People usually has misconceptions about investing in stocks. Most of us rather put our hard earned savings into our bank accounts and let it grow through the bank's interest rates. That is when we already knew that those interest rates can hardly get us anywhere ranging from 5-10 years later with a few thousands in bank. A fixed deposit, yields you a maximum of 1.5% guaranteed returns on a good year and can be as low as 0.45% in a normal year. That means for every $1000 you leave in the bank for a year. you only get $4.50 in return.
In contrary, being able to identify a stock that pays good dividends every quarter will prolly get you around 10% return per year! That is $100 for every $1000 you invest. There are some stocks that pays up to 30%! and it all depends on your own observation and the economy. However, you will also be exposed to the up and down valuation of the stock price, but nonetheless if you are able to pick a stock with good fundamentals and at a bargain rate. Your $1000 may turn into $2000 within a year!
Tuesday, November 24, 2009
Thursday, November 19, 2009
How to Start - Picking a Stock (Technically)
Technical Analysis
Ever did graphs during your Secondary School? Remember the bar charts and gradient indicators that you have to figure out so detestably during your school days? And you wonder how will they be applicable to you in the future? Well you guessed it! This is what people use to 'forecast' the future price movement of the stock, note the word forecast. This method of picking stocks is called Technical Analysis.
Technical analysis is a security analysis discipline for forecasting the future direction of prices through the study of past market data, primarily price and volume. Well although not theoretically direct from what you learned during your school's maths lesson. Technical Analysis is really all about reading graphs, bar charts and understanding the principle usage behind the tools. There are different indicators and each of them has their own formulas. Some of the famous tools being used are Eg. Moving Average, Stochastics, MACD, Bollinger Bands and Candlesticks. These are largely used in a chart of a share to determine the future price movement of the stocks. Heres an Example of a chart where most of you will find in your online Trading platform.
fig.1 Have you Grasped the Trend?
Look Confusing? To sum it up. Technical Analysis if you had read more, is largely about signals and sentiments. Its about following the trends (they are you friends). Technical Analysis have been a popular approach used frequently by day traders who buy and sell their shares daily without indulging in the fundamentals of the shares/company itself. They rely solely on data, charts, and graphs to whizz in and out of the market.
Understand that in the beginning i noted the word 'forecast' being used in Technical Analysis. Forecasting/Predicting be it on the weather or stock movements can never and will never be 100% accurate. There are absolute indicators that lets you foresee better on whats going to happen next. Remember that all businesses are hugely affected by the supplies and demands of their products and services and not entirely who buys and sells pieces of their shares. However, not to say that Technical Analysis is a completely bogus way of investing. There are still many whom profited from its usage and some even made millions out of it. Please note that these people are professionals and they went through lots and lots of losses and courses before being successful, having found their own strategy to beat the market.
The following are some valuable guidelines used by the Great Technical Analyst Paul Tudor James II himself:'
I CANT SAY MORE! - SYI
Ever did graphs during your Secondary School? Remember the bar charts and gradient indicators that you have to figure out so detestably during your school days? And you wonder how will they be applicable to you in the future? Well you guessed it! This is what people use to 'forecast' the future price movement of the stock, note the word forecast. This method of picking stocks is called Technical Analysis.
Technical analysis is a security analysis discipline for forecasting the future direction of prices through the study of past market data, primarily price and volume. Well although not theoretically direct from what you learned during your school's maths lesson. Technical Analysis is really all about reading graphs, bar charts and understanding the principle usage behind the tools. There are different indicators and each of them has their own formulas. Some of the famous tools being used are Eg. Moving Average, Stochastics, MACD, Bollinger Bands and Candlesticks. These are largely used in a chart of a share to determine the future price movement of the stocks. Heres an Example of a chart where most of you will find in your online Trading platform.
fig.1 Have you Grasped the Trend?
Look Confusing? To sum it up. Technical Analysis if you had read more, is largely about signals and sentiments. Its about following the trends (they are you friends). Technical Analysis have been a popular approach used frequently by day traders who buy and sell their shares daily without indulging in the fundamentals of the shares/company itself. They rely solely on data, charts, and graphs to whizz in and out of the market.
Understand that in the beginning i noted the word 'forecast' being used in Technical Analysis. Forecasting/Predicting be it on the weather or stock movements can never and will never be 100% accurate. There are absolute indicators that lets you foresee better on whats going to happen next. Remember that all businesses are hugely affected by the supplies and demands of their products and services and not entirely who buys and sells pieces of their shares. However, not to say that Technical Analysis is a completely bogus way of investing. There are still many whom profited from its usage and some even made millions out of it. Please note that these people are professionals and they went through lots and lots of losses and courses before being successful, having found their own strategy to beat the market.
The following are some valuable guidelines used by the Great Technical Analyst Paul Tudor James II himself:'
- Attempt to buy and sell turning points.
- Trade at the smallest amount when your trading is at its worst.
- When develops an idea pursues it from a very-low-risk standpoint until proven wrong repeatedly, or until you change your viewpoint
- Swing trading; the best money is made at the market turns.
- Gets out if a losing position is making you uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.
- Never average losers. Decrease your trading size when you are doing poorly, increase when he is trading well.
- Develop mental stops. If it hits that number, be out no matter what. Not only price stops, but time stops.
- Monitors the whole portfolio equity (risk) in realtime.
- Prices move first and fundamentals come second.
- Don’t care what mistakes made 3 seconds ago, but what you are going to do from the next moment on.
- Don't be a hero. Don't have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead
I CANT SAY MORE! - SYI
Wednesday, November 18, 2009
How to Start - Picking a Stock (Fundamentally)
If you had been researching about stocks for quite awhile, you might have come across these two terms. Fundamental and Technical Analysis. What are they? What are the difference and how can i trust them to make profits?
Investing and Trading is not like Gambling. If you are someone who believes in luck and thinks that your $3000 is going to make you into a millionaire within one day, I think you are going to be very disappointed. Infact i suggest you take a hike to the Singapore pools or Genting and put your money there. Unlike gambling, Investing doesn't always let you lose all your money in one go or make a big profit out of no where. When investing you are buying other people's businesses, assets and liabilities. So for you to make a million within one day, it will take your shares to grow at least 333.33 times its current price or in other words it will have to take Golden Island, a little known private limited bunkering company in Singapore to become Exxon Mobil, the World Largest Petroleum Corporation. The chances of that happening is historically ZERO. So what really makes you want to invest and what makes you think you should invest? Now let me introduce you to the two most critically acclaim methods of investing. I say most because there are some people that still thinks investing is a gamble even after years of moving in and out of the market.
Fundamental Analysis
What do people look for when they want to plan their next holiday trip to another country? Of cause they have to understand the demographics of the country, the weather condition, the amount of money they are going to spend and of cause the kind of shelter they want to reside in. So how is this similar to picking a stock?
Like going on a trip, picking a stock also requires planning and research. The best and most usual way to do that will be through news, visiting their stores, knowing their products and of cause their financial health; which can be seen through their quarterly financial and yearly annual report. All publicly listed companies are required to publish their quarterly financial reports/Annual report on their websites or to SGX when they are released at year end. For most fundamental analyst like the Great Warren Buffet, they often make their decisions base on the company's Financial report(The methods will be discussed much later in future posts). Many news or related media will tend to also follow the companies' financial report to announce their financial standings and to make forecast on the country's economy. And of cause, a good and healthy balance sheet with little or no debts might meant that the future is looking bright which correlates to a potential increase in the share price of the company. Likewise, a negative outlook on the balance sheet will potentially reduce the share price of the company and this is how investors like you and me make their profits and losses.
Investing and Trading is not like Gambling. If you are someone who believes in luck and thinks that your $3000 is going to make you into a millionaire within one day, I think you are going to be very disappointed. Infact i suggest you take a hike to the Singapore pools or Genting and put your money there. Unlike gambling, Investing doesn't always let you lose all your money in one go or make a big profit out of no where. When investing you are buying other people's businesses, assets and liabilities. So for you to make a million within one day, it will take your shares to grow at least 333.33 times its current price or in other words it will have to take Golden Island, a little known private limited bunkering company in Singapore to become Exxon Mobil, the World Largest Petroleum Corporation. The chances of that happening is historically ZERO. So what really makes you want to invest and what makes you think you should invest? Now let me introduce you to the two most critically acclaim methods of investing. I say most because there are some people that still thinks investing is a gamble even after years of moving in and out of the market.
Fundamental Analysis
What do people look for when they want to plan their next holiday trip to another country? Of cause they have to understand the demographics of the country, the weather condition, the amount of money they are going to spend and of cause the kind of shelter they want to reside in. So how is this similar to picking a stock?
Like going on a trip, picking a stock also requires planning and research. The best and most usual way to do that will be through news, visiting their stores, knowing their products and of cause their financial health; which can be seen through their quarterly financial and yearly annual report. All publicly listed companies are required to publish their quarterly financial reports/Annual report on their websites or to SGX when they are released at year end. For most fundamental analyst like the Great Warren Buffet, they often make their decisions base on the company's Financial report(The methods will be discussed much later in future posts). Many news or related media will tend to also follow the companies' financial report to announce their financial standings and to make forecast on the country's economy. And of cause, a good and healthy balance sheet with little or no debts might meant that the future is looking bright which correlates to a potential increase in the share price of the company. Likewise, a negative outlook on the balance sheet will potentially reduce the share price of the company and this is how investors like you and me make their profits and losses.
Monday, November 16, 2009
How to Start - Using the platform
Now you are done with the lengthy proceedings and u are about to embark on a lifetime journey of investment! First if you're new to this platform you're using, you will probably know what the numbers are there for but you might not realise the significance of it.
As you can see, There are lots of number. and above each column they are categorised by words like, buy; sell; volume; open; close; high; low; buy volume; sell volume; price.
price - this is the price of the stock and usually it numbers in between the buy and sell price
buy - This is the price of the stock should you want to buy. Different companies has different prices, usually, the more expensive it is, the larger the company is.
sell - This is the selling price, notice that the selling price and buying price are abit different. This is call the spread
volume - this is the number of shares being traded on the day itself
buy volume - this is the number of shares being bought at the buy price
sell volume - this is the number of shares being sold at the selling price
open - this is the price shown when the market open at the start of the day
close - this is the price shown when the market closes the previous day
high - the highest price so far shown today
low - the lowest price so far shown today
Prices that are below $0.50 are usually penny stocks. If you're new to investing, then you might think that the cheaper the stock is, the easier it is for you to buy and make quick bucks. Well, practically speaking, its true as a minor jump in the share price of a penny stock might earn you few hundreds with a capital of $3000, likewise if it goes the other way, you might be losing a few hundreds. Theoretically speaking, the cheaper the stock is, the more unstable it is. In bad times, these stocks are very vulnerable to liquidation and you'll realise your $3000 can turn into worthless piece of paper in no time.
As you can see, There are lots of number. and above each column they are categorised by words like, buy; sell; volume; open; close; high; low; buy volume; sell volume; price.
price - this is the price of the stock and usually it numbers in between the buy and sell price
buy - This is the price of the stock should you want to buy. Different companies has different prices, usually, the more expensive it is, the larger the company is.
sell - This is the selling price, notice that the selling price and buying price are abit different. This is call the spread
volume - this is the number of shares being traded on the day itself
buy volume - this is the number of shares being bought at the buy price
sell volume - this is the number of shares being sold at the selling price
open - this is the price shown when the market open at the start of the day
close - this is the price shown when the market closes the previous day
high - the highest price so far shown today
low - the lowest price so far shown today
Prices that are below $0.50 are usually penny stocks. If you're new to investing, then you might think that the cheaper the stock is, the easier it is for you to buy and make quick bucks. Well, practically speaking, its true as a minor jump in the share price of a penny stock might earn you few hundreds with a capital of $3000, likewise if it goes the other way, you might be losing a few hundreds. Theoretically speaking, the cheaper the stock is, the more unstable it is. In bad times, these stocks are very vulnerable to liquidation and you'll realise your $3000 can turn into worthless piece of paper in no time.
How to Start - Opening Account
Finally! You hit your first ever $3000 in your life time in your bank account! That's your first step into the world of Investment! However, you can not trade without first having a CDP account.
A CDP account is a direct securities account to customise your shares in. Each time you transact in securities your movement will be recorded and when you trade, you will receive a statement at the end of that month you transacted in. You will also get a year-end statement reflecting your share balance. Tracking your portfolio has also been made easier with CDP Phone and CDP Internet Access, and they offer more than just your account update.
Ok to make things simple, this CDP account is like your bank account with the MAS. You will receive a seven digit ID and twelve digit password that allows you to buy and sell shares using the ATM, Internet or over the SGX counters.
To open a CDP account, just go to any of the brokerage house. Below (Be mindful that different brokers charges different commissions, so be sure to find out which policy suits you the best and remember there are some market makers that are not regulated and these are usually scam house, so do becareful. Rest assure those below are all regulated by MAS but they charge higher brokerage fees.)
Kim Eng
Lim & Tan
UOB KayHian
IOCBC
DBS Vickers
Phllips POEMS
GK GOH
A CDP account is a direct securities account to customise your shares in. Each time you transact in securities your movement will be recorded and when you trade, you will receive a statement at the end of that month you transacted in. You will also get a year-end statement reflecting your share balance. Tracking your portfolio has also been made easier with CDP Phone and CDP Internet Access, and they offer more than just your account update.
Ok to make things simple, this CDP account is like your bank account with the MAS. You will receive a seven digit ID and twelve digit password that allows you to buy and sell shares using the ATM, Internet or over the SGX counters.
To open a CDP account, just go to any of the brokerage house. Below (Be mindful that different brokers charges different commissions, so be sure to find out which policy suits you the best and remember there are some market makers that are not regulated and these are usually scam house, so do becareful. Rest assure those below are all regulated by MAS but they charge higher brokerage fees.)
Kim Eng
Lim & Tan
UOB KayHian
IOCBC
DBS Vickers
Phllips POEMS
GK GOH
Sunday, November 15, 2009
How to Start - Saving
The most important thing you need if you want to start investing is: MONEY. To begin with, i recommend you have at least $3000 - $5000 to start with. (Why $3000? I will explain why later on)
How to have money?
First, you need to save. If you are an NSF especially, it will be a challenge if you have had difficulties with the following; 1st. No bank account; 2nd. Have a bank account but below $1000; 3rd. Have a girlfriend or like being a gentlemen all the time (for guys); 4th. Big spender; 5th. No Job; 6th. NSF Recruit/Private/Corporal with or w/o combat pay
So to make things easier, lets address the worst case scenario. Imagine you are an NSF Recruit with no savings, have a girlfriend and a big spender,tough huh? Your first 3 months in BMT yields you a salary of up to $450 w/o combat pay. On a side note, the only way to spend your money is on weekends &/or public holiday. So now follow these RULES should you want to start investing within two years.
Rule #1- PAY YOURSELF FIRST: Set aside $200 every month and leave it in one bank account, that is your SAVINGS. Set up another account for spending purpose. In this case i will set aside $50 for my phone bills and have $200 to spend for the rest of the month.
Rule #2- CUTDOWN: As an NSF, you can never be blamed if you have the urge to hit the nightspots every weekends to feel normal again. Entrance fee to these nightspots can range from $20-$32 and some do not even provide complementary drinks. So cut down. Do it twice a month if you will and NEVER EVER Open bottles without pooling the money with your friends. Your average expenditure should be around $100 per month on these places. So now you're left with another $100 my friend. If you're smoking, Cut down on smoking, one pack per week is going to cost you $40 per month. Best alternative will be pooling your money with your smoking buddy and buy 1 packet together. That should reduce your burden by half!
Rule #3 - THE GIRLFRIEND: Let's be honest here, you love your girlfriend and wants to make her happy and compensate for the time lost in the prison. However, a trip to the movie theatre cost u $9.50 per person. That is $19 plus a dinner that will probably cost you $29 in total, taking into account you're eating at some normal food courts and you're footing the bills. If you do it every weekend you will need to reimburse your $100 from your savings account. So what you can do is request to go on dutch (might be quite hard if you're just into the r/s) or best, download movies and eat your mother's home cooked meal for at least twice a month. Be wary as the girlfriend might be unhappy with your frugal way of spending on her. So if things gets abit out of hand and when she's not understanding. I would suggest you weigh out the options of investing and girlfriend. Forfeit either one.
Rule #4 - NO CREDIT CARDS: No matter what you do, no matter how convenient it is, no matter how good the prospect it seems to be for holding one and no matter who offers you one. SAY NO to credit cards. Use CASH! Remember this phrase "CASH IS KING" I'm going to repeat this word a few times in the future. Or If you need a lighter wallet, get a DEBIT CARD Instead.
Rule #5 - NO RESTAURANT: I can't agree more, the food in camp is kinda sucky and sometimes you would just skip that meal altogether. Nonetheless that doesn't mean you shouldn't eat out and eat well during Weekends. The kopitiam in Singapore is a good place to eat out at and most have better foods or as good as they have in Restaurants! Resturants are just too expensive. Do not go there when you're paying by yourself!
Rule #6 - NO SHOPPING: Do it before you enlist. Trust me you ain't gonna wear the stuff you bought as often as you think. Wear the clothes you already have! The rest of the months you should be wearing green, you know that.
By following these rules, having an additional $200 every month in your saving account shouldn't be a landmark goal. Even so, by following minimally, you will be able to save up to $2000 a year! that is very close to where you want to be next. However, remember that you need at least $3000 to start with if you are to buy Blue chips stocks. In this case, you just have another half a year to go before u reach that amount. So start saving!
How to have money?
First, you need to save. If you are an NSF especially, it will be a challenge if you have had difficulties with the following; 1st. No bank account; 2nd. Have a bank account but below $1000; 3rd. Have a girlfriend or like being a gentlemen all the time (for guys); 4th. Big spender; 5th. No Job; 6th. NSF Recruit/Private/Corporal with or w/o combat pay
So to make things easier, lets address the worst case scenario. Imagine you are an NSF Recruit with no savings, have a girlfriend and a big spender,tough huh? Your first 3 months in BMT yields you a salary of up to $450 w/o combat pay. On a side note, the only way to spend your money is on weekends &/or public holiday. So now follow these RULES should you want to start investing within two years.
Rule #1- PAY YOURSELF FIRST: Set aside $200 every month and leave it in one bank account, that is your SAVINGS. Set up another account for spending purpose. In this case i will set aside $50 for my phone bills and have $200 to spend for the rest of the month.
Rule #2- CUTDOWN: As an NSF, you can never be blamed if you have the urge to hit the nightspots every weekends to feel normal again. Entrance fee to these nightspots can range from $20-$32 and some do not even provide complementary drinks. So cut down. Do it twice a month if you will and NEVER EVER Open bottles without pooling the money with your friends. Your average expenditure should be around $100 per month on these places. So now you're left with another $100 my friend. If you're smoking, Cut down on smoking, one pack per week is going to cost you $40 per month. Best alternative will be pooling your money with your smoking buddy and buy 1 packet together. That should reduce your burden by half!
Rule #3 - THE GIRLFRIEND: Let's be honest here, you love your girlfriend and wants to make her happy and compensate for the time lost in the prison. However, a trip to the movie theatre cost u $9.50 per person. That is $19 plus a dinner that will probably cost you $29 in total, taking into account you're eating at some normal food courts and you're footing the bills. If you do it every weekend you will need to reimburse your $100 from your savings account. So what you can do is request to go on dutch (might be quite hard if you're just into the r/s) or best, download movies and eat your mother's home cooked meal for at least twice a month. Be wary as the girlfriend might be unhappy with your frugal way of spending on her. So if things gets abit out of hand and when she's not understanding. I would suggest you weigh out the options of investing and girlfriend. Forfeit either one.
Rule #4 - NO CREDIT CARDS: No matter what you do, no matter how convenient it is, no matter how good the prospect it seems to be for holding one and no matter who offers you one. SAY NO to credit cards. Use CASH! Remember this phrase "CASH IS KING" I'm going to repeat this word a few times in the future. Or If you need a lighter wallet, get a DEBIT CARD Instead.
Rule #5 - NO RESTAURANT: I can't agree more, the food in camp is kinda sucky and sometimes you would just skip that meal altogether. Nonetheless that doesn't mean you shouldn't eat out and eat well during Weekends. The kopitiam in Singapore is a good place to eat out at and most have better foods or as good as they have in Restaurants! Resturants are just too expensive. Do not go there when you're paying by yourself!
Rule #6 - NO SHOPPING: Do it before you enlist. Trust me you ain't gonna wear the stuff you bought as often as you think. Wear the clothes you already have! The rest of the months you should be wearing green, you know that.
By following these rules, having an additional $200 every month in your saving account shouldn't be a landmark goal. Even so, by following minimally, you will be able to save up to $2000 a year! that is very close to where you want to be next. However, remember that you need at least $3000 to start with if you are to buy Blue chips stocks. In this case, you just have another half a year to go before u reach that amount. So start saving!
Recommended Readings
Before you begin to invest,I urge you to read up on investment books. According to the world greatest investor himself, Warren Buffet, 'the best investment you can make is to invest in yourself first.' That can be interpreted in many ways and in terms of investing i interpreted that you should use your hard earned money and buy some books and know how others do it before you actually start.
Recommended Readings for Young and/or New Investors
George S. Clason - Richest Man in Babylon
Peter Lynch - One up on Wall Streets
Goh Keng Chuan - Handbook For Stock Investors
Robert G. Hagstrom - The Warren Buffet Way
Richard A. Ferri - All about Index Funds
Recommended Readings for Young and/or New Investors
George S. Clason - Richest Man in Babylon
Peter Lynch - One up on Wall Streets
Goh Keng Chuan - Handbook For Stock Investors
Robert G. Hagstrom - The Warren Buffet Way
Richard A. Ferri - All about Index Funds
Singapore Young Investors
Hi guys, I'm 23 this year and i'm starting up this blog as a platform for me to share my knowledge in equity investments and other financial products that i'm familiar with.
To begin with, I opened a CDP account when i was 21 on the 17th of December 2007, a year away from the 2008 financial crisis. During that period I was a short term investor under the supervision of my father whom was a day trader in the Singapore and Hong Kong market. I opened my trading account with OCBC securities and have been trading and investing since. Currently I also started night trading in the US Markets using the CMC Market platform, trading CFD (Contract For Difference), a margin/leverage trading.
The reason why im starting this blog is because i have realised that young investors my age have yet to understand and capitalise on the benefits of investment and also do not understand fully the threats and opportunities that they are exposed to. This blog is meant for me to share my understanding, believes and philosophies in investing and also be exposed to experts advice and the people whom have the experience in investing to share their expertise with me.
Thanks for your time in reading and please do leave relevant comments on my tag boards and my posts. Invest Smart!
To begin with, I opened a CDP account when i was 21 on the 17th of December 2007, a year away from the 2008 financial crisis. During that period I was a short term investor under the supervision of my father whom was a day trader in the Singapore and Hong Kong market. I opened my trading account with OCBC securities and have been trading and investing since. Currently I also started night trading in the US Markets using the CMC Market platform, trading CFD (Contract For Difference), a margin/leverage trading.
The reason why im starting this blog is because i have realised that young investors my age have yet to understand and capitalise on the benefits of investment and also do not understand fully the threats and opportunities that they are exposed to. This blog is meant for me to share my understanding, believes and philosophies in investing and also be exposed to experts advice and the people whom have the experience in investing to share their expertise with me.
Thanks for your time in reading and please do leave relevant comments on my tag boards and my posts. Invest Smart!
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