Tuesday, August 16, 2011

INV101 Element of fear in investment

Every investment carries risks. How much risk appetite does an investot have? There are different answers.

The recent downgrade of U.S. credit rating had caused roller coaster rides to the stock prices around the world. Singapore stock market was affected as well.

Kindly answer this question:
How do you feel when the stock market went down due to the downgrading news?
a.  Scared. Afraid that I will lose every single cent invested.
b.  Give up on investment straight away.
c.  Just sit back and relax. Wait and see.
d.  Very happy. Time to open the warchest and strike at will.

An investor does not worry about noises that cause the stock market to plunge. An investor is indeed happy to see the chance to buy more of the companies' shares. Anyone who chooses a or b is actually a speculator. Choice c will not get you anywhere either.

Since we already have our personal valuation of the companies, then strike when the iron is hot. Stockpile! It does not matter if you stockpile 1000 shares or 100,000 shares, as long as you stockpile.

The opportunity to stockpile may have come and gone last week. If you have missed it, then wait for the next chance. If you have bought some shares last week, you have done a great job.

Happy investing.


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