Is stock market scary for many? It does seem so.

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Gen-Y in the stock market? Well, Gen-Y has shown keen interest in properties thus far but when it comes to the share market, not yet. Though much has been done to encourage them the participation has been low. Most of the players in the market are older people. One key reason, the older you are, the more savings you have and thus the more flexibility when it comes to buying stocks. J One example, my father buys and views his portfolio daily. Furthermore, not everyone loves penny stocks too. Majority of the typical blue-chips are already high priced. Buying 1,000 units may set you back even RM10,000. Gen-Y is not likely to have such savings and if they have such savings, I would still advise them to buy a roof over their head first before venturing into stocks. The reason is because buying stocks are actually much more complicated. Do you at least know what an Annual Report is and how to understand its content? For those who said, this is not needed, I just need to rely on the research houses and analysts, this is where investment turns into ‘gambling’. Not true?

I did a check around my colleagues and friends. 12 out of a total of 20 said they have not bought any before. Another 5 said they have bought before but have stopped. Only 3 said they are still actively buying. Says a lot right? Participation in Bursa Malaysia Stock Exchange is definitely low amongst the younger than 40s amongst my friends. Personally, I started when I was 23 years old, 2 years after I started working. Within the first two years, the overall result? One word, LOSS. I was buying at the wrong time, most of the time too late. I was selling too early, most of the time way too soon. I am not sure what happened but one day, I came to realize that to buy, I better start knowing more. That was when I took a more keen interest and started to read more. Business Times of NST, The Edge newspaper and whatever material I can come across including online. Then, I started to buy fewer stocks but with a larger quantity. Targeting mostly technology stocks as I was working in the manufacturing sector. The results were slightly better. In my mind, I thought this can be better than FD but it would never be something I would ever be good at.

Fast forward to the past few years. I have started to come up with my personal blue-chip list consisting of companies which are not popular but has a good business which I understand as well as close to or debt free. One example, if the manufacturer is selling pharmaceutical products and you can see that it is popular or derives its profits from exports to many countries plus has many patents and a strong R&D team, why not buy them? Even if, many people have never heard of them before?

Debt free is important because it meant that the company’s financials are strong and during downturns it can withstand and during good times, it can quickly invest to build up its business. It also meant that the company is well run. Thus, growth is likely to be continuous even if not as fast as those with huge debts. I love to read the board of directors too and more often than not, it gives an inkling of what to expect as well from the management team.

When I have money, I buy a few and as this went on, I realized that whenever I sell, the profits were pretty good! In fact, I only watch them once every few weeks and most of the time, I did not bother. Reason? They are not popular stocks! Haha. Thus, their prices go up only when they release a good quarterly result. Perhaps I am lucky for the past few years? I think it is more likely that when we buy things objectively with a good knowledge of what we are buying, the chances for profits are much higher. That’s my learning for the past 14 years. I love stocks. I think Gen-Y should too.

written on 22 Nov 2014

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