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Showing posts from March, 2011

Buy a business with reasonable price

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As long as there's profit, you will not go bankrupt. This is the only way to survive in any business, similar for business buyer. The business you buy or planing to buy must be able to generate better return than cash, if not, why bother about invest in the business, isn't it more safer to put money in bank to earn interest? Hence, the reasonable return of any investment should be able to generate at least 3 times Fix Deposit can provide. Buying a business, we may want to ask how much the return can we obtain per year after deducted the expenses. Use the profit figure divided by the principal, we will get to know how much of return in percentage per year. Today, if we are not buying the whole business, instead buying a few shares of the company, it work the same way. I came to know a company, Mithril, listed 7 years ago, never seem to make any positive income, every year incurred losses. The boss should close down the business, better put money in bank, where can earn some 3

Aware of the Trend, chase the up trend, cut the lost trend

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The bull run market already reach 2nd years aniversery, nobody know when is the end of bull run. Hence, if anyone going to continue trading in the stock market, he should at least know the company before invest. Read news paper, blogs, research and come out conclusion on which industry having the greatest potential to continue the up trend for the next 6 months. Technically, in 5 years time, if you can hit right only 6 times, with 100% profit every time, 50 thousand become 1 million is not a problem. Cut loss is very important strategy, this may cause you miss a chance of making some money in certain time, but it will help to protect the pricipal from bigger loses in most of the case. Some people would like to know how much percent to cut loss, I think it would be wise to cut lost if a stock already down 10% from the peak.  Also, need to learn the opposite way, chase the up trend, do not cut the profit, let the profit run. Once you understand concept, you can apply "buy the