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Saturday, November 23, 2013
It's a bull market, why investor lost money?
We all know, the stock market all over the
world is currently in the bull run (up tread) for more than 3 years
since 2009. However, still we found many investors not making money,
some even lost the money during this period. What's the reason?
In the bull market, not all stock are in the
same up tread. The reason is not all the business are making profit,
some with good profit but some of them with profit decline, or even
continue to make lost for few quarter. As an investor, don't forget
when we buy a stock, we are actually buying part of the business. If
you buy a business that was making loses, even the stock market
continue to climb up, you may end up losing money.
Predict the market. Many investor think that
they can predict the market, they buy when stock index near 1,000
point, sell when the stock index hit 1,300. That's was 30% profit and
hope to wait it come down to 1,000 point again. But the market is not
going down, it when all the way to 1,500 points! Then he try to find
another stock. Looking for new opportunity, however, most of good
stocks are breaking record high, the only left, the penny stocks.
Then he try to buy some of them. Few months later, the stock index up till 1,800 points, but the penny stocks, came with mix result,
some going up and some going down.
The bull market is only happen after maths...
you may say, “if I know the stock index will up from 1,000 to 1800
points, I will not sell my blue chip stock”. I can tell you, not
many have the will to hold it even for one year. For example, when I
recommend my client to buy Maybank at 2012, some of them start to
When the stock move till $9.00, many start to sell it already.
Do you want know how long I hold my Maybank
stock? Five years? Ten years? Let me tell you, it's longer than that,
I started invest into Maybank since I was at Form Six, though I only
have my small pocket money. Over the year, when the market went down,
if I had extra cash, I will turn it into Maybank stock and never sell
it, or sell very small % if the stock went up a lot. I don't remember
how many times Maybank stock hit above $10 and went below $5... I
also not remember how many times it gave bonus shares or how many
times it gave Dividend and recently through Dividend Reinvestment
This is one of the secret how to make money in
long run, let the good business appreciate in value over the year
and you will notice their dividend keep on increasing. If you are
patient investors and would like to invest over the year, do come out
a plan and consistently buying a stock every month or every quarter
no matter stock price up or down. Of course, you may buy more if the
stock price going down on that year. Try not to sell it, as the good
business will keep on growing, you will know what's the meaning of
investing after 5 or 10 years later!