21 August 2013

Follow your investing principle(s) during uncertainty - Aug 2013

We have been gone through a price fluctuation on Asean stock market recently. If we let our mind influenced by the market, then we may end up selling at the low price or buying at the high price. So to set you from the storm, you may have your own investing principle(s) that allow you to go through the bull market as well as bear market.

As we know, the bear market begin from bull market, and of course the bull market appear after bear market ends. Instead of looking on the trend by itself, we should focus on the value we get after we paid for.

Since this is a long term journey, there is no need for you to really focus on the stock price movement. Instead, every time the huge drop in the market should be the opportunity to accumulate more good quality counters, so that you could enjoy the capital appreciation & higher dividend later.

I have seen some passive investors focused on cash flow game, where they only accumulate net free cash flow companies that will give them certain dividend amount every year. They will not liquidate off the counters they hold as they treat it as savings. It could be due to the strong confidence they have in the counters they hold for long term.

I have friends also like to accumulate real estate whenever the rental yield is right for him. As he sees regular cash flow entering his own pocket, he sees no reasons to sell off the property whenever the property price goes up or down.

If you set a good principle in your investing, I believe that you will not be really bother about the market movement. You may just focus on the counter you think it is worth to hold for long period. Try to make use of the opportunity created by the "Mr. Market". And always be greedy when the price is cheaper and be fear when the price is higher.


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