Sunday, November 22, 2009

Different between gambling and investing


As an experience investor, if you can predict the future, it's like having a crystal ball who know how a stock going to perform tomorrow. Hence, it's very important to select a good company with predictable earning, say in next 3 to 5 years, else, it would be no different like gambling in casino.

We may need to have a proper plan before making any investment decision. Once the plan is drafted, we would have a very clear target on what's we going to achieve in next 3 or 5 years. At least a solid company that can generate profit, not a small profit, but big one, at least 100 million! A stable profit margin with good dividend yield would be an added advantage.

Investment decision is actually not about doing something that is right, but not to do something that is wrong! As incorrect decision will cost you thousand of dollar. Beside the predictable future earning, we need to consider the entry price as well. If there is no more room for the stock price to surge, we have no reason to buy the stock immediately.

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