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How to be a successful investor?


Stock market is a zero sum game. Whenever a person gains some profit, another person will lose a certain amount of money. Hence, it is not rare to see a lot of investors lose money instead of earning profit. Now, which type of investors are you? If you are making profit, congratulations. If you are not, it’s time to reflect on your investing style.

Personally, I think that a successful investor must have three main characteristics. P.I.E.After mastering and equipping yourself with these three characteristics, earning in investment would be as easy as apple pie.
P – Patience
I – Intelligence
E – Effort

First, let’s start with effort. Without much explanation, effort refers to the homework and research that you have done on a stock. Is there still a demand for the company business or is it an industry that is going to wear out soon? Is the company filled with bad debt or is its earning increasing annually? Is the director of the company a trustworthy man or is him a selfish and immoral person? How is the company revenue as compared to the peers?

Have you answer all the doubts in your mind? If you are still unclear about the company, it means that your effort is not enough. Putting in effort is important as it helps to identify a valuable company that you can hold forever for it to grow.

Secondly, intelligence. Through effort, you have finally chosen the right stock. Now, you wish the stock A that you bought at RM2 to fly high. But unexpectedly, the stock market started to dip. Stock A that you are holding now drop to RM1.20. A drastic drop of 40%. What will you do? Will your emotional side take over your intelligence side? Or will you think critically and reaffirm your faith in the stock? IQ or EQ. Many investors upon facing troubles, will allow their EQ to take over and execute regretful decisions. A good investor at times like this, will intelligently know that this is not the time to sell, but in fact, the time to grab for discounted stock.

To make a good property investment, it’s all about location, right location. To make a good stock investment, it’s all about timing, perfect timing. To wait for a perfect timing, one need to be patient (more than you could imagine). As a passer-by, I know it too well. When I first stated, there were occasions when I bought good stocks at high price, only realizing I could have bought them at least 10% cheaper if I was patient enough. In the end of the day, of course the stock price rose, but still I could have earned more if I was patient enough.

Stock market will never rise smoothly. It will definitely fluctuate up and down or even run sideways at some point of time. Because the world is so interconnected, a simple drop in US employment rate could now affect our stock index. All these negative external and internal affairs have provided the market a chance to go down. And it is this market dip, that gives patient investors the best opportunity to get in and buy some discounted stock.

For instance, the chart below shows the price of PUBLIC BANK from August 2015 to February 2016. Overall speaking, the price is maintained at RM18. However, there are many little dips that have provide us to buy in at a cheaper price, such as RM17.10 and RM17.40. So, be patient.

In short, to be a successful investor, one must have the characteristics of P.I.E. In usual days, put in effort and find the right stock. Then be patient to wait for the right timing to appear. Finally, be intelligent and don’t let emotion take over. Think independently and have faith on your good stock. In this way, you will gain profit over time.

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