Recently I have read a book "Taming the Money Shark" written by an experienced institution investor. The author suggests to beginners that just concentrate on one industry that you like the most. Study the industry thoroughly and pick the best company in the industry to invest.
If the best company you choose is not at the right price at that time, then just wait with cash on hand until one day its share price drops to the undervalued level, no matter you have to wait for many months or even years.
I think only very disciplined investors can do this.
For me, if there are some cash, most of the time I will dump it into the stock market. Now I feel that this is not a very good habit.
The more stocks I study, the more stocks that I think are worth to invest in. That's why money is always not enough.
I wish to achieve a cash/share ratio of 1:10, but at the same time, I also wish to accumulate more shares of some already-owned stocks, and there are several stocks queuing in the watch list just waiting for money to come in.
This situation needs to be sorted out surely.
However, can someone hold the cash for 1-2 years just to wait for the share price of a particular stock to retreat to the desired level?
I have been waiting for a few stocks in my watch list for 5-6 months, just hoping that they will come down to my "not-overvalued" price before I put my money in them.
What happen is, the prices of most of these stocks go up and it seems like if I want to buy them, I have to wait until the next financial crisis.
I have a chance to pick up these stocks during the small stock market crash in August, even though not at my initial desired price, but I didn't have spare cash to invest at that time.
This shows the importance of having a specific cash:share ratio.
Many stocks recover well from the August crash and continue to break new high. I probably need to wait until the cow comes home to be able to buy them.
When the cows really come home one day, hopefully I will have cash on hand.
Micheal Teo
To an investor like U perhaps patience is virtue. Precisely, playing it safe is far better than to lose for in BURSA its a zero sum game. Thank you.l
2013-11-08 06:48