Friday, January 6, 2012

Is investing hard?........Part II

In part I, the punch line that I wanted to get through was

face the reality.

Knowing the reality is so important. For what you may ask. Reality is the opposite of illusion or fantasy. The reality is many have tried and only a few succeeded.

The second punch line was

it is only meaningful when you can win over a long period of time.

At times when I met new converts(newbies), they will lecture me that the most powerful force in the universe is Compounding force. A 26,000 will turn into 1,000,000 if you can compound 20 years over 20% annual compound rate. Bless you bros.

What impressed me the most when I read Mr. Koon Yew Yin's essay was this. He began to invest in public listed companies seriously when he was 50 years old. I suppose he spent all his energies running businesses he co-founded before that. I was not sure what were his reasons of not "playing" in the stock market in his younger days.

In many cases, personal finance consultants are right, when you retire you should not take too much risks. What risks? Are risks associated with price fluctuations of blue chips companies or penny stocks? There are huge distinctions between the two.

He did not say it in too many words, he said he did not know how to read balance sheet. Most people who do not know how to read balance sheet will default to technical analysis camp. But certainly not him. I supposed he took efforts to do crash course like Finance for non-finance managers or a self-study for ACCA professional qualification.

What impressed me even more is this. He was like Chow Yuen Fatt, smiled charmingly and stylishly, GOING ALL IN. That must me around 1996/1997. How old was he? If he retired in 1983 at 50 years old, he could be around 63 or 64 years old. This old wise man really got big balls.

This lead to my third punch line

you can be in 5/100 club regardless of background or age.

A big BUT, this club is certainly not for the ignorant, lazy, lucky, tipsy-taker,.........(you fill in the rest).

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