Wednesday, November 10, 2010

At 1526 KLCI, Where Do We Go From Here?

No body can predict the market. Even Warren Buffett said: “Don’t try to time the market.” However, we can always make our decisions based on facts and probabilities. Take a look at our KLCI chart, at 1526 it’s our all time high now, is there room for growth?

All the technical indicators and analyst reports are bullish about our stock market, mostly based on the favourable news from US that the US Federal Reserve announced they are going to pump in more liquidity in the market (its called the Quantitative Easing) and the possibility that our Malaysia general election might be coming soon, hence, many analysts predicted our KLCI will reach 1800 in 2 years time!

In order not to be crowded by all the noises in the market, we must be firmed with our own investment plan. In your investment plan, ask yourself these:
• What is your investment horizon? 2 years, 5 years or longer?
• What are my stocks? Dividend stocks, blue chips, or tech-stocks?
• Do I have the holding power if my investment portfolio reduced by 50%?

If you intend to hold a longer investment horizon for your retirement or your children education fund, most likely you will be holding dividend and blue chip stocks in your portfolio. In addition, you must have the holding power should the economy turns bad, then by all means invest in the stock market regularly because in any stock market there is only one trend in the long run – that’s UP!

Personally, I did not sell my Maybank and Public Bank shares during the recent financial crisis, however, I did buy more when Maybank was at RM3 and Public Bank was at RM8.65. Hence, I was able to lower the average cost of my portfolio during the financial crisis. Moreover, I do invest in the stock market regularly but now I’m investing at a slower pace now.

However, if you just want to make quick bucks out the stock market, then my advice is: make sure you have the right tips and to take profits in time. Lastly, I want to leave you with a piece of advice from the popular investment guru, Warren Buffett:

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.”

Happy investing,

Pauline Yong

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