so now I feel like want to elaborate more about long term investing,
that's why I chose this topic to write.
First thing first,
I think the most important is still understanding ourselves first,
before investing any company.
You can refer to the article <<DISC, 4 basic types of human personality >> that I wrote at October 2017.
Try to ask yourself.
What kind of person I am?
How is my personality?
Do I like something exciting?
Am I patience?
Do I easily change my mind?
Am I stubborn?
If you like something exciting,
then I don't think that long term investment suits you,
because it is quite a boring investment method.
Long term investing for few years, even more than 10 years,
can I tolerate this long?
Or....
am I willing to challenge myself to test my tolerance?
If your answer is "YES.",
then only you can start to consider long term investment.
If your answer is "NO",
then you can consider short term investment instead.
If you found the correct method,
not only is exciting,
but you can earn money as well.
Isn't that better?
I remember I saw a sentence from a investment guru:
"If you want to be a long term investor,
you need to be believer of better tomorrow."
If you everyday also imagine that tomorrow will be the end of the world,
or World War 3 is going to happen soon,
or Malaysia's economic will bankrupts soon,
then how can you have the confidence to invest for long term?
Apart from knowing about your personality,
is better to find out your cycle of competence as well.
What is cycle of competence?
It is an area where you have unfair advantages at.
For example,
let's say you are working at a shopping mall,
then don't you think that you have the unfair advantages of knowing which product is selling more,
which is selling less lately?
Understanding yourself is the 1st step.
2nd step,
is to understand the company.
How deep you can dig into a company to find out more information about it?
As for me,
if you look at my investment portfolio,
you will know that those companies that I invested at,
are either we can see their branches everywhere,
or their products can seen at any places.
Investing at a company that you are familiar at will help in building more confidence at it.
However,
you can't just invest at PARKSON or AEON just because you visit there everyday,
you need to understand their financial condition as well.
From here,
I will turn into a C type person.
If I found a company that I am interested to invest at it,
I will download and read all the annual reports of that company from Bursa website,
including the quarterly reports for the past 2-3years.
I will try to know the company basic financial ratio like EPS, PE, ROE and others,
observe if there is any changes on revenue or profit lately,
see do they have any plan to expand at the future.
That's all my 2nd step.
Of course you don't have to follow exactly what I did,
the important thing is to have your own way which worked well for you.
3rd step,
understand the share market.
What I meant here,
is not telling you to try to predict the up and down of share market,
or tomorrow will rise or drop.
What I meant was......
how do you define "share market"?
"share market" is what kind of place for you?
Is it a place to earn fast money?
Or is it a place to accumulate wealth?
How you define "share market", will influence your investment method too.
After having a clear definition of "share market",
after confirming that you want to invest for long term,
after finding a company which is suitable for long term investment,
after knowing that share market is a place to help you accumulate your wealth,
then is time to buy the share.
How we buy the share is different for different investors.
I will take me as an example.
Just an example, please don't follow exactly what I did,
is better to have your own way.
After deciding which company to invest at,
usually I will buy a little shares only,
I will not straight away used all my capital, because once I did that,
I might not be able to fall sleep at night.
After buying a little shares,
I will buy more carefully,
slowly accumulate.
This is because sometimes the confidence does not start with 100%,
as time goes by,
my confidence at that company will rise too,
and then I will buy more shares,
slowly accumulate more and more shares of that company.
But yeah.....
most of the companies that I invested with this method,
the more I bought the more I feel heartache,
this is because the share price kept rising,
I have buy with higher price every time........
Somehow I just can't straight away spend all my capital at one time,
because I really can't fall sleep at night if I did that.
That's all about how I build my confidence to invest at a company for long term.
Thank you for reading.
Other articles :
A book that influenced my life
4 basic types of human personality
Year 2017: The consequence of long term investment
Public Bank 3rd quarter financial result
Handling investment with ease
Other links:
List of articles of October 2017
My current investment portfolio
My self-introduction article
My Twitter : @TheCellist86
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