I am 90 years old and I am a co-founder director of IJM Corporation Bhd. Since my retirement 35 years ago, I have been investing in the stock market and I learned many expensive lessons which I would like to share with you.

If you Google "percentage of investors lose money in the stock market", you will be shocked to know that 90% of investors lose money. If you have no experience in investing in the stock before, you should not start.

The reason is that fools and fanatics are always so sure of themselves and the wiser investors are always in doubt.

There are about 1,100 listed companies and you don’t have so much money to buy many stocks. Just carefully select a few to buy. Never take unnecessary risk.

Unforeseen risks

In the stock market, there are always unforeseen risks. Let me give you an example of how I lost some money in early 2022.

The crude palm oil price (CPO) chart below shows the CPO price shot to historical high of Rm 6,500 per ton in early 2022. When I saw this CPO price chart, I started to buy Jaya Tiasa at 70 sen in early 2022 because price chart cannot lie. As I was buying, it was going up higher and higher rapidly. When I stopped buying, more investors who were willing to take risk were chasing to buy and pushed the share prices up to historical high.

Jaya Tiasa chart below

The Jaya Tiasa price charts shows that Jaya Tiasa shot up to their historical high in May 2022. But when it reported reduced profit for the quarter ending March at the end of May, its share price plunged. As a result, I lost some money and those who bought at higher prices would have lost a lot more money.

The reason why Jaya Tiasa reported reduced profit because Indonesian workers could not enter Sarawak to work due to Covid 19 lockdown. I did not foresee this situation. As a result, I lost some money and I learned a new lesson to be more careful. Beware of unforeseen risk.

Nevertheless, all investors must know how to select good growth stocks.

Stock selection criteria

Among all the stock selection criteria such as NTA, dividend yield, cash flow, debt or cash rich, etc, the most powerful catalyst to push up share price is profit growth. To be safe, only buy when the company has reported increased profit for 2 consecution quarters. Never buy any stock that cannot report increasing profit and never buy any stock when its share price is dropping lower and lower as shown by its down trending price chart.

Price chart cannot lie

The share price chart is a record of the daily closing price of a stock. If there are more sellers than buyers, the share price will drop and if there are more buyers than sellers the price will go up. All these daily transactions are recorded to form the price charts. Never buy any shock with a down trending price chart because after you have bought it, the price will continue to drop. Only buy stock when its price chart is showing up-trend.

Initial Public Offer (IPO)

Never buy Initial Public Offer (IPO) shares because record shows most IPO projections are not achievable.

One challenge of investing in IPOs is that the companies usually don't have a long history of disclosing their financial information and they don't have an established trading history, so analyzing them using conventional methods can be impossible. Moreover, IPO marketing campaign can mislead investors.

Free tips

This is the biggest mistake that most people commit when they start investing in the stock market. They easily trust the tips they hear from a friend, neighbor, colleague, brokerage firm, or any financial channel that they just watched. Moreover, most people blindly trust these recommendations which later turn out to be a major loss on their investment.

Patient

This is big mistake that people make while investing in the stock market. People are always in a hurry to make money. They always want to become rich quickly. Investors must be patient.

Blind leads the blind

Investors should not follow the crowd blindly to buy stocks. After researching the company properly, if you are satisfied, then only invest in that stock.

Never sell good winning stocks to buy bad losing stocks

After careful research, you bought a few stocks. The good stocks continue to go up higher and higher and the bad stock went up a bit but keep dropping. Don’t sell the good stocks to buy the bad stock.

Safety

After careful research, you might have bought 1 or 2 stocks. It is safer to buy a couple of other stocks to diversify to reduce risk.

All investors must check their track record. If they have been losing money, they should stop investing because 90% of investors lose money in the stock market.