The Bull and The Bear
For those who think that they are going to get hot market tips from me, huh, too bad, you are not going to get it. In case you donít know, you need a license from the Securities Commission to dispense advice on stock market investment. I donít have that and neither am I qualified to get one. Damned!!! Why on earth did I slog for that degree on Accounting and Investment Analysis from a top university in England? I should have just slept through the three years I was there. Ooops, come to think of it, I did!!!
But I canít help recall that when I was working for 14 years in the stock exchange (my glory days!), every time I met someone and give my name card, the first reaction I get from the person that I met, ďGot tips, ar???Ē
Without fail!!! Everyone seems to think that just because you work in the stock exchange, you know all the secret maneuvers of the tycoons that run the companies that are listed on the stock exchange. Hey, they have stockbrokers for that!!! And even if I do know something in the line of my work, I canít say anything as there is a thing called insider trading!!! And you can be charged in court and fined millions of dollars for that!!! Not that many people have been at the wrong end of the courts for that. And in this country, I have to say that insider trading is an activity that seems to be popular on the golf courses and karaoke bars!!! And recently, a businessman married to a very powerful lady was implied to have traded based on what could have been inside information! And there are a lot of powerful ladies in this country at the moment. In fact the most powerful person in the country is a lady!!!! And as with every usual accusation of misdeed by powerful people or people married to powerful people, or people related to powerful people, or people who are friends with powerful people, nothing happens. Malaysia boleh!!!
So once again, sorry folks, I am not giving you any tips on which company is suddenly going to see its price jump up 20% on one day soon or anything like that. Not that I know anything like that is going to happen, because if I had the skill to do that over the years, I would not be sitting here writing this. I would be sitting on some beach somewhere sipping margheritas being served by a couple of blondes in the tiniest of bikinis or hacking away on some golf course on a private island!! And I will be the ones driving the Lamborghinis, Ferraris and Porsches to the golf club.
So what I am going to give you instead are some tips on how to be a good investor, though in some circles, there is a saying that goes like this, ďYou start as a speculator, and you end up as an investorĒ, which basically means that your speculations have all gone wrong and you ended up having to hold on to your investments until they are worth less than toilet papers.
Rule 1 -†† Do not go into the stock market if you are afraid of losing
We all say that we are not afraid of losing. But the truth is most of us are afraid of losing, even if it just for a few dollars. Why do you think some people cheat on the golf course for RM10, even though they have millions in their bank accounts. In psycho babble, this is called ďloss aversionĒ, the granddaddy of all behavioural-economics principles. The Israeli psychologist who came up with this, Daniel Kahnerman, actually won the Nobel Prize in 2002 for this theory!!!
According to him, most people respond to the loss of a given amount of money about twice as strongly as they react to a similar gain. Comprende??? Loss aversion is why many people routinely sell winning investments too quickly and hold losses longer than they should. Remember, start as speculator, end up as investor! So if you are afraid of losing, donít play golf, and donít go into the stock market. Period!!!
Rule 2 -†† Do not get emotional and be patient
Investing in the stock market is very tricky, just like golf. And just like golf, anything can happen. What looks like a certain par can end up as a bogey or double bogey or even triple bogey!! Just ask Michelle Wie. Still sulking from that quadruple bogey, my dear girl??? But golf is a game invented to test your patience (What do you expect? It was invented by a Scotsman!!!). Investing in the stock market can be very testing too. You may get a double bogey on the first hole, but golf is a game of eighteen holes. It is the same with investing in the stock market.
It is for the long term. Now, forget the part about, start as speculator, end as investor!! Just like golf, donít be emotional when you lose one hole. Thereís another hole, and an asshole (who claims to be your friend!) who will keep reminding you of that loss!! In golf, it is 90% mental and 10% physical. That was the difference between Tiger Woods and the rests at one point in time (before he kept forgetting to keep his dick in his pants!!). In stock market investment, it is 90% mental and 10% luck. The mental part refers to the study that you have done on the companies you are investing.
Rule 3 -†† Do not listen to remisiers excessively (sorry to my remisier friends!!)
A lot of the times, the tips you get from remisiers/dealers are meant to entice you to buy certain stocks because someone else is trying to push the prices. This is when ďsyndicates are in the marketĒ. They tell you to buy only after the syndicates have started accumulating the shares, and they tell you to buy more when the syndicates are about to dump the shares in the market. Just like that asshole who is playing golf with you. He tells you to go for the green surrounded by the big lake after he has laid-up his shot just before the lake!!! Duh!!!!
Play your own game. Donít rely too much on the advice of others. Study the course!! Study the companies!!!
Rule 4 -†† Do not get greedy
I know Gordon Gekko said ďGreed is good!Ē and it became a mantra for many on Wall Street. Look at what happen to Gordon Gekko and what happen to those guys on Wall Street. They got obscenely rich!!! And then some of them went to jail! How on earth could Bernard Madoff con people to lose USD65 billion!!!! Thatís 27% of Malaysiaís GDP!!! Greed folks, one of the seven deadly sins!!!
Set a modest target for your investment, just like golf. If you are a 24 handicapper, donít expect to par the 450 yards par 4 index 1 hole!!! Donít even expect a bogey!!! If you are investing RM1,000, donít expect to turn it into RM2,000 in one week!!!
So if you donít want to be like these two guys, listen to my advice.
And on the golf course, you donít want to be like these two guys!!!