Dr.Neoh Soon Kean is
considered to be one of the successful stock investors in Malaysia. He is a
founder of Dynaquest, a Penang-based investment and consulting firm.
He
strongly believes that equity investment is the best way for an average person
to accumulate wealth.
In the 29th
May 2017 edition of The Edge Weekly, he shared 7 investing tips to the general
public. I would like to summarise the key points below:
1) Best time to buy is when market is
depressed and best time to sell is when it is the most optimistic (Be a
contrarian).
2) Buy progressively over a period of time
as few people are good in market timing (Buy progressively).
3)
Do not concentrate into just few stocks
unless you have very good stock picking skill. With a diversified portfolio, if
70% of the shares make good money, Dr.Neoh cited he will be very happy although
he could possibly lose the remaining 30% (Diversify).
4)
Do not be frightened by market decline
5)
Do not be afraid to take profit if one
or more of your stocks that have made substantial gains.
6) Choose stocks with good dividend yields,
low price-earning ratio and high cash flow. Few speculative stocks have produced
profit in the long run (Buy on fundamentals).
7) Nobody is perfect, even Warren Buffet
makes mistakes (Do not expect to be right every time).
Overall, the investing
tips shared by Dr.Neoh resonate well with me and it serves as a constant reminder.
Nevertheless, investing process may not be as simple as the above unless we
assume all investors are rational being, sometimes emotional aspect could cloud
an investor’s investment decision, hence the investment result.
That’s why some
investors sell winners in the equity portfolio, and hold on the losers because realising
losses can be emotionally painful.
Some investors own 10
stocks but fail to view the 10 stocks from portfolio perspective. Even though 8 stocks
make money, if the losses from the 2 stock are huge, we will still be suffering
loss from total return perspective.
I will shed more light
on emotional aspect of investing in the future J
