Tag Archives: stocks trading

Learn from the rich

It was a pleasant surprise that I receive this message from someone whom I did not keep in touch for the past three months.  With consent from the sender, I put this short message in quote as follows:

Dear Mr Brennen Pak,

It's been 3 months since my last message to you here. I'm happy to report that I was able to boost from 2% to 8% after the course. I kept my discipline and stuck with value investing instead of trying to catch and predict the charts daily. It has done well for me so far and better stress management even when I see what I'm holding is in the red. Overall, my account is now 8% capital gain.

Very happy indeed to have found your course and happy investing!

Best Regards,

Time flies. That was already three months ago when I received a message asking about whether day-trading suited him given that the interest offered by banks was extremely low. He further mentioned that trading psychology was low. (I believe he meant that he could be very sentimental and had low tolerance for market volatility). Noting that he was probably young and had a good future ahead of him, my first reaction was why waste his time in front of the stock monitor, especially given his low tolerance for market volatility. Going for day-trading should not be a solution against the low bank interest rate. It could be made worse if the trades were going against him. However, what I liked about him was that he was frank and upfront about his own weaknesses, and that made things easy for him. What he really needed was just a helping hand and he should be able to manage himself well. Certainly, an 8% return is nothing to brag about in this investment climate, but given that he has only about 1 year experience in this business, it is probably fine. What really concerned me going forward was that his investing character could swing to the other extreme to become over-confident. It could be a lot more damaging by then. I sincerely wish him well and hope that he could continue to apply restraints and not to be over-confident. Many of us almost always started off carefully but became over-confident, thinking that we could out beat the market. That would be the beginning of disasters ahead.

 

Actually, if we look at activities related to stock investments, the buy and sell actions that we make only take up several minutes of our time. Most of the other activities are time-wasters such as monitoring, communications, emotional build-ups and worrying etc. Those probably take up 80%-90% of our time. Actually, once we have made up our mind to buy or sell a stock, it is that few minutes of keying in to buy or sell that determines whether we win or lose in the trade. The other times could have spent on many other activities like our day-jobs, improving ourselves, playing with children or household chores. As small investors, our stake in the stock is at most a few thousand dollars. For this we should learn from a lot of rich founders who own huge stakes of their company stocks. At appropriate times, they invest millions of dollars of their personal money to buy their own company stocks. In my opinion, I do not think they monitor as frequently as several times in a day. Even if they do, I do not think they spend a lot of time worrying or getting too emotional even though their stake is in millions of dollars. For them, perhaps, it is business as usual in their day-to-day activities. I believe they are more focus on the business to ensure that it is on track than on the share price. On the contrary, it is the small investors like us who appear to be more worried about whether the stocks that we hold go up or down. Perhaps, if we are the type that gets very emotional, we should take a step back and think of the beautiful world around us. Distancing ourselves from the stock market can sometimes restrain us from buying and selling at the wrong times.

Brennen has been investing in the stock market for 28 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is the instructor for two online courses on InvestingNote – Value Investing: The Essential Guide and Value Investing: The Ultimate Guide. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hard copy.