Why Investor lost money!
Many research report shows that only
about 10% of investors are making money in stock market. Meaning to
say, most of the investors are losing money in stock market! Few
years back, I was not quite agreed with this statement. However,
after I became a Dealer, from the record, seem it's true that almost
80% of “investors” are losing money.
Beside my personal experience, (listen
to the rumours and buying the troublesome company), I think most of
the “investors” have no idea if they are investing or
speculating. For instant, rumours about ABC stock having some good
news to be announced, people will rush in to buy ABC stock. However,
ABC stock never go up, but XYZ stock going up. In this case, investor
will change horse, by selling ABC stock and buy XYZ stock.
After buying, XYZ stock price become
stagnant, but ABC stock price start to go up. In this case, should
you change horse again or wait? This is the problem faced by most
investors, what they buy never go up, but what never buy go up in
price! In fact, if you keep on changing horse, this is not investing
but speculating... nothing wrong with speculating. The problem is,
the investor use the method of investing apply on speculating, that's
the killing part, every goes wrong!
Investing is long term process, where
one need to study the company's profit and agreed with company's
management style then only put in the money to invest. After invest,
if the stock price fall in price, investor dare to put more money to
invest more shares at the low price. In this case, investors need few
years to grow with the company. When the company start to bear fruit,
the stock price will double or triple, and of course, follow by
handsome dividend too!
However, speculating is the process of
hit the right horse. If jump on a wrong horse, then change
immediately and find another black horse. Once you find the right
horse, stick to it until last drop of blood, jump down when the horse
is tired. Meaning, for a speculator, he need choose the right stock,
and let the profit run until momentum slow down, before decide to
sell!
A friend of mine had brought a stock
which went up nearly 200% recently. That day I meet him and I thought
he earn a lot for this stock. But guess what? He sold the stock when
it just move up 50%... the reason? He couldn't stand the “shaky
horse” so he get out quickly. Oh boy! If you take a plane to US and
weather is not so good, the plane will become shaky as well, do you
jump down the plane before it reach the destination? Whether
speculating or investing, as long as you know what you are doing,
then it's fine. After all, they have the same goal, that is making
money. “We don't care it's a black or white cat, as long as it's
able to catch mouse, it's a good cat!”
.
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