Never put money into something that may go up or down FAST. Never put money into something which requires you to have higher heart beat and have to keep monitoring non-stop. Both are situations when we gamble / speculate. It’s definitely wrong to ‘invest’ money into something that could give us returns every month. No companies have their accounts audited every few weeks or even have businesses giving exceptional profits every other week. Okay, there are still many good companies for us to buy, keep and wait for dividends and potential capital appreciation. There are many companies which are already expensive by ASEAN standard. My colleague told me that he invests only in companies with PER of 10 or lower. I told him I am okay with up to 15. Yet, both of us hate speculators. For these, sometimes we may be lucky, sometime we may not be. Why not just buy a good company instead?
The same applies to currency. Just as the fundamental of a country does not suddenly change within 30 days, why do you think a currency should keep moving up and down every month?! Let me share an amazing comment about two of ASEAN’s giants which appeared in TheStar today. Which are the two countries? One is by population, one is by trade numbers in relation to its population size; Indonesia and Malaysia. This was a comment by that amazing person. He said, “The lack of volatility still reduces the appeal of the two markets.” Volatility is supposed to be good for the investors? Supposed to be good for the two countries? Perhaps can ask the Philippines CentralBank Governor these couple of days if he agrees. Here’s a recent news about the Peso. Here’s one about the Singaporean dollar too. Conclusions are clear. Central bankers in most countries would prefer an orderly manner in which the currencies move. This includes even Janet Yellen by the way.
Sorry yeah, from my understanding, businesses hate volatility too. Importing materials when the local currency is weak and selling it later when the local currency is strong will kill many businesses. They certainly hate speculative activities, unless of course they are not in an actual business but prefers the speculative element instead. Investors hate volatility. Even Mr. Warren Buffett buys stocks which he could ‘keep forever.’ Definitely not buying today, sell tomorrow, buying the day after and sell two days later. That’s definitely not investing…. Here’s one actual definition of investment. Yea, it clearly does not say that no volatility should be expected. However, the value of an investment is over a certain period of time. Lack of volatility definitely does NOT reduce the appeal of investing in a country. It is the POTENTIAL that should be the right focus. Happy investing, not speculating.
written on 14 Aug 2017
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