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Buy Shares- Straight Up Or Sip?


Stock Market-The Greatest Casino in the World

Quite a few people I know buy shares on tips from people they know or even from strangers. If you go out on the street and someone tells you to buy a $1000 stamp collection because he says it is going to go up, would you buy it? Some people buy stocks that have a timeline running, for example, they will need the money that they use to buy stocks 2 months later as deposit to buy a house or pay their insurance premiums. So, is it reasonable to expect to make money from these kinds of 'investor'?

Granted, the stock market is a much fairer place to take a chance than the gambling tables in the Casino, where the odds are heavily weighted on the side of the banker. People take a punt on the stock market regularly in all parts of the world. That is why there are people who are 'specialist' contra trader who regularly buys and sells in huge volumes and short sells who sell shares they do not have. It is the biggest and best casino.

What if you can learn how to read a card and memorise them to turn the odds against the bankers? Card sharks and card sharps are typically banned in Casinos and black listed. The same analogy can be applied to the equity market. Investors who operates on the basis of value investing could be the equivalent of the card sharps in casinos, people who consistently do better than the average person because they have gotten hold of information to beat the market consistently.

So how did they do it? It is no magic. Value investing has been around since 1934 when a very thick book called "Securities Analysis" came out. The condensed version of it is "The Intelligent Investor" which is the bible that Warren Buffet uses to understand the workings of the equity market. However, it is hard work, reading the book, trying to synthesis the teachings and later implementing it. On top of it, the book epouses investor to read the financial report and extract valuable data from it to sift out the value investments over all the overpriced stocks available.

It is easier to take a tip and act on it. It requires no thought and thinking. If I put up 100 blogs, and I put 10 blog post each day for 10 days tell readers to buy 10 different stocks on all the blogs. There will be a few blogs with a 100% record after 10 days and I'd be lauded as a stock market seer. Everyone will act on my next few tips. But to do so consistently over 50 years as Warren Buffet has done so with value investment takes some beating. It actually proves that the market can be beaten. But not by a cheap tip from someone, it is by hard work, spending time reading materials on investments and critically eliminating those that are rubbish.

Some people have made suggestions that I should make this blog easier to read, the topics are too hard. I am just trying to get people to understand the investment mindset. It is not easy, I do not know a lot, so for me, it is also a journey. Maybe one day, I shall just write "Buy ABC company- outperform, technicals showing resistance levels will be breached soon ....." I think I'd get more readers then :) Oh and the answer to the title question is of course to sip it slow and take in all information that you can get to make a decision to buy the stock. I will look at the different things you need to consider before buying a stock in the next blog.

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The information contained in this blog is prepared from data believed to be correct and reliable at the time of publication of this report. The authors do not make any guarantee or representation as to the adequacy, accuracy, completeness, reliability of the information contained herein. Neither the authors or any affiliates or related persons shall be liable for any consequences (direct or indirect losses, loss of profits and damages) of any
reliance placed on information provided in the blog.

Shares and financial instruments illustrated in this blog can go down sharply or in certain instruments suffer total loss on the initial investments. Investors are advised to make their own judgment on the information provided and consult their own financial advisors or consultants as to the suitability of the products illustrated to their particular financial needs and objectives before acting on any information contained herein in this blog.