A Thought from Pasar Malam

Today evening time, i went to Shah Alam Pasar Malam, known to be the longest night market in the whole Malaysia. While i was enjoying the popular Malaysian food there, then something struck my head. Actually stock picking is just like buying food in pasar malam. 

Pasar Malam - Night Market

There are a lot of stalls in the pasar malam. Just like there are a lot of counters in our FBMKLCI. Some of the food are good, really good; some of the food are not good, but still there are a lot of people visiting their food, but just for a short period of time. Some of the counters are fundamentally good while some of the counters are just speculative counters, they are hot in a short period of time but wont last for long.

Buying myself a drink is just like picking a stock. Of course, i aimed those stalls with customers. When we are picking a stock, it is important that we pick some counters with active volume. The counters without volume will be difficult for us to buy or to sell. Since the weather is hot nowadays, everybody is drinking cold drinks. They are the most popular food now. Malaysia market is interesting because any national story or local agenda might boost up the share prices. Previously we had GST theme, lately we have plantation theme and also USD exports theme. As long as we read more global or national local news, we can invest based on the themes.

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Some stalls might be decorated very attractively; some stalls might priced their products expensively; some stalls's bosses are not so friendly, always give you a fierce face. But whether the food suits our taste or not, we will only know after we taste it. Companies with good and attractive websites, do not mean that they are having a good business model. That is why we have Fundamental Analysis to check whether their performance are as good as their physical images. The right valuation is obtained through detailed and thorough analysis. If we are not comfortable with the company, do not ever take risks. There are so many counters in Malaysia, do not weep or waste our time on 1 counter. Continue to search for others. I am sure that one will suit or fulfill our comfort level.

The hardest thing for us to track will be the management. As we are just small investors, unlike those fund managers or research houses, we are not able to meet or sit down with the managements. We can only know them through the newspapers or interviews, but we will not know their personalities.

To conclude, there are some golden rules for our investments:

1. Pick counters with active volumes.

2. Pick counters with themeplay, or ride the wind

3. Pick stocks with right business model, right management.

4. Pick stocks after performing Fundamental Analysis and make sure they pass our comfort levels.

5. Enter at your comfortable price, by referring to Technical Analysis.

6. Be patient and wait for the price to perform.

7. You can set your Cut Loss or Profit Taking point based on the Projection Analysis.

Remember this...

After we bought the fundamentally good counters, then we just need to wait. Just like we buy our drinks. We will only know how good or how bad it is, after some time. It applies at the stocks also, we need time to judge the counters.

Let me end my post with Warren Buffett's quote, "Price is what you pay, Value is what you get."

Let's Ride the Wind and Gainvest

Gainvestor 10sai

24 April 2016
12.34am