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By Koon Yew Yin

The stock market has been falling recently and many investors are suffering losses. Of course those who have lost money feel miserable and do not know what to do. Some have margin calls and are forced to sell.

I wish to share with you my experience of making money when stocks sink and soar. Remember, after every crash the market will soar again. It is not the end of the world.

No share can go up or down indefinitely, for whatever reason. What goes down will come up again. What comes down rapidly will also rebound rapidly.

In 1983 when China gave notice to the British government to take back Hong Kong, the Hang Seng index dropped below 1,000. Almost all the investors rushed to sell their shares and properties.

This was the first time I started share investment seriously. I identified a few really undervalued stocks. For example, Hong Kong Reality and Trust Ltd fell from $13.50 to $3.50 but each share had a cash value of about $10.

I traded with Kaiser Stocks and Shares Ltd which offered me a margin finance at 5 percent interest. When China gave Britain an extension of 50 years’ lease, the market rebounded and HKRT jumped up to $13.50 overnight. Within a year I made enough money to buy 46 percent of Kaiser Sticks and Shares Ltd. Today the Hang Seng Index is 18,318.

You can learn the following lessons:

  1. Never fall in love with the shares you have bought. You must sell, as profit is not a dirty word. Unless you sell, you have no money to buy back.
  2. Never buy up to maximum margin limit. Always allow room for safety.
  3. Do not be afraid to buy when people are rushing to sell.
  4. I recommend you read ‘Crash Profits’ by Martin Weiss, who founded Weiss Research, an investment newsletter publisher in Florida.
Ooi Teik Bee, who is managing RM15 million for me, has a system based on financial and technical analysis which will be very useful. He also conducts training programmes and publishes a newsletter.

*Koon Yew Yin is a retired engineer turned philanthropist. He was a founder of IJM Corporation Bhd and Gamuda Bhd.*

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