Stock Market & money related sharing

Last few days, we saw the market having fun, crash like crazy, people panic selling like no tomorrow. Yesterday we saw US Dow Index down by 283 points, at the time I write this notes, it's down by another 350 points, Dow Index currently stand at 10,774. Many investors force to shake out in this volatile market with one of question in their mind, if the market go down further, should he continue to average down, or should he cut loss? . To a new investor, he will confuse, as many will suggest to “Cut Loss”, whereas, someone might say, no, it's time to buy more so that you can average down to reduce the cost. I think in order to do the right thing (let do not care if this's correct way or not), one must understand what's the purpose or intention when he bought the stock. Is it for short term speculating purpose? Or is it for long term investment purpose? Also, he may want to find out if the share he bought is mean for speculate or investing grade. . You should ...

In natural science, the balance environment always see something like this: Electron = Proton, or what we say, Positive is equal to Negative. . Similar in stock market, if nothing happen: Buyer = Seller In this case, technically the stock price will remain the same all the time. (this is boring ya, just imagine if a stock just remain the same price today, tomorrow or next year) Once a while, some kind of news will spark the imbalance, like what we faced in 2008, the financial crisis which caused few big banks to meltdown, making seller more than buyer. Sometimes, the seller became panic and want to sell stock like no tomorrow and dump the share price at what even price. . Recently, market seem to encounter the similar imbalance again. It's full of negative news every where. It remind me of one famous quote: It's a mistake to sell something worth 1 dollars for 50 cents with the hope to buy it back at 30 cents. It's also a mistake if you refuse to buy som...

Every day, share price change up, down or stay side way. What cause the share price to change? In fact, nobody really know the answer, even the experience traders. Some special event, like financial crises, those experience know share price will go down, but they can not predict how much it will go down and when it will end. If you treat share as “goods”, most probably the supply and demand cause the share price to change. More buyer will create higher demand, then the price will going up. In the normal circumstances, demand = supply, hence share price will stay flat. In the event if the market is full of negative news, it create more seller, meaning supply more, the price is under selling pressure and tend to move down. The funny thing is, share is not something necessity, it's not something everybody need in daily life. Today's buyer can become tomorrow's seller. If a country spark a war, everyone will become panic as because they only want to hold cash. T...

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. . 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. . 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. Ano...

TNB is the only electric power provider in Malaysia, the business is monopoly but they can not simply raise the price. My father was ex-worker from TNB, hence I know TNB since the first day of listing when I was studied at form six. Bursa market was so hot during 1992 bull run (that time know as KLSE), it came to record high of 1300+ points in one year. TNB IPO price was $4.50, it went to $7.20 on first day of listing. In few months time, TNB went to record high of $20. Then one day, out of sudden, it drop to RM15.50. One week later, TNB close at RM10. In the next one to two year, TNB ranging from $7 to $10. . One of my father's friend, Mr Lim, he bought some TNB share at $9. He added more when it drop to $8. When TNB drop to $7, he bought again but with more lots than before. That time, I don't understand the method, but later I noticed this is call Cost Average Down. In 1994 to 1995, people seem to forget about previous pain, TNB share price reached $12+ again and Mr Lim disp...