1. What is your time horizon? 2. Do you need the money for the next 5 years? 3. It is indeed a wonderful time to be invested in the market if you start now. In the middle of one of the worse recession in history you really can\'t go wrong unless the company goes under. 4 If you do not have enough expertise to do your own due diligence, I would advise you to use ETF or a low load mutual fund and invest with a fix amount every month regardless of prices.
I suppose i do not have that kind of expertise or diligence as you said, however not really interested in ETF as I have read that equities produce the highest returns among all kinds of investments around, though the risk is that the company could go under. My choice picks come mostly from what i have read from related sites, references to analysts\' recommendations, and own insticts. In fact, prior to reading this forum, I am already fully invested in a cmobination of S-chips & local stocks, but the former have fallen to nearly half of what I have bought at. In fact, just purchased Celestial right before it began its free fall. But I have intended to hold on to all even if some post losses in the alst quarter. Despite this, have not really fretted much, as I am holding the kind of make it or die attitude. I am thinking, if I cant make a decent profit from this round of downturn, then it would not have made any point. No specific time horizon, and hopefully I wouldnt need to use the money for the next 5 years. If this is a fast recovery, guess wouldnt need to wait for that long? If indeed I have to use the $ then I would have to sell by then.
Hi Sean Ng, Nice to read of your experiences. Choosing the \"right\" companies is not an easy task at all due to a myriad of factors which serve to obfuscate more than clarify in terms of what constitutes a good investment. Even if one had all available information to make a good decision under normal circumstances, he might still be tripped up by exigencies which were not planned for, or unanticipated external events (such as the current crisis). That said, companies which are established and have a proper business model for long-term growth (rather than short-term \"bursts of fire\") are more likely to be investment-quality. The focus in investing should NOT be profit-making, rather it should be preservation of capital and to earn an adequate return on your investment (above inflation). Time horizon has to be defined for any investment because the returns we get will be measured against the time taken to achieve those returns. If returns from a company stand at 1% per annum, it\'s better to leave your money in a bank account, risk-free ! For a sustained recovery to take place, one needs to wait for the business cycle to turn up again. In the meantime, take your time to analyze and pick your companies; there is no rush to swing the bat at the ball because right now the ball is moving in slow motion.
Hi Sean, I really do applaud your appetite for risk. The loner the time horizon then the risk of failure goes down in tandem. I am not a financial advisor and I do not profess to be one but I tend to be careful dishing out advise as to whether it would be wise to go all in now as opposed to a gradual move into the market. I am a very \'fearful\' investor and as much as I do due diligence I do get it wrong often even now as with Celestial...no worries you\'re in good camp. Always look at the stocks you\'re holding and ask yourself whether the relative chance of out-performance can occur with your current ones or are there better opportunities out there. So at times, portfolio rebalancing can occur and yes you may have to sell positions that are in the loss to raise capital. Paper loss and realised loss is the same thing to me. It becomes permanent loss if you decide to exit the market. Thus the point is to stay in the market either by averaging down or buying other companies that hold a bigger upside due to better fundamentals of otherwise. I\'ll give you an example to illustrate the point. Company A and company B assuming both has the same fundamentals are now trading at $10 each. You buy company A @ $10. Due to market weakness both has dropped now to Company A @ $5 and company B @ $1. IF THE FUNDAMENTALS REMAINS UNCHANGED FOR BOTH. I may sell company A and buy company B as the upside potential is bigger. The above example is an oversimplification and there is a lot of other issues one has to consider before rebalancing and you may even get the timing wrong. Again the above is my personal view and is what I do with my portfolio. I cannot over emphasize the importance of time horizon and the longer you have even the lousy companies can make you a good return as we\'re in a deep bear market now. As for overall timing, it is a darn good time to start albeit slowly. That\'s my 2 cents.
The disadvantage for retail investors is that they never get to meet the management and feel whether they are \'real\' businessmen or not and whether they still have the \'hunger\' to drive the companies. Take a local-listed recycling company for instance, i was told by a friend in the institutional sales that shortly after this company went into limelight, the CEO apparantly became very fashionable, dressed in expensive clothes, drove a new car and upgrade to landed property. Then shortly everything went wrong for the Company, the commodity price dropped and the acquisitions that they made turned out to be lemons. I believe as investors, we are buying the management as much as we are buying the companies\' fundamentals.
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