Sunday, November 23, 2008
Stock Trading - Taboo for Malays Discussion (Part 2)
It is hard if not difficult to find Malay peers that really do the monthly budget and serious investment-related things. Most of those I met never bothered and much not interested into doing well-planning of how they want to ride their money in a particular month. When it comes to investment, they DO NOT KNOW what to study about. Their investment was made because their friend did and they were just following suit.
Talking about stock trading is pretty much a taboo thing and tends to be associated as the game of the rich and only super-genius can trades in the stock market. If it is hard to see one to cracking his head for monthly budgeting, asking him about stock trading portfolio would certainly made you a fool to be the least.
Walking through with friends from many walks of life and of course holding good careers made me learn many things. Their idea of how to manage their money and their investment roadmap interested me the most. Out of roughly ten, I can get seven who never do the planning while their idea about money is spending it because you earned it. It may be true to some point.
Their true investments are somehow being in the EPF, nice shining car, expensive furniture in their rented apartment, and one good thing to hear: Unit Trust. At least they know about unit trust, sighed!
The only thing that amazed me on their understanding regarding unit trust was their thought that unit trust is a pure and top priority investment for everyone, or so they believe. Thanks to numbers of unit trust consultants. But don’t stop there, we need to know what was the fund they are into. I was bedazzled when they told me they bought the fund because their agent said it is the best in the market and they are relying hundred percent on their agent to buy or doing switching if necessary, on their behalf. They seem not knowing the type and what is their fund investing into (though not all).
Then I shared with them my experience on how I had widened my investment horizon into stock market trading. One big question slapped onto my face, and best to note was that it happened many times and things that made it painful, was when a unit trust consultant asked me the very same. It is a big thing for me, however, “How much losses have you made in the stock trading?”, until now. To them, trading in stock market is pretty much like gambling, thanks to Pak Man Telo who had helped to embedd that idea into the Malays. Trading in stock market will only come to one final point: LOSSES!
When tough gets going, going get tough. Because I heard the question too many times, it made me weary of it. I don’t mind telling them that now I had made two digits percentage in realised profits and taking home dividends from big company. A byline I would never forget, “While you keep your money in a particular bank, I owned a number of that bank shares. While you guys being their client, I am being one of its owners (shareholders), though tiny it maybe. While you guys get the small dividend for your saving, I got fatter for 2 to 3 times a year.”
A friend who also happened to be an agent rebutted, saying that unit trust pretty much do the same and unlike direct investment to the stock market, it reduces the investment risks by leveraging into multiple counters. That is true and I don’t deny! But, having to learn myself and encountering new things are very much interesting, what is life without learning and ability to take risk. To give her one fancy answer, “I also invested in the same counter as the unit trust did, though not all, but I chose few that have sound yielding-dividends”. On top of that, my investment in stock market has strict judgment after some deep research. It may not be easy to make stock picking decision and it also requires time to do research, but it worth it. I reap the dividends 100% to my pocket unlike unit trust that requires entry and exit fees as well as management fees.
I am not against unit trust fund as I myself segregate my cash and cash-like yieldable assets to score of at least 15% into unit trusts, but I also put another 70% in stock market. I’m riding on two horses.
Global financial crisis that started on the side of the globe but affecting us gave me chances to root-in deeper as many more counters that previously sold at incredibly high prices now being discounted. The factor that attributed to the downward spiral of the markets was due to a loss of confidence among investors, and not because of fundamental issues.
To be an investor, instead of speculator that follows herds, one must have a strong faith in one’s decision. Stock market has many uncertainties that human can only predict. At tumbling time, the price of holdings may be reduced to halves and you may seem like those are losses. But, history has shown that markets were and do recover over time.
Been a speculator myself and made losses in the past, I am now morphing to someone I am comfortable with, an investor. That means my horizon is far wider and my targets are far bigger with certain aspects of criteria to look at.