, VERY COOL AND PURPOSELY FLIP IN FRONT OF FRIENDS
3. SONY ERICSON - SONY CARRY FAMOUS BRAND. THOSE DAY SONY LAPTOP SELLING DOUBLE THAT THEIR PEER SUCH AS COMPAQ, DELL, ACER.
4. BLACKBERRY - CORPORATE HP
5. IPOHONE SERIES
7. HUAWEI/OPPO, XIAOMI
Can you see the same product but company has change down the road. If a company can't maintain their market and keep on growing. A day their competitor will overtake them.
So, as a retail investor, do you really have much time to study in depth about this? I doubt so. Are you rich enough to get a good dealer/analyst to monitor for you?
Let be frank, this is the society which people talk about benefit. You can't expect a good service from dealer when you are talking about position investment. Therefore, you only can rely on research report or those boutique house research report. In some cases, people might rely on forum such as I3Investor to give opinion and outlook. In other word, you are putting your faith into other people hand. If anything go wrong, don't put the blame on other as this is your money. Your responsibility to ensure it is profitable. Not to wait for the person to inform you when to sell.
So, if you are busy with work and can't do short term trading. Yeah. I know that. But i am sure you have a minute just look at the price of the stock you are holding. It is go below a certain price level. Regardless how good is the future of the stock. you should just sell if off. You might miss the opportunity of making big money if the stock resume the momentum going up further because you refuse to chase high since you sell low. Again, is it a profit 30% is not consider money compare to 50% or 100%. If you know what to do, if you have the knowledge. Then you will plan how to reinvest. A person who regret is a person who have no knowledge and let the greed control their emotion. End of the day, your mind is full of regret and negative thinking. I would rather you invest zero amount and never step into investment world. At least you still live happily.
Wealth and Health, I will choose health. health is not about physically healthy, is also mentality healthy as well.
A person who aim to make position investment of 30%- 50% in 1 - 2 years time frame into fundamental stock.
Another person who spend a little bit more of time to do short term trading with the aim 5-10% within 2 weeks time frame. If you can have a success rate of 80% for several stock that you are trading. Will you be making more than a person who aim 30-50% in 1-2 years time.
I guess the answer is pretty clear. Unless you know your stock can surge more than 100% to 300%. Then i would suggest you stick to your current approach which can deliver 3 digit return in term of percentage.
So, here come to the end of my discussion about this topic. A good entry is more important than a good stock. That really depend how you plan your trade.
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