Choose STOCKS or PROPERTY

Besides their own home, investors can put their money into a whole range of assets such as stocks and bonds, real estate or businesses beyond investing in their own homes. Within each category, there are further choices. Choose the type that suits your needs and pyschology. How much money do you plan to invest? When you have a little capital, your choice is limited to … Continue reading Choose STOCKS or PROPERTY

Own stocks directly

Own stocks directly instead of mutual funds, also known as unit trusts. There are two reasons why you should try to own stocks directly. First data show that funds generally do not out-perform the overall market over the long run. Secondly funds charge management fees which can take up a large chunk of your returns. The fee might seem little, say 2% of funds managed, … Continue reading Own stocks directly

Understand fatal flaws of Contrarian Trading

The idea is that the best time to buy is when the market is at its most pessimistic, the best time to sell is when the market is very optimistic. In practice, it is hard to tell when investors are very pessimistic or optimistic. In hindsight, we know these points correspond to lows and highs, but looking forward it is harder. For every seller there … Continue reading Understand fatal flaws of Contrarian Trading

Understand fatal flaws of Technical Analysis

One group of people try to identify price changes by looking at historical price trends. Technicians use price charts (so they are also known as Chartists) containing the price data such as the range from high to low, opening and closing prices. This data may be on daily, weekly or monthly, prices may be linear or logarithmic. It is not possible to go into details … Continue reading Understand fatal flaws of Technical Analysis

Buy takeover stocks

Financial researchers have convincingly shown that companies which are taken-over outperform the general market in terms of share price. These companies see their share price rise substantially after the acquisition announcement – the rise may be instantaneous or may occur over a few days or weeks. This rise in most cases is about 30% to 40% during this short period although the rangemay be much … Continue reading Buy takeover stocks

Buy value stocks

One conclusion that financial researchers have convincingly drawn is that value stocks outperform growth stocks in the long run. Value stocks are those that are expected to grow slowly, and typically have a low share price compared with their present earnings (i.e. low Price to Earnings ratio) – this is because investors expect their profit to grow slowly or not at all. Growth stocks have … Continue reading Buy value stocks