Saturday, 9 July 2011

Long term investment plan

When we buy shares or invest in a company, indirectly, we agreed to also bear the risk in the business performance of companies. Each investor must realize that the value of shares can fall shattered to be worth even a cent if the company went bankrupt.
Many people, especially new investors involved with stock investing is usually difficult to choose which stocks to buy and when the right time to invest in assuming their investment knowledge is too shallow, or at least worried that stock prices may have been too high and likely to fall back at any time. If possible they want to get good profit in a short time and at the same time afraid of losing the investment made.

Investing strategies

The best time to invest in shares is not actually located to the seconds, hours, minutes or days, right to buy shares, but more dependent on the duration of an investment - that is for short periods, medium or long term. In fact, no one know whether the shares of a company or the stock market as a whole will rise or fall at any given time. However, a wise and experienced investors usually know which company's stock will rise or fall in the medium and long term. Hence, it is not important if the price of a stock is changing up or down in the short term. Significantly, in the long term the stock prices continue to rise. See Chart 1 which shows the trend towards increasing the performance of the stock value in the long run even if the shares be changing in the short term. That is why it is said to invest in the long run is better than to invest for short periods, especially for investors new toddle in the buying and selling shares. For a more convincing example let us consider our second chart showing the performance of Bursa Malaysia Composite Index beginning of each month from January 1997 until June 2011. Composite Index (CI) is to show the number of shares of movement of selected companies listed on Bursa Malaysia. Composite is meant here is a combination of a number of companies considered to represent the number of sectors on Bursa Malaysia. In other words, the CI may be regarded as a benchmark the performance of listed company shares as a whole. In early February 1997, CI commendable performance at 1.270 points. However, good performance declined gradually to become increasingly serious about July / August when the Asian region, including countries facing financial crisis. Stock market performance when it becomes unstable until early August 1998, CI dropped to 303 points worse. So, many investors who mostly use bank loans to invest into bankruptcy because they are forced to sell their shares at a price too low and could not repay their loans. The situation is different with the group of investors would be wise and prudent in making investments. Although most blue chip plummeted, investors who had planned strategy from the start and only use part of their own savings to buy shares, do not face any pressure to sell their shares, especially at the lower of purchase price. They believe that when economic conditions improve, a strong company stock prices will back up and that's what happens when the economic recovery measures implemented by the government began to take effect is reflected by the increase in CI to 982 points in early February 2000. CI fell slightly later, but rose again to 1.445 points in December 2007. After that, the same conditions as if repeated when the country once again facing recession, but the situation then and began to recover in October 2008 the performance of CI is seen to increase further. Morally, any investor who is not willing to wait a long time, would sell the shares at lower prices. If they are willing to wait several years, they will have good profit. Anyone interested in investing in the stock can actually build the confidence to plan their investment strategies by watching the movement of CI performance or the overall stock market and observe how the performance of each stock counter purchased based on different economic situations. Eventually you will definitely know better pick stocks where a potential profit target. In addition, the smart investor is someone who has been studying and planning of each investment first. In other words, before we buy a particular stock, we should have been planned from the very beginning when we want to sell shares. For example, in a series CerdikSaham ago, I reported the description of the investment in the shares of Tenaga Nasional Berhad (TNB) the potentially high investment returns by 18.3 per cent in just a month. In reality, only certain investors to research and plan a good strategy that can earn such profits. I mean investors are those who keep track of TNB from the early years and has analyzed other factors such as rising natural gas prices, electricity tariff description of the not checked-old back and forth. These investors know that TNB's share price has the potential to increase when the government gave the long-awaited approval to increase the basic tariff of electricity and thus have a plan from the beginning to sell these shares within a day or two later

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