Investment Note - Oct 2013

Dear Investor,

Good day! Coming month is a budget month for Malaysia, for some investor they think this is important month, as the Government might create a new blue print and set new rules for coming year or next few years. By knowing what is good for a country's economy, one can actually plan ahead. The hot topic now in GST (Good Service Tax) and investors are looking for the company that will benefit from this. However, this is just part of it, how to choose a right company for long term investment is more important.

Let think what's the purpose of investment? Last week, I meet a friend, he told me, he sold all the stocks before the General Election because he fear the price may go down... Investment is not about predict the market! Investment is about how to create wealth or increase net worth over time. If you are not sure what I mean, just see the below example:

Someone who invest 1000 shares of Public Bank 40 years ago and never sell the shares, today, his net worth will easily above 2 million, not yet include the dividend.

If you invest 1000 shares of Maybank 13 years ago and never sell it, today, your holding will value about RM60,000+.

If you invest 1000 shares of Telekom 10 years ago and never sell it, today, your holding will become 2000 shares of TMplus 2000 share of Axiata. Total holding is worth about RM25,000+.

Even 4 years ago, if you bought 100 share of Dlady at RM18 (RM1,800), today, the price for Dlady is RM45++ (RM4,500).

This is one of the method how long term investor beat the market, find the monopoly business and let the magic and power of compound interest doing their job. Don't say “I don't have the money to invest!” In fact, you don't need a lot of money to invest 1000 shares but you have a lot of time if start early! Time is good friend for monopoly business.

In recent market correction, I have added Axiata as one of my investment portfolio. My average cost was about RM6.50. I have received one time of dividend payment and going to receive another one soon. May be you will ask, what's my plan if the stock price go down below my investment cost of RM6.50? Since my plan is to invest for the next 5 to 10 years, why should I bother about the price movement every day? In fact, I do happy if the price keep falling so that I can buy more shares in next few months and just wait for it to bear fruit.

If you fear of market turn down, then don't invest. If you remember my previous email few months ago, I told one of my friend who bought Dlady 3 years ago at RM18 and he only make small profit even though Dlady's market price is RM45 today... the reason? Because he sold it when the share price start to move up because fear of choppy market price!

That's the beauty of stock market, price fluctuate! If tomorrow Axiata stock price fall below RM6.50, I will buy more. You may ask, what's so good about this company? The reason, I let you think of it. It's nothing wrong if you buy and sell stock in short term, but make sure you buy and keep 1000 share of Monopoly type business at least, and keep it in your portfolio when you plan to save money!

All right, this all for now. Happy Investing!