Recently I met a young guy who was interested to invest. He started investing a few months ago and had earned a few hundred dollars. I was curious to find out whether it was a continuous lucky streak or something methodological.
The method he used:
1. Read blogs written by Singaporean bloggers (there are a few popular ones that show up when you google) and buy on recommendation.
2. Read forums patronised by Singaporean retail investors and investors wannabes. Buy on recommendation by credible forumers.
3. Finally, sell once the price passes buy price + 5%. If there is strong momentum, wait and see to how high it can go. Once it starts to fall, sell.
Interestingly, this is actually very methodological, but is akin to playing a game of musical chairs. The good thing is everybody knows that they are in a game of musical chairs and they don't want to be the last guy standing, so this method of investing is speculative at best.
I would not discourage this practice as this was the same way I learnt about the stock market. I joined multiple games of musical chairs and earned a tidy sum. However, if I were to go back in time to advice my neophyte self what to buy as a first stock, I will recommend the 1 lot (1000 units) of the STI ETF to lock in some dividend income first (yield is secondary). At today's price, it will cost about $3500 (average yield 2.5%). After that, play a few rounds of musical chairs to experience what it is like to play a speculative game and observe and learn how to recognise speculative patterns.
The writer does not own any shares mentioned.
No comments:
Post a Comment