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http://www.asiaone.com/Business/My+Money/Opinion/Story/A1Story20091020-174613.html
Tue, Oct 20, 2009
The Straits Times
Why can't I make big bucks from stocks?
By Sumiko Tan
I've been dipping into the stock market of late in a bid to 'grow' my money.
My company had docked our monthly salaries in April this year as part of cost-saving measures. We're also bracing ourselves for much lower bonuses when our salary letters are handed out in January. (I know, I know, we should be so lucky if we're even getting a bonus.)
Related stories:
» Tips for successful investing
» Core investment principles still hold
All this means that my colleagues and I have been down by quite a sum compared to previous years.
And with banks offering such pitiful interest rates for fixed deposits - hitherto my main vehicle for parking my money - how to bolster our income has become a hot water-cooler topic.
My answer has been to make forays into the stock market.
Thing is, I've realised that I'm not cut out to make big bucks from the market either. I lack timing, luck, guts, patience and the diligence to do research on the stocks I want to buy. Worse, I never knew till now what a greedy person I am.
If I had been prepared to let go of some stocks instead of sitting on them because I wanted them to rise by another one or two cents - which they never did, of course, plunging instead - I would be smiling at a pretty pile of profits.
Instead, I've made just a few hundred dollars here and there.
My profits are peanuts compared to those of friends who have the uncanny ability of sniffing out stocks that are on the verge of shooting up, and letting them go just before they tumble.
I've a friend who bought a slew of bank stocks late last year when everyone else was panicking about the financial meltdown.
Imagine, he got DBS stocks at the basement bargain price of $8 plus. He kept some lots and they're worth more than $13 today. Others he sold at a profit, then used the money to buy the stock again, and sold those after he chalked up even more profits.
Everything he touches seems to turn to gold, whether it's blue chips or penny stocks. He bought Capitaland for less than $2 and the stock went over $4 last week. He's also made a tidy sum on Golden Agri-Resources.
He had never even really gone into the stock market prior to this. He started investing when friends said a recession was a good time to pick up bargains, especially blue chips - sort of shopping at a Club 21 sale, I suppose, only the stuff you buy isn't last season's.
It didn't hurt that his fengshui master said that 2009 was going to be a year he would make money, and that he has.
The main problem with stock novices like me is that we're lazy.
Instead of studying the companies we're keen on buying - who runs it, what sort of industry it is in, its financial history and prospects - we jump in blindly and speculate based on gut feel, rumours and 'tips'.
I spend more time contemplating the pros and cons of buying a dress - is it too expensive, would it make me look fat, do I have shoes to go with it, where can I wear it to - than a stock I'm prepared to throw thousands of dollars at.
Worse, I get sentimental about certain shares and won't let them go even when the price is good. As someone told me, if you love the share so much, you can always buy it again later. Just take your profits first.
Then there's the matter of patience. I want prices to rise and I want them to rise now. When they don't, I get discouraged and dump the shares. But the minute I sell, the price will rise. Why does this always happen to me? Is there a name for such a phenomenon (other than lousy luck and bad timing)?
My worst vice, though, is greed. A colleague whom I consult about shares told me something that shocked me last week: 'Wah, you're very different from when you first started. Then, you just let go every time you made a small profit.'
Which I realised to my horror is true. Just a few months back, I was a happy camper if I got a 5 per cent return (way better than what the banks are giving). I am so much more difficult to please these days.
I really should heed the advice of experienced investors: Either buy good stocks and keep them for the long term, or quickly exit the market whenever you've made some money; you can always go back in again.
The first time I played the stock market was back in the 1990s when every Tom, Dick and the neighbourhood auntie was into it.
My craze lasted a few months and I probably broke even. But there were some dud buys. I still have a reminder of that period in my Central Depository account - 10,000 Goldtron shares bought at a price I don't remember and which are now worth one cent each, or a grand total of $100.
In the years that followed, I paid little attention to the market. I exercised a few of my company's stock options and bought and sold the occasional shares, but that was about it.
My money was parked in fixed deposits, a life insurance asset guaranteed plan and my POSB savings account.
When I went through a session with a financial adviser in 2007, I told her that I was banking on a 3 to 4 per cent fixed deposit interest rate to see me through my retirement. It was a modest return but a steady enough one, I thought.
Then the financial hurricane hit last year and left us all bruised and breathless in its wake.
Everything tumbled - interest rates, value of stocks, value of savings and job security. A lot of people lost a lot of money. The days of 3 per cent interest rates for fixed deposits are also gone, maybe forever, at least in my lifetime.
And now, barely a year later, we are told that the recession is over and sunny days are back.
Stock markets are up and people are buying property like there's no tomorrow. How do you account for that? There must be plenty of money floating around. But are the good old days really here? Why am I still feeling the pinch then?
Events of the past year have brought some lessons and changed some habits.
I've become more wary of staff from banks and insurance companies and am suspicious of their sales pitch. I will also read the fine print in any contract I sign now.
I've also been trying to rein in needless, extravagant purchases although my resolve to be prudent is slipping by the day.
At one stage, I had banned myself from using my credit cards. I thought using only cold hard cash would make me think twice about buying something I want but don't need. The experiment lasted just two months.
The biggest lesson has been how I must think of ways to grow my money instead of letting it sit in a savings account.
Maybe the stock market is not the safest and best way to achieve this. In fact, many people have lost their shirts through bad calls. But I'm not carried away by the market, I don't have a large sum invested, I err on the side of caution and I've yet to realise any losses.
I have colleagues who swear that property, not stocks, is the better way to go. You can't go wrong, they say, whether it's buying an HDB flat to rent out later, an apartment next to an MRT station or even a piece of commercial property in a bustling part of the island. You can make hundreds of thousands, they say.
But going into property seems such a hassle and taking a large loan to fund an investment is too high a risk for me.
What I've also learnt over the past year is to never compare your financial lot with that of others.
There will always be those who will earn more money than you - whether at work, in the stock market or through property - and there will always be those who will earn far less.
The challenge is to stay happy and satisfied with what you have, even if all you made was two hundred dollars from a stock while your friend made two thousand.
Drats.
This article was first published in The Straits Times.
Tue, Oct 20, 2009
The Straits Times
Why can't I make big bucks from stocks?
By Sumiko Tan
I've been dipping into the stock market of late in a bid to 'grow' my money.
My company had docked our monthly salaries in April this year as part of cost-saving measures. We're also bracing ourselves for much lower bonuses when our salary letters are handed out in January. (I know, I know, we should be so lucky if we're even getting a bonus.)
Related stories:
» Tips for successful investing
» Core investment principles still hold
All this means that my colleagues and I have been down by quite a sum compared to previous years.
And with banks offering such pitiful interest rates for fixed deposits - hitherto my main vehicle for parking my money - how to bolster our income has become a hot water-cooler topic.
My answer has been to make forays into the stock market.
Thing is, I've realised that I'm not cut out to make big bucks from the market either. I lack timing, luck, guts, patience and the diligence to do research on the stocks I want to buy. Worse, I never knew till now what a greedy person I am.
If I had been prepared to let go of some stocks instead of sitting on them because I wanted them to rise by another one or two cents - which they never did, of course, plunging instead - I would be smiling at a pretty pile of profits.
Instead, I've made just a few hundred dollars here and there.
My profits are peanuts compared to those of friends who have the uncanny ability of sniffing out stocks that are on the verge of shooting up, and letting them go just before they tumble.
I've a friend who bought a slew of bank stocks late last year when everyone else was panicking about the financial meltdown.
Imagine, he got DBS stocks at the basement bargain price of $8 plus. He kept some lots and they're worth more than $13 today. Others he sold at a profit, then used the money to buy the stock again, and sold those after he chalked up even more profits.
Everything he touches seems to turn to gold, whether it's blue chips or penny stocks. He bought Capitaland for less than $2 and the stock went over $4 last week. He's also made a tidy sum on Golden Agri-Resources.
He had never even really gone into the stock market prior to this. He started investing when friends said a recession was a good time to pick up bargains, especially blue chips - sort of shopping at a Club 21 sale, I suppose, only the stuff you buy isn't last season's.
It didn't hurt that his fengshui master said that 2009 was going to be a year he would make money, and that he has.
The main problem with stock novices like me is that we're lazy.
Instead of studying the companies we're keen on buying - who runs it, what sort of industry it is in, its financial history and prospects - we jump in blindly and speculate based on gut feel, rumours and 'tips'.
I spend more time contemplating the pros and cons of buying a dress - is it too expensive, would it make me look fat, do I have shoes to go with it, where can I wear it to - than a stock I'm prepared to throw thousands of dollars at.
Worse, I get sentimental about certain shares and won't let them go even when the price is good. As someone told me, if you love the share so much, you can always buy it again later. Just take your profits first.
Then there's the matter of patience. I want prices to rise and I want them to rise now. When they don't, I get discouraged and dump the shares. But the minute I sell, the price will rise. Why does this always happen to me? Is there a name for such a phenomenon (other than lousy luck and bad timing)?
My worst vice, though, is greed. A colleague whom I consult about shares told me something that shocked me last week: 'Wah, you're very different from when you first started. Then, you just let go every time you made a small profit.'
Which I realised to my horror is true. Just a few months back, I was a happy camper if I got a 5 per cent return (way better than what the banks are giving). I am so much more difficult to please these days.
I really should heed the advice of experienced investors: Either buy good stocks and keep them for the long term, or quickly exit the market whenever you've made some money; you can always go back in again.
The first time I played the stock market was back in the 1990s when every Tom, Dick and the neighbourhood auntie was into it.
My craze lasted a few months and I probably broke even. But there were some dud buys. I still have a reminder of that period in my Central Depository account - 10,000 Goldtron shares bought at a price I don't remember and which are now worth one cent each, or a grand total of $100.
In the years that followed, I paid little attention to the market. I exercised a few of my company's stock options and bought and sold the occasional shares, but that was about it.
My money was parked in fixed deposits, a life insurance asset guaranteed plan and my POSB savings account.
When I went through a session with a financial adviser in 2007, I told her that I was banking on a 3 to 4 per cent fixed deposit interest rate to see me through my retirement. It was a modest return but a steady enough one, I thought.
Then the financial hurricane hit last year and left us all bruised and breathless in its wake.
Everything tumbled - interest rates, value of stocks, value of savings and job security. A lot of people lost a lot of money. The days of 3 per cent interest rates for fixed deposits are also gone, maybe forever, at least in my lifetime.
And now, barely a year later, we are told that the recession is over and sunny days are back.
Stock markets are up and people are buying property like there's no tomorrow. How do you account for that? There must be plenty of money floating around. But are the good old days really here? Why am I still feeling the pinch then?
Events of the past year have brought some lessons and changed some habits.
I've become more wary of staff from banks and insurance companies and am suspicious of their sales pitch. I will also read the fine print in any contract I sign now.
I've also been trying to rein in needless, extravagant purchases although my resolve to be prudent is slipping by the day.
At one stage, I had banned myself from using my credit cards. I thought using only cold hard cash would make me think twice about buying something I want but don't need. The experiment lasted just two months.
The biggest lesson has been how I must think of ways to grow my money instead of letting it sit in a savings account.
Maybe the stock market is not the safest and best way to achieve this. In fact, many people have lost their shirts through bad calls. But I'm not carried away by the market, I don't have a large sum invested, I err on the side of caution and I've yet to realise any losses.
I have colleagues who swear that property, not stocks, is the better way to go. You can't go wrong, they say, whether it's buying an HDB flat to rent out later, an apartment next to an MRT station or even a piece of commercial property in a bustling part of the island. You can make hundreds of thousands, they say.
But going into property seems such a hassle and taking a large loan to fund an investment is too high a risk for me.
What I've also learnt over the past year is to never compare your financial lot with that of others.
There will always be those who will earn more money than you - whether at work, in the stock market or through property - and there will always be those who will earn far less.
The challenge is to stay happy and satisfied with what you have, even if all you made was two hundred dollars from a stock while your friend made two thousand.
Drats.
This article was first published in The Straits Times.
