Thursday, March 28, 2013

Do you think buying stock is better or buying property?

Well, there’s no definate answer. If you ask a speculator, they will tell you, trading in stock market is similar to gambling. However, from business view of point, when you give it time to grow, 5 or 10 years later, it will bear fruit, provided you choose the right business.

The problem is, not many know how to choose the right business. That’s why almost 80% of investors losing money in stock market in the past because 80% of the stocks are weak stock. Usually weak stock will become weaker and weaker, of course, their share price will become weaker and weaker too in long run. Some so call investors hope that they can buy these “cheap” stocks and sell for higher price. (or i should not call them investors, as the real investors will not invest in these type of stocks)

How to tell if they are weak stocks? Weak stocks usually have lots of debt and poor balance sheet. Their earning is inconsistent, almost zero or negative. They may face the risk of going bankrupt any time the most is only 10% of chance it will survive. If you were to buy these weak stocks, what make you think that their stock price will go higher than your buying price?

If weak stock just give us slim chance to win, how about strong stock? Strong stocks are very rare types of companies you can find, they have a superior earnings, making money in all seasons. Over the years, their share price will go higher and higher. Just imaging if you invest in these stock stocks, how nice if you notice the share price double or triple in 4 to 5 years time?  

What’s that related to property investment? Well, if you buy a house, you can hope for capital appreciation and collect rental. If you buy the stock stocks, you can hope for capital appreciation and collect dividend as well. The rental or dividend will go up every year! Finally, one beauty about the stock market, some time you can exchange between the strong stocks if the opportunity come... this is how we call it, grow your portfolio!