Taking The Bull By The Horns

May 10, 2009

Are you trying to invest on your own?

Many retail investors are investing by themselves and try various strategies to maximise their return / beat the market.

Some investors like to analyse and pick stocks. Others attempt to choose from a list of unit trusts.

Retail investors think that their own intelligence & skills are above average. 

Logically, it’s impossible for us to outperform the market when information about a particular company is know by the public.Both buyers and sellers know the same information can’t make money from each other.

It’s impossible for investors to beat the market by investing on their own. It would be  alright to think that for each person who beat the market, there must be some investors who are underperforming the market.

Example, let’s say Bursa Malaysia has 100 investors only and the sum of all money invested is RM 1 mil. In order for you to outperform the market, someone must be underperforming by an equal amount.

But what is the probability of success for a retail investor to beat a well organised investment fund?

You are not competing with your neighbour only but actually the whole world including mutual funds,Government linked funds,foreign funds,hedge funds and others.To make some money out of these big funds, you might need an I.Q similar to Albert Einstein, or more.

The truth is,you can’t make money by investing alone and trying to beat the returns offered by big funds.Big funds have accessed to SENSITIVE INFORMATION through their BUSINESS NETWORK. Any information that you and I know have already been priced into the share price. 

Just try to visit Bursa Malaysia in KL / nearest brokerage office. You’ll see a lot of retired senior folks acting like “Mr. Know It All”.

I really pity them because they are “gambling” away their hard earned money which is supposed to be their retirement fund.They don’t really know what they’re doing. Mass Media are also responsible for this because they are REPORTING whatever stuffs FEEDED to them WITHOUT ANALYSING any information and come out with at least TWO DIFFERENT VIEWS.Well,that’s why their occupation is named “REPORTERS” not “ANALYSTS”.

But most analysts are also “pressured” to find ways to MASK the truth with flowerly WORDS in their reports. Try to read these reports here and tell me whether they help you to make a better investment decision.Or Are these reports trying to MISLED YOU?You really need to read these colourful reports with your BRAINS WIDE OPEN, not EYES ONLY.

After obtaining CFA and working with a famous investment bank for years, I felt indebted to the public because some of the reports which have been published by me (with the directive from CEO) may had caused you/parents/uncles/aunts lost huge sweat money in Bursa Malaysia. I felt bad but I still have to bring back food on for my family.Therefore, I created this blog to do some good KARMA.In this blog,I will recommend companies which I have “inside” information but it can’t be so obvious because I still want to keep my CFA license.

Please browse my previous recommendations and you’ll find that most of my recommendations make money if you still holding them until today (Buy Mah Sing Group, ahem)

Actually, what I’m trying to tell is almost two-thirds of your competitors is made up of mutual fund managers, pension funds, insurance companies, trusts/foundations, and banks. So, do you want to try to beat the market like Warren Buffet? Do you think you have the INFORMATION to outperform the teams of full-time professionals? These teams are well-funded and have well-staffed research departments. If you’re confident that you can beat them, then you’re probably trying to commit financial suicide

But please go ahead and try because you don’t have to take whatever I’m feeding you right now.

By the way,don’t forget to subscribe to my RSS on NEW BLOG (http://boyboycute.blogspot.com)

What is Value Investing? Part 3

April 24, 2007

Given all the problems in KLSE,how should one invest? Some investors prefer short term investing/speculative investment such as options and warrant. In speculators’ opinion,short term investment is not affected by corruption and political decisions. This is true.But how many of us are professional traders?How many of us have a CFA?

CONSERVATIVE analysis couple with long term investment can also reduce the effect of inappropriate decision by the company.When one has made profit in the stock market,he should ‘lock’ his profit in bond.The proportion of portfolio should be ….(continue)