Tuesday, August 10, 2010

Investing - think like rich

Investing is a process of building wealth. In stock market, many think that investing is try to buy low and sell high. Those try to buy low and sell high, we call them trader (or speculator) but not investor. There's nothing wrong to buy low and sell high (be a trader), as long as you can make money, who cares,  but this is not the right concept for investor.

Investing should be buying an asset or business that can generate stable income. The famous investor, Warren Buffer, became billionaire by investing in good and monopoly company. Let's take a look at local millionaire, do you see Genting or Public Bank's owner sell their business today and buy back tomorrow and sell again next week? No matter how high or low the share price, they are doing nothing with their share holding. As they know their company will keep on growing and business will expand every year, why bother about their share price.

Some of my friends came and ask me to recommend some good stock for investing. Others came and want to learn more about investment. I always tell them to have a clear mind and decide if you want to be a trader or investor. Don't try to use trader's concept and apply as investor. To be a successful investor, you need to think like rich. The rich own good asset and business that will generate passive income even they are not working today. In Stock market one can buy good business any time, however, one question is at what price you willing to pay. Of course, good business may not sell cheap if you buy it now. The beauty of stock market is the price keep on changing, once a while, like supermarket, it will do a promotion, at time many items sell at discount price.

In the past, almost every 2 or 3 years, something would happen and created panic selling, stock market went down by 15 to 20%, or even more depend on the degree of crises. At time, one just need to pick up a good business (of course not any cheap stock), waiting for 20 to 30% return is not a problem. Rich knows when to buy at right price, that's why recently our local tycoon T.Ananda Krishnan decided to privatize two company Measat (RM4.20) and Tanjong PLC (RM21.80) at price which look value to him.
Before you start to invest, have you think like rich today?

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