15 January 2012

Stock Market Investment: Focus on What You can Control

In stock market investmet, there are plenty of uncontrolled or unpredictable events (natural disaster like earthquake and tsunami) that affect the trend of the market in short term period of time. Besides that, unless you are insiders, retail investors like me are lacking of first hand information. Therefore, what we can do is to control what we can control to redure the impact of uncertainty. Here I list out three things we can control in stock market investment:

1. What company to invest?We can choose what we want to invest. Therefore, make sure you have more than 95% confidence about your choice based on your personal homework and study.

2. What Price to buy?Yes, we can determine what price we want to buy in stock market investment. Remember, nobody focus you to buy a company with PE more than 20 ; and no one can focus you get away from company with PE less than 8. In short, we should have responsible to our action and stop blaming other people. So, if you believe the reasonable enter point is PE < 6, then you should wait. If you believe the reasonable enter point any time as long as "news" is coming, then just do what you believe and let time to justify it after few years.

3. Sell or hold?After having a portfolio, what we need to do is monitoring our portfolio from time to time, that is sell or hold, based on the performance of the companies in the portfolio.

Therefore, make sure you control these actions based on your intelligent instead of emotion. That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage.

Written by: Xaivier Chia


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