Saturday, December 25, 2010

How to survive for long term investment

Invest in stock market is similar to sailing, there's no smooth sail, we always face with storm and bad weather, hence our boat or ship is always shaky. While stock market is making it's all time high in terms of index performance, actually not many investor making all time high earning. The reason? I understand from one of my client, because he could not stand with the shaking situation and fear factor, he sold the share too early. Will you jump down from the ship before reaching the destination?


We can not predict the weather and do not know when the storm going to come. Weather forecast in TV quite ofter goes wrong. Similar to stock market investment, we do not know when is the right time to buy or sell, but we can prepare for it. Always ask a question, if a stock price goes down after you buy it, what is your plan? Many people would like to ask, is tomorrow stock price will go up or down? What happen if North Korea start a WAR? If you are a short term trader, not even need to ask if tomorrow market will up or down, as you are trading according to the trend, be it up trend or down trend. If you are a long term investor who plan to buy share in next five years, there's nothing to worry about market's movement, since you are not going to sell the stock tomorrow. In fact, we should be happy if market start to go down, as this will enable us to buy more share with cheaper price. 


The next question, would you choose small boat or big ship? For me, if you able to take risk and sail for short distant, then can opt for small boat. Always monitor the boat's condition, if there's any leaking, change the boat for your own safety. As the time use for repair is very costly and usually is a waste of time, the chances are very high that the boat will sink. Sailing for long distant should choose big ship, as this's not only reduce the risk of facing with bad weather, but also risk of sinking in case of knocking some rock, although the speed might be slower compare to motor boat. 


Similar to investment, it's very hard to predict how's the economy doing in next 5 years and we are not sure if a company can survive for the next 10 years. If you choose a small boat, then need to take extra care and always change the boat if the company turn bad. For me, I prefer Big Ship, the industry's leader for investment, as this kind of company tend to overcome difficult economy situation and also get higher chance for it to continue with business in next 20 years. As long as the Big Ship is moving, a bit slow is not a big deal, as my investment style is not looking for biggest return, but consistent stable return is good enough.


Merry Christmas and Happy New Year!!

3 comments:

  1. First..i want to thank you so much for sharing yr knowledge, may God bless you fruitfully, i just begin to invest in reit lately, i think i got in a little late as the price is now high..looking at yr latest post on reit give me a good guidance indeed,a simple woman learning and still learning how to invest, for financial growth and the future.

    ReplyDelete
  2. Thanks for the words, REIT is good for those who want to invest for consistent cash flow. Your blog is nice too, a balance life style. Crocodile farm was so familiar, but I just could not recall where I saw it.

    ReplyDelete
  3. Somewhere to Desaru Beach..Telok Sengat, Johor Bahru...Nice Crocodile Farm.

    ReplyDelete

Note: Only a member of this blog may post a comment.