Investing in Share Market

Investing in share market needs not only knowledge but also experience. But, even experienced traders can make mistake. More so, individual investors can be sabotaged or lured into making mistake.

Nevertheless, in a cycle of one decade, there will be one chance to get real gain with 95% confidence level. The concept of purchasing share is to purchase when the price is low.

But not all low share should be bought. I recommend to concentrate at share which could give high return in term of dividend relative to the current share price.

Try to avoid bad counters. Investors can check the performance of the company through internet. For example, if it is predicted that a company will give 12 sen dividend during the worst time and the company price is at RM 0.90, for all sake, it will turn to be a good buy.

But, if the compnay is in PN17 list or has probability that it is going to bankrupt, then these counters should be avoided regardless of how low the price has gone through. This technique is to help the investors to safeguard their investment. It is better to gain less than to lose all investment.

Next, is to the task to predict when the share is at the lowest level. This is quite a difficult predicting job to do and it consists of a lot of reading. Basically, it consists of two factors - (1) Prediction given by prominent people and (2) The acceptance of government head regarding present and near future state of their economy and their actions. Non-acceptance means that prediction can go wrong.

For example. let say that a number of corporate figures and government treasury around the world qualitatively mention that the 1Q is going to be the worst hit time for the economy, then it is with a tolerance of 2-3 months that this can be the worst hit time only and only when the government head of the most affected economy of the world has accepted it's nation current state of economy and is acting on it.

It is quite difficult right. But with this kind of judgement, we may have got it at the lowest price only and only if the price has gone done ( which followed the world market) and stabilizes at a certain level.

The assumption that I make over here is that, though the share price moves south to reflect the adverse economic impact on the company bottomline, but it will reach bottom when it hit the worst period of economy and subsequently the share price moves upward in advance of the future state of company profit because of efficient investors investing in the market.

And when is to sell ?

Basically, when it is predicted that the global economy will be in bad shape in 8 months time. For all you know, run away from the share market and protect your golden eggs for golden age. This is the best safety precaution that I know of.