Wednesday, August 31, 2011

Investment Note Book


Do you have the habit to write a diary? I wrote investment diary, record down every trade done in stock market, buy or sell, in a note book. This keep remind me, every trade need proper planing start from research, monitor, set target price, list the Main Factors, execute the trading and sell strategy including if something went wrong.
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Planing – Before buying a stock, have a plan, be it for short term trade (speculate) or invest for long term. List down the reasons why want to buy this stock. Invest in a stock is not as simple as buying 'kuih' at night market, you are not paying few dollars but thousand, hence need to be serious and careful.
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If there is no reason of buying a stock, meaning you could have know nothing about the company or haven't done enough research. Usually I like to ask, “do you dare to buy more share if the stock price go down further tomorrow?” If the answer is “No” or “Not Sure”, then better think twice, maybe it's not good time to buy. Another question I like to ask, if tomorrow Stock Market close for 3 years, do you still want to buy the stock? What happen if tomorrow US market crash 1,000 points due to what even reason?
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After doing some research to come out few points to support the trading, it's time to monitor and set target price. Just wait for months, once a while, sales will come. Some day, you may find there are many stocks falling in price, some discount 10%, 20% or even 30%. (like what's happen last few weeks) Soon you will notice many negative news in news paper or internet. It's time to test your skill and ability to act differently from others. How firm are you stand still with your original plan?
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In this situation, I find my note book very useful, I will read through all the mistake done in the past and other investors experience, it's the time to use logic thinking plus the experience to conclude the decision. "Money is similar to rain, there are million and trillion of it, it need to go some where, build a pool to prepare for the rainy day to keep this water, if not, it would be a waste to let it go some where" - one of the quote from a experience investor.
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