Tips for retail investors to stop losing money in stock market

IN the stock market, there are two main types of investors – smart investors and retail investors. While smart investors have been able to make money from the stock market, the majority of retail investors suffer losses most of the time.

As the market saying goes, only one out of 10 investors can make money from the stock market. The rest always incur losses in the stock market.

Some retail investors believe they can make quick money from the stock market. They believe that investing in the stock market is one of the best ways to accumulate wealth in a short period of time.

However, due to lack of proper financial training, investing knowledge and intelligence, they always find themselves at the losing end. When they are excited about investing, the stock market may be nearing to the peak.

On the other hand, when they are suffering losses, losing patience about investing and intending to cut their losses in the stock market, the market may be touching the bottom, and that, in fact, is supposed to be the best time to invest.

A majority of retail investors seldom pay attention to the stock market. They will only start doing so when newspapers or TV news headlines show that the market is touching a new high.

Driven by greed and the thought of making fast money, they will follow their friends or tips from their brokers to invest without paying much attention to the fundamentals of the stocks.

Due to lack of discipline to cut losses, more often than not, they find themselves holding on to a lot of poor quality stocks when the market collapses to a very low level.

We believe that the majority of retail investors do buy a mixture of good and poor quality stocks. However, they tend to hold on to poor quality stocks and sell the good ones when the stock market collapses.

This is because when the stock market crashes, poor quality stocks will drop much faster than good fundamental stocks.

Most retail investors find it difficult to sell poor quality stocks as the stocks may drop far lower their buying prices within a short period of time.

As retail investors refuse to admit their mistakes, they will hold on to these stocks, hoping to break even again in the future.

Unfortunately, they overlook one important market saying, which is: What goes up may come down, what goes down may never go up.

We may have emotional feelings about stocks but we should not refer to our purchase prices to determine whether we can cut our losses.

Our purchase prices are only important to us; they mean nothing to the overall market.

As our purchase prices may be much higher than those of other investors, even though we may not be able to sell the stocks, other investors, especially the company owners, can still liquidate their stocks.

We need to be careful when trading in speculative stocks especially those with prices that are much higher than the book values of the companies. The book value of a company reflects the owners’ costs in the company.

Hence, even though the stock prices tumble to a very low level, as long as the prices are still higher than the book values, a lot of company owners can still liquidate the stocks as their market prices are still higher than the cost invested.

For example, assuming the stock of a company is at the book value of only 30 sen and the stock price before the rally is 50 sen.

Due to the bullish sentiment and speculative play, the stock price may be pushed up to RM3. If our purchase price in the company is RM2, selling lower than RM2 means cutting a loss.

However, unfortunately, a lot of retail investors, instead of cutting losses continue to average down their purchase prices.

They may start averaging down their purchase prices at RM1.50, RM1, 80 sen and 50 sen.

If the company has poor fundamentals and has been incurring huge losses over a long period of time, averaging down our purchase prices this way means we will be incurring more losses.

While we are doing this, the owner of company can still sell the stock at 50 sen as his investment cost is only 30 sen!

Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

thestar

談股論指（完） 打造ETF與單位信託組合

投資者之間有一個說法，即天下唯一免費的午餐，就是投資組合多元化。

多元化概念重心在于，不同資產級別都附帶獨有風險和回報，因此在經濟週期中會有不同反應。但即使能夠“免費”降低投資組合風險，如果缺乏能夠遵循簡單規則，也很難做到。

每個投資者的組合策略，很大程度上取決于年齡、財務目標、平均壽命、風險容忍度和投資期等因素。這些條件決定每個資產級別的確切資產分配。

一般來說，大部分投資者在投資組合中持有證券、固定收入和現金，更有見地的投資者會通過產托和商品而持有產業。

無論持有多少不同的資產級別，如果要降低整體投資組合的風險，則同一個資產級別內也需要多元化，如持有幾個行業股票作為投資。

通過股票指數基金（ETF）和單位信託基金，可以輕鬆且低成本的實現這一點。

ETF和基金是持有一攬子不同股票的投資工具。個人投資者能夠借此在單一交易內，參與多家公司或固定收入證券的投資。與各別買入證券相比較，購買ETF或單位信託基金單位的費用更低。

縱然ETF和基金都起著多元化的作用，但它們在結構上是不一樣的投資工具（見表）。

差別在投資方式

ETF和基金差別最大之處，是投資方式。單位信託基金由基金經理主動管理，目的是通過識別和買入經過挑選的證券，以超越大市表現。

一些基金經理也計算市場的時機，以利用漲勢，避開跌勢。相反地，ETF是被動式管理投資工具，旨在通過反映指數而跟隨大市。

以指數為基礎的基金投資目的，和以指數為基礎的ETF相同，但前者是結構化的，並且如主動管理式基金般運作。

投資者能夠同時借助ETF和基金，從而降低投資組合的整體風險。設計精良的投資組合，能夠利用ETF和基金互補不足。

ETF vs 單位信託基金
差別	股票指數基金（ETF)	單位信託基金
投資策略	被動式管理以跟隨市場走勢。ETF持有一攬子證券，旨在跟蹤某項指數的表現	基金由基金經理管理，以超越指標的表現
交易	在交易時段買賣，通過股票經紀或上網達成交易。	通過代理或機構單位信託代理（一般是銀行）買賣。在交易日結束后定價。
成本	經紀佣金、結算費和印花稅，與買賣股票相似	股票基金收費高達5.5%。
管理年費	淨資產值的0.4%- 0.5%（每年）	淨資產值的0.75% -1.8%（每年）

主動管理方式

採取主動管理的單位信託基金，可以用作策略投資，這需要基金經理的選股技能。

比如說，如果投資者認為增長股、低估股或小型資本股能夠帶來額外回報，他們可以選擇投資于增長股或價值股的基金或小型資本基金。

這些基金可以補足以大市為基礎的ETF，因為這兩者不太可能持有相同公司的股票。

想要在組合中加入外國投資的投資者，可以選擇專門投資在中國或發展國家的市場和特定地區單位信託或ETF。

我國股市的ETF，目前只投資在本地股票，但投資指南在6月份修改后，國外的ETF也能在大馬交易所跨界掛牌了。

市場面對巨大壓力時，即使是多元化的投資組合也會貶值。這種情況下，全球股市會短期性的表現不佳，就如去年全球金融危機時期。

這種異常的走勢最后會趨緩，負相關（negatively correlated）的市場，將恢復相反走勢。

這使得長期的投資方式更為可取，因為投資期限長的投資者較能容忍短期波動。

持有主動管理型基金的投資者，務必要監督和評估未來數年的表現，因為基金可能需要一些時間才能展現價值。

考慮更換表現持續落后于指標和相同組別內同儕的基金。ETF不需要太多的分析，但投資者應該偶爾查看其表現是否緊隨基礎指標。

中国报

＊免責聲明＊

此文章資牛料並不構成法律、財務、交易和投資建議。勸告讀者在投資前先尋求獨立咨詢。大馬交易所有限公司在任何情況下，都不會對讀者或任何人士因為此文章或與其有關的索賠負責。

新兴市场教父15大投资法则

身为富兰克林邓普顿基金公司的执行总裁，墨比尔斯是掌握6只新兴市场基金的操盘经理人，他手中掌 管着450多亿美元的资产（1575亿令吉），他与巴菲特、林奇、索罗斯同列为《纽约时报》评选的“全球10大顶尖基金经理人”。不仅如此，墨比尔斯还拥 有一个令人生畏的头衔———新兴市场教父。

墨比尔斯30年的投资经历，让他领悟到了风险的最终价值，即承担风险能够提供回报，并发现，如果将投资眼光放长，通常会有不错的回报。

面对激烈震荡的新兴股市，墨比尔斯总是能够始终保持理性与平静。至今，70多岁的墨比尔斯仍在一线工作，他管理的邓普顿新兴市场投资基金，1990年以来年均报酬率达15.6%，远远超过摩根士丹利国际新兴市场指数7.7%的年均报酬率。

当每个人都想进场时，就是出场时机；当每个人都急着出场时，就是进场时机。

你最好的保护就是分散投资。

如果你想参与全球经济最快速地区的获利成长，就必须投资新兴国家。

经营团队的素质，是选股投资的最高标准。

用FELT选择股票或股市投资。所谓FELT就是指凡投资任何股票或股市之前，都应审视股价是否合理，股票是否具有流动性，该上市公司财务报表是否透明。

所谓“危机”，就是人们开始觉醒的理由。

下跌的市场终究会回升，如果你有耐心，就不需要恐慌。

有时候你必须表现比大盘差，未来才能击败大盘。

以资产净值判断是否值得投资。

先了解一个国家的证券交易所，否则不盲目投资。

一个国家的总体面常常与个别公司的未来成长性互相矛盾。

选择投资标的时，如果只靠技术分析等投资方法往往会误判情势，必须辅以实际的调查。

如果全世界的股市皆因为一个国家的短期因素而出现剧烈下跌，投资建议立刻从持有改为买进。

政治不确定性是进入一个市场的通行标志，不确定性会压抑股价，但如果你相信你的基本分析，不确定性反而是你买进原本可能价格过高的蓝筹股的好机会。

一旦不确定成为确定，任何人皆可预测事件的后果时，先前的风险便会如轻烟般立刻消失。

Three key elements in savings

So, you’ve worked for some years now. How do you know if you are doing “well” when it comes to saving your money for a rainy day? Is there a magic number which tells you how you are faring?

“As a rough guide, one should set aside 20% to 30% of one’s net income every month for savings,” says licensed financial adviser Jeremy Tan of Standard Financial Planner.

“Saving is important because when you save you are preserving wealth for future consumption,” he tells StarBizWeek.

Generally, there are three key elements to one’s savings.

“If you have these in place, or are on your way, you are faring ‘well’,” Tan says.

“First, one should have what is called an emergency fund, this should equal at least six months of your current net income.

“This fund is set aside in the event you lose your source of income unexpectedly, so this should keep you going until you find another job,” he said.

Next is your life-risk fund, which is basically funds to be used when a person loses the ability to earn an income, i.e. becomes paralysed or ill.

This is normally accumulated via an insurance policy. Here, one should ensure that the funds are equivalent to at least five years’ annual income, according to Tan.

“So, for example, if you earn RM5,000 a month, which translates to RM60,000 a year, then you should buy a RM300,00 policy,” he says.

Third, you should set aside some money for generally safer investments such as property and blue-chip stocks.

“This should garner you some decent returns but you have to be careful of your choices,” he says.

“Following these principles is a good start to securing your stash,” Tan adds.

Comparing the amount you have tucked away with that of individuals of your same age simply to gauge how “successful” your savings strategies are is not a good benchmark, says another industry player.

“People like to do that but there is no point in comparing yourselves, say, if you are a 30-year-old to another 30-year-old, because every one has different goals and different lifestyle, not to mention different income levels” says Keith Hiew, wealth adviser at Freebase Wealth Advisors Sdn Bhd.

“There is no golden rule that says that at age 30, you should have this amount and so forth. You save within your means but you have to save,” he says.

“You know you are saving ‘enough’ when that savings are able, in your comprehensive and integrated financial plan over your lifetime, to cover your education, retirement and other goals,” says MyFP Services Sdn Bhd financial planner and managing director Robert Foo

“The wisdom in financial planning is save what you have first and then spend the rest,” he says.

For R. Kumar, a single, 30-year-old engineer who earns about RM40,000 a year in net income, savings are top priority, simply because “I cannot afford not to save.”

“I scrimp to save and invest a little every month but I make sure I do because I know my Employees Provident Fund (EPF) money is not going to be enough for my old-age,” he says.

A recent survey by the EPF showed that around 90% of the 5.7 million active members had less than RM100,000 in their accounts and more than 70% would have exhausted their money within three years of withdrawing the lump sum upon retirement.

Generally, Malaysia enjoys one of the highest savings rates in the world at 34%.

In the United States, during the economic boom that took place between 2005 and 2008, a credit-fuelled consumer spending craze effectively brought the US savings rate to zero.

Ahmad (not his full name), a 40-year-old private school teacher says he supplements his income by giving tuition. “The extra income earned is saved and invested,” he says.

“Based on my income alone, I am not able to save much, that is why I do extra work.

“You’ll be surprised to know how much I have saved over the years,” he says gleefully.

Thestar