Making the Move
June 11th 2007 09:05
A week ago I was asked for advice on a particular Malaysian stock which was listed on 1st June. The question was whether it was the right time to buy that stock, which belongs to the Oil and Gas sector, after a massive surge on Monday 4th June. Those who managed to buy on Friday made some tidy profits.
Given that I am not following the Malaysian stock market I wasn't able to provide any specific advice except for some general ones which were mainly related to being prudent and not be carried away buy the surging positive momentum which I suspect was speculative. But the person seeking the advice was on the speculative gear as well.
Whether it is investing or speculating, one cannot be emotional over the price changes. Clear your mind and think. Try to be rational as possible because most of the time, the biggest enemy is not the market but yourself, as Benjamin Graham once said. After all you make the decision, even on the advice of your broker, ultimately the discretionary power to buy or sell is yours.
And to avoid wiping out the money you are going to put into a paricular investment, you must be as rational as possible which is the first step of drafting your game plan before you enter the game. Remember, fail to plan is plan to fail. You wouldn't want lady luck to dabble with your money especially when your limit of losing is limited.
Specifically, I gave the advice to look out first even after I referred to an analyst's recommendation of a buy. Although the long term outlook is rather positive for that particular stock but you wouldn't want to buy at a price that is not worth your money. It is just the same as being in the real market that you bargain for the best price.
Of course there would be a premium on a good stock and it must due it if deserved. But then again, prevention is better than cure. A week passed, the price of the stock stabilised and I believe the speculative activity is losing steam. Some would say, the opportunity was missed to make some mindless bucks. Yes, if you can afford it, go ahead and gamble. If everyone has unlimited money to invest then "Economics" will cease to exist but that is not the case.
Everyday we are involved in economics, evaluating and making decisions on the best allocation of scare resources. We all are doing unconciously.
In the end, this case forms the inspiration for the Portal to launch an Investment Education series for all to learn the basics and tools for evaluating and making decisions on the best allocation of scare resources to generate more resources.
Given that I am not following the Malaysian stock market I wasn't able to provide any specific advice except for some general ones which were mainly related to being prudent and not be carried away buy the surging positive momentum which I suspect was speculative. But the person seeking the advice was on the speculative gear as well.
Whether it is investing or speculating, one cannot be emotional over the price changes. Clear your mind and think. Try to be rational as possible because most of the time, the biggest enemy is not the market but yourself, as Benjamin Graham once said. After all you make the decision, even on the advice of your broker, ultimately the discretionary power to buy or sell is yours.
And to avoid wiping out the money you are going to put into a paricular investment, you must be as rational as possible which is the first step of drafting your game plan before you enter the game. Remember, fail to plan is plan to fail. You wouldn't want lady luck to dabble with your money especially when your limit of losing is limited.
Specifically, I gave the advice to look out first even after I referred to an analyst's recommendation of a buy. Although the long term outlook is rather positive for that particular stock but you wouldn't want to buy at a price that is not worth your money. It is just the same as being in the real market that you bargain for the best price.
Of course there would be a premium on a good stock and it must due it if deserved. But then again, prevention is better than cure. A week passed, the price of the stock stabilised and I believe the speculative activity is losing steam. Some would say, the opportunity was missed to make some mindless bucks. Yes, if you can afford it, go ahead and gamble. If everyone has unlimited money to invest then "Economics" will cease to exist but that is not the case.
Everyday we are involved in economics, evaluating and making decisions on the best allocation of scare resources. We all are doing unconciously.
In the end, this case forms the inspiration for the Portal to launch an Investment Education series for all to learn the basics and tools for evaluating and making decisions on the best allocation of scare resources to generate more resources.
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