When Should One Be Trading Shares?

Malaysians, well, Asians in particular have this penchant to invest money in shares themselves. In the US, Europe and Australia, individuals do not do that so much. Most of them would invest via mutual funds. I guess, it has to do with the similar reasoning why when you go to any international casinos, you will find mostly Asians there. The chance to have a bet is ingrained in most Asians. The other way to explain it is that is probably why many are more willing to be entrepreneurs, to dictate their destiny, the more than norm risk takers.

 

However, there are many types of individual investors. Some are technical traders, day traders, punters, speculators and some are long term players. If you are a genuine long term player, then you do not have much to worry about. If you are seeking the 10% a year or so, thats even safer. Some are long term but keen on getting supernormal returns, i.e. between 20%-40% a year, thats OK too, just need to do more homework.

There is very little need to be very brilliant to achieve the desired returns if you are a long term investor. I have drawn up a symbolic portfolio for both:

A. Long Term 10% annualised return

- BAT

- Guinness Anchor

- Aeon Credit

- Public Bank

- Nestle

B. Long Term 20%-40% annualised return (higher risk albeit)

- Rimbunan Sawit

- MBM Resources

- Jaya Tiasa

- Delloyds

- DIGI

Now, coming to the rest, the traders and punters. This will save you A LOT OF MONEY, TUITION FEES, heartaches, sleepless nights, short lived happiness, longer term misery ... IF YOU CANNOT GET AT LEAST 50%-100% return a year, STOP PLAYING THE MARKET YOURSELF. Go back, repeat the statement slowly.

Why such a high threshold? Either you are a successful trader/punter, or you are not. There is no middle ground. If you are successful type, you should get that kind of returns. If NOT, you are just waiting for your entire portfolio worth to be decimated.

The entire market for punters and traders is like a pyramid. At the top is a small select group of people who know more than the rest, and then dribbles down. Do you even know where you are in the pyramid? If you don't know, that means you are in the bottom 50%. 

Another important piece of statement, if you are punting or trading, only the top 20% makes money, FULL STOP. Its not even like an exam, where if you achieve 51/100 marks, you will pass. In punting and trading, you NOT only need to be better than half the population, you need to be better than probably 80% of the people playing the markets to make consistent money.

So, if you know you cannot cut it (rest your ego for a while), then opt for Long Term strategy A or B, pleeeasseee ...

Too many people will learn the hard way after years of trading to come to the same conclusion. I would then advise to go for longer term strategy OR mutual funds, but our mutual funds fees structure is waaaay too expensive. There are plenty of international funds that charges less than 0.5% for decent long term returns. Go and check them out.

You can only be trading and punting if your size is small, i.e. less than RM10m, anything more than that will make it extremely difficult to get the 50%-100% returns in Malaysian stocks. You will have to punt HK and US stocks for positions higher than that. 

Don't kid yourself anymore.