ks55

Cannot stand 5% losses? Try out with REITs.

Let suppose you have 1m cash asset (Share, FD, Bonds, Treasury bills, SA etc excluding EPF). How much risk you you can take?

Some people can stand up to 50% loses (if they are still young <35 yr old)
Some people can only stand up to 20% loses. (may be for 40 -50 yr old)
Some may be 10%, or 5%. (Retired or near to retirement >50 yr old)
It is really depends on your degree of tolerance.

Some may be young, but they have low degree of tolerance. Their temper will fluctuate with market performance. Market good, they got excited. Market down, they will not be able to sleep. This will affect their job performance.

My advice is, if you invest up to 500k, you find that your temper already being jeopardized, reduce to 400k. If still find hard to sleep, reduce further to 300k, 200k,100k etc. There should come to a level whether market up or down doesn't affect performance of your main career anymore. That is your tolerance level.

Some may have 1m cash asset, but not able to stand a 5k loses. These people are not risk taker, share market is definitely not suitable for them. REITs may be most suitable for them as it is low risk with medium gain. Otherwise will be FD or MGS.

Again a word of caution. Don't commit 100% of your cash asset in share market. Always keep some for rainy days. Worse still if you try to buy on margin in this coming turbulence market.

Think safe, play safe, invest safe. If want to punt, punt safe.
If you lose money, it is you who are not good enough to engage in stock market. Why want to blame others ??


IF YOU LOSE MONEY, IT IS BECAUSE YOU ARE NO GOOD. DON'T BLAME PEOPLE LIKE A SMALL BOY...

2015-09-09 12:11

ks55

###Anyone lived through the experience in 1997-1998 during the Asian Currency Crisis and the political turmoil at home and saw how the KLCI and the Second Board Indices fell like waterfall and imagine the devastations caused by margin financing?###

Yes. I did. It happened to some of my close acquaintance in 1997/98 Asian Financial Crisis.
I knew personally the following cases of devastation because of margin finance.

1. An accountant who make a million just before the crash in 1997 ended up losing all his money (capital plus earlier profit), refinanced his house and still could not settle outstanding losses. He was bailed out by his business associates and made monthly settlement through salary deduction.

2. A businessman who lost his bungalow, business, cars and everything. He lost multiple millions. Finally stayed in a rented flat, wife and son had to make a living as a night market (pasar malam) vendor.

3. A high ranking government servant lost all his hard earned saving and profit from stock market earlier, then still owe bank a few hundred thousands OD. Children just about to enter university. Life was really miserable for next decade or so, facing increasing expenditure and still have to service bank interest plus principal.

4. There were a few more cases I know of (from trading floor of brokering house) but those people were not close acquaintance, got very severe burnt and they are no more exist in the stock market now.

5. Due to what had happened in 1997/98 always come back vividly in my memory, I am really against using OPM for share investment, always reserve certain cash in FD, diversify asset allocation, invest safe, if I want to punt, I will punt safe........

2015-09-09 12:21

ks55

Just go through 30 major shareholders of any listed company from their annual report. Find out whether their shares are pledged and registered under nominee account. By all means, avoid the counters. It simply indicate to me major shareholders are very weak and any time these pledged shares can be forced sale under present market sentiment.

One good example is all Lion Group shares are pledged by WC and mostly just leave 5 to 25% from their respective height.

Good to play safe by voiding the potential booby traps..........Please don't respond unless I know you.

2015-09-09 12:31

ganasai

Buy stock must know the stock value worth. During 199x, a lot of stock price up far far than the stock value itself. This kind of pyramid price cause a lot of people lost their pant. Now people smart already. Old generation also dont want touch stock.

2015-09-09 13:30

Evertraveler

I am curious what is the average P/E of bank sector during 1997 before the crisis? Is it much higher than current P/E ratio?

2015-09-10 13:37