Hi to all my book purchasers,
I have informed you that for those book purchasers of mine who wish to ask me any question for the next two months regarding the content of the book, I will answer them according to my best ability. This is another question from a book purchaser.
I just go to Chapter 4 of your book, and reading your book bring back to me a lot of memories (sad memories) when I come across names such as Idris, Rahman, etc etc)
You pointed out that over the long-term stocks outperform using the index as benchmark. Hence is it fair to deduce that one should always buy index stocks?
I have “invested” in a lot of stocks that is as good as “hangus”…Setegap, LCL, LHI, Perisai, and many more.
To a wage earner who neither has the time to master the art of day trading and reading charts, what are his options? What do you think about robo advisers such as Stashaway?
From your statement above, you are probably not far away from my age group when those stocks bring back bad memories in our investment journey. The following image is a good reminder.
Hence, it is a good thing that you start to read my book to learn about the fundamentals of investing, treating buying a stock as investing in part of a business. That is the right path of investing. I am sure it will alter the outcome of your investment experience.
The KLCI Index consists of a basket of 30 biggest stocks listed in Bursa in term of market capitalization. Hence the KLCI Index represents the performance of those stocks, which because they are the biggest stocks, it generally represents the performance of the general market. But I don’t mean one should always buy index stocks.
There are hundreds of stocks, those lower market capitalization stocks, are not in there. Some of them outperform the KLCI and some of them don’t. If you can pick more of those which can outperform KLCI in the future, you will outperform the general market.
That is the purpose of value investing in picking individual stocks as propagated in my book, “Invest like a stock market guru: The complete value investing guide that works!”.
I am sure with your experience of so many years dabbling in the stock market above as mentioned by you above so far, you should realize that making money in the stock market is not an easy thing to do. Listening to rumours, following stock tips etc. is a sure way to lose money in the stock market. Here is an article for you to ponder about,
“Mastering the art of day trading and reading chart”, in my opinion, only very few people can do well and successful in that. Very few indeed. I have shown you in my book, Chapter 4 on numerous researches on the slim chance of success of day trading and the pure use of charts in making investing decisions. That is why according to statistics and as described in the “Preface” of my book, I mentioned that according to research, 90% of individual investors lost money dabbling in the stock market.
So, Mr Soo, you were not alone in losing money in the stock market. That also includes me 20-40 years ago.
Hence, to answer your question, as a wage earner, who has no knowledge, or time to master the fundamentals of investing (not only reading chart), it is best not to speculate in the stock market on his own. Why? He will sure lose money. Speculation in the stock market is a zero-sum game. You must know who your opponents are.
What about if one still wishes to invest in the stock market without having the time and knowledge?
I believe the use of Robo Advisers as mentioned by you is a much better alternative.
Robo advisors are wealth management platforms that automate the process of investing money on the user’s behalf with little or no human intervention. It generally helps investors to invest mainly in various kinds of Exchange Traded Funds (ETF) in US and some bonds all around the world.
A typical robo advisor will start out by identifying the user’s financial circumstances and ascertain his personal risk profile and from there it will help determine what investment portfolio or ETF is best suited for the person. Chapter 3, Page 46 of my book has some descriptions of ETFs, their advantages and disadvantages.
Robo advisers started just 2-3 years ago in Malaysia. Currently, there are 3 robo advisors in Malaysia licensed by the Securities Commission to provide their services locally, namely, MYTHEO, StashAway and Wahed Invest. There will be more in the future.
The attractiveness of investing using Rob Advisers is convenience, passive and best of all, low cost which is below 1% a year, with no upfront fee like unit trust funds/managed funds, and hence the performance of portfolio will be generally slightly below the performance of benchmarks the ETF follows of about 1%. In the past few years, investing through Robo Adviser appears to be doing well due to the rise of the stock market, especially in the US.
Robo Advisers also provides the advantage of diversification benefit investing in ETF.
For those who wish to earn a little more to invest himself, there is no other way except to spend some time and effort to learn about the fundamentals of investing. With some practice and experience, I am quite confident that they can do better.
There are many resources in the internet including many good books on learning about the fundamentals of investing. Here is one,
This book is a very comprehensive book encompassing almost all aspects of fundamental investing, from personal finance, investing options, history of stock markets, risk management, analysis and interpretation of financial statements, various relative and absolute valuation techniques, proven successful investment strategies, and much more.
This book is on sale in the major bookshops such as MPH and Popular.
The books I have were all sold out. The next print will be available next month. You may contact me to pre-order a copy if you wish at the following email address.
This may end up as your best investment.
I always believe the below,