27 July 2011

Start your investment in the business that you are most familiar with

When you are new to the investment, and try to look for a public listed company to invest in, try to find the company that you are most familiar with. As an intelligent investor, you do not really be good in maths or in finance. What you need to do is to stay in the circle of competence and keep on expanding your circle of competence. Try to pay a visit to the company, have a chat with staffs and clients there, and look for the competitors in this industry. Of course, you must be aware of the fraud by the management. So, if you are new to the equity investment, try to look for the established companies. For example, Maybank in Malaysia and DBS in Singapore are among the leaders in finance industry.

What I would like to say is that, try not to make investment complicated. Try to make it simple stupid and have your own framework of investment. As a new investor, diversification is a must to avoid any unsystematic risk that happens to you. Always be prepared for the worst and looking for the best to come.

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