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Friday, December 18, 2015

Investment Lesson on price volatility and fluctuation - Koon Yew Yin

Last evening 4 young lecturers, all about 30 years old from Super Education Group came from KL to visit me in Ipoh. They told me that they have been reading all the articles I posted and have been making money from the shares I recommended such as Latitude, Lii Hen and VS. As all the shares have gone up a few hundred per cent, they wish to know what are my top picks.
Obviously they have been following my share selection golden rule which is that I must be very sure the company can make more money this year than last before I buy the share.
Now they want to know how to become a super investor and become millionaires as soon as possible. They reminded me of my youth when I was so passionate about making money to become a millionaire.
I am encouraged to continue posting articles because there are so many people have benefitted. Fortunately there are only a few idiots who continue to make senseless remarks and seemingly quite happy to remain poor.  
Among the 7 traits which I have elaborated in my previous article, the most important, and rarest, trait of all is the ability to live through price volatility and fluctuation without changing your logical thinking process. This is almost impossible for most people to do when the share goes through a price correction. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. But most people just cannot see it that way; their brains would not let them. Their panic instinct steps in and shuts down the normal brain function.
Most investors believe that no share can continuously go up or come down indefinitely for whatever reason. They will sell to take profit and buy back during price correction. But quite often, the correction is mild especially if the share has fantastic profit growth prospect. They would not buy back at a price higher than the price they sold.
Among the shares I am holding, Ge Shen, Can One and Chin Well are my best performers yesterday with unusually high volume . They went up 22, 17 and 16 sen respectively. Many ordinary investors would have sold and many smart investors would have bought.
The following 3 price charts show that they often have price corrections and only ordinary investors would have sold and would not buy back when they continue their climb.

If you want to improve your technic in investing you have to study this article carefully until you have mastered them. You have to absolve them into your brain so that you can react automatically like a reflect action.

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