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FORUN Technology Research and Advisory ___________________________________________________________________________ |
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Disciplines Avoid
anything that appeared overpriced. This is hard to do at the current market
conditions, but try. Seek at least relatively best value, and best competitive
positioning. Dispose
stocks that had advanced to price levels that made further holding no longer
attractive. Do not be greedy. Concentrate
on what you understand instead of blindly building
a portfolio that is diversified. Write
down why a stock is bought and why it is sold. Do
detailed fundamental and technical analysis before committing with an
investment. Can you identify any major changes or any trends for the company's business? or its industry? good to better? good to bad? bad to good? bad to worse? Don’t
go against the momentum. Do not short a red hot company even if it is severely
over valued. Do
not buy just because a company is undervalued, for the price could go down
further. Be patient, watch the trend line, and pull the trigger to buy only when
it is convincingly attractive. Do
not use borrowed money to buy stocks. Buying on margin can enhance investment
return in good times, and can burn a portfolio at bad times. If you do use
borrowed money, remember to set a target for the profit and loss, and take
profit or stop loss ASAP without emotion. The margin call frequently ruin
investors or speculators with a Buy and hold strategy. It's always better safe
than sorry. Advice from the
Master: Benjamin Graham In The Intelligent Investor, Benjamin Graham had two
pages of advice for investors. We feel these advices are very useful. Here
is a brief summary, and consult the book for details.
Investment is most intelligent when it is most businesslike.
It is amazing to see how many capable businessmen try to operate in Wall Street
with complete disregard of all the sound principles through which they have
gained success in their own undertakings. The first and most obvious of these principles is: "Know
what you are doing-know your business."
The second principle: "Do not let anyone else run your
business, unless (1) you can supervise his performance with adequate care and
comprehension or (2) you have unusually strong reasons for placing implicit
confidence in his integrity and ability."
The third principle: "Do not enter an operation - that
is, manufacturing or trading in an item - unless a reliable calculation shows
that it has a fair chance to yield a reasonable profit. In particular, keep away
from ventures in which you have little to gain and much to lose."
The fourth principle: "Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it --even though others may hesitate or differ." You are neither right nor wrong because the crowd disagree with you. You are right because your data and reasoning are right. In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand. |
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