Early Knowledge about Stock

I'm read lots of articles, books & magazines about stock investment & financial management. As of today,  I didn't gain much wealth & not very success in managing my money. 


Recently I bought a poster, there is a famous quote in the poster:
" Knowing is not enough, we must apply"
" Willing is not enough, we mus DO!"


This quote bring a big impact to me!! and I'm decided to DO IT NOW!!


Flash back what I have learn previously, sharing with people..
Someone told me, the most effective way of learning is to teach & sharing..


Investing in stock is like own a company.
You believe in the company, products, services & organisation.
You love the company revenue, cash flow, asset & earning.
Then, you decided to become one of shareholder, money will start flowing into your pocket.


The rule of thumb:
- The simplest the business, The most I like.
If you don't understand how a company operate it's business, how to earn money, don't buy their SHARE.


Ideal Company:
1. A Boring business
- when you find a company with a good Earning & Balance sheet running a boring business, you can buy in the share at cheaper price. When investor chase after the company, and price is overvalue, you better move out.


2 A Despondence business
- Search ideal company from those inconspicuous business or forgotten company by corporate investor.


3. Corporate investor will not buy their share, analyst will not monitor their share performance
- if a company is highly chase by corporate investor, we will not follow. We shall early find out their potential, and one day the corporate investor is agree with their potential.


4. In a zero growth rate industry
- In a zero growth rate industry, you don't worry about competitor, because no other company will interested in this industry. So, the company can expand their profit & market share. That's the company called - Ideal growth company.


5. Competitive advantage, like patent.
- if a company's product has it's patent, they can decide the price tag on the product. Also, it eliminate competition.


6. People continuous buying their product.
- if people need to continuous buying a company product, and the company have it's own brand, then you find a company that can invest in long term.


There are only few of the conditions of an ideal company.
I will share it more in details in future..will see...

History Tends to repeat..

Through the past History..
we notice the Harder they fall, the stronger they Bounce Back..

Let's review some of the important event happened with such scenario:

1973 - Oil Shock Crisis
Dow Jones Industry Stock crash from 1974 - 1975 for 45%
Gain back 300% after 12 years from 1975 - 1987

1987 - Black Friday due to computer trading program
Dow Jones Industry Crash 38% within 2 months in 1987
Gain back 561% after 12 years from 1987 - 2000

1997 - Asia Financial Crisis due to Thailand currency collapse
Straits Time Index crashed 64% from 2000 points to 865 points
Recovered within 12 months, gain more than 500% for the next 10 years

2001 - Dot.Com Bubble Burst
Dow Jones Industry crash 36% from 2001 - 2003
Gain 86% over the next 4 years from 2003 - 2007

2008- Financial crisis due to sub-prime
Dow Jones Indsutry crash 160% from Sep 2008 to lowest Mar 2009.
Gain back more than 176% as of Mar 2011, recover less than 2 years.

As summary, history tend to repeat, and the time of bouncing back getting faster.
if we follow the rules of BUY when Market is PANIC, SELL when Market is Greedy..
that's how our wealth accumulate...Let's see how's investing in STOCK create our Financial Success.