Koon Yew Yin 27 April 2020
About 5 years ago, I wrote an article namely “Super Investor’s Secret Recipe”. Since then I have learned something new and I would like to revise my article to benefit all my readers.
There are always more losers than winners in the stock market. Among the winners, there are only a few super investors. In fact, if you Google you can see that even institutional investors cannot beat the stock market index.
If 3 persons bought the same share at the same time and at the same price, yet each of them would have different result. One is a speculator, another is a short term investor and the last is a successfully long term investor. The first 2 persons will not make much money but the last one should be more successful depending on the timing of his sale. Profit depends more on the best time to sell. There is a saying “it is not what share you bought but when you sell is more important”.
Super investors’ secret recipe is optimism, confidence and entrepreneur spirit.
Can one be trained to have these qualities?
Frankly, I am not sure that one can be trained or acquire these qualities by try and error in practice. Perhaps one must be gifted with these qualities and improve on them through regular practice. Whatever it is, one has to keep trying and learn from past mistakes to improve.
Optimism
If you are a pessimistic person, you will not go anywhere very far because this attitude will stop you from moving forward. But if you have a natural optimistic attitude, you can go to the moon.
All successful investors must be optimistic, like an entrepreneur always willing to venture and take a chance. He must develop some business sense so that he dares to buy when a good share is beaten down for no good reasons. In fact, investors can make a lot more money in such a situation than waiting to buy when it crosses the 200 day moving average.
Professional fund managers and chartists: Statistics show that almost all professional fund managers have very poor performance record. With no disrespect to them, they must examine their track record to see why they are not performing so well as they like their followers to believe. One reason is that they are not optimistic. They will only buy when the price has gone higher crossing the 200 day moving average. They are not optimistic enough to buy when the price is at its pivoting or turning point of the trend reversal.
Super investors always have the entrepreneur spirit to take a calculated risk. The stock market is an adventure in business.
Confidence
If you always have no confidence, you will not go anywhere very far because this attitude will stop you from moving forward. But if you are a steady and confident person, you can achieve almost all the things you want in your life.
Super investors always have the confidence in understanding what they read between the lines of any financial report, bearing in mind that all analysts’ reports are usually buy recommendations.
Have you ever seen a sell recommendation before?
Super investors dare to make instant decision to buy or sell.
They always remember the stock market has a quick way to punish false confidence, arrogance and recklessness.
Critical thinking
Critical thinking is the ability to think clearly and rationally about what to do or believe. It includes the ability to engage in reflection and independent thinking. Critical thinking is absolutely necessary especially in share investment.
In this information age, everyone can suffer from information overload. Information will come to you through SMS, WhatsApp or email while you are asleep.
Every day I receive share recommendations from investment banks. Since I do not have unlimited funds to buy all of them, I have to examine their recommendations carefully and critically.
Do you dare to buy glove makers’ shares?
Due to Covid 19, the demand for gloves far exceeds supply. As a result, glove prices are shooting higher and higher and all glove makers should be making more and more profit. Unfortunately, most of the glove makers did not make much profit in the past and their share prices have been so depressed. If you just based on their historical record, you will buy glove makers’ shares. If you have the qualities of a supper investor, you will buy glove makers’ shares such as Comfort, Rubberex, Supermax etc.
You may like to read my article namely “Comfort Share price should fly relatively faster” which I have posted a few day ago.