further discussion about investments;
(sharing of my experience)
to be honest, you make the right decision to just save up the money now.
it's not the time to put more "new money" into the stock market.
I believe, regardless the age of a person, long term investments are the best financial return.
But economy is run in "cycles", so there are time that one must to be more conservative, and other time to be more agressive.
Now is time to be conservative.
as a long term investor, I don't think it's wise to spend time to catch all the short term rebound. Instead, it's better to put money in a safer place and focus in one's career.
From time to time, one may read news about some young people quit working and focus on day trading as main channel of income.
This is very scary thought and action. I would have doubt about how many actually succeed in doing this.
I only believe to use investment as a way to grow my monthly saving from my salary, so as long as it beats the growth of living index, I am successful. I don't expect to get 25% in 2 weeks.
always bear in minds: "priority is to trust only in yourself", so read books of investments to gain more knowledges, and make your own decision.
of course, there are people who simply cannot do this and must rely on a professional finance planner.
In my experience with the HK stock market, I think
HK market does not have much regulations, and most individuals are very short term. so the local chinese books about investments are usually only suitable for the way of HK market.
there are many books about "technical analysis, chart analysis".
I guest everyone trys to find a way to read the market's trend.
such as the mentioned PEG. I mention it only because it is the hot topic among readers now. It gives a way to explain about the high PE situation in the 2007 market (the book that talks about this is first released in July 2007).
**the cover of the book is http://www.cosmosbooks.com.hk/img/bo...882116580L.jpg
The book also mentions about PEVG, EBITDA MARGIN, ARPU.
It is kind of becoming a "bible of investment" among chinese readers now, as most never experience very high PE but prices continue to grow. So, it is like a way of finding an explanation about things that are happening (people just want a way of reasoning)
I mention it only because PEG is what people have been talking about for months now.
Of course, there is no magic formula to give a "risk free" environment. It's always a 2 heads snake, it does not guarantee a stock with PEG of 0.5 will become 1.0 (growth) or drop to 0 PEG (crash) in the future.
the only fact we know is the lowest price of any stock share is 0.
Also, there is a group of investors who supports the "technical analysis/chart anaylsis". (you won't believe how many chinese books talk about reading charts). By reading many books, I only know these kind of anaylsis only may work in a specific region, and the same way usually do not work in other countries.
So, from my experience, I think it gives not much help to do this.
besides the way of technical analysis, direction of economy growth, and the most important, political situations, direction of currency.
**out of all, political situations is the most uncontrollable matter and has the biggest impacts on the market.
political situation can change things upside down immediately.
the mood of the market is the next thing, if a very negative mood is built up (in reaction to future economy expectation), it is a very strong force to impact the market direction even for the stocks with strong finance support.
Out reading all books, I like a point of view from this author
?The Seven Pillars of Wisdom in Stock Investing ?
Author: CHAN Yan Chong
**he writes a finance column in Apple Daily every Mon-Fri
He mentions about
"having stocks in the heart, but not on the hands"
what he means is to reach a level that you owns shares of stocks but your mind is not worrying about its price changes (of course, you still need to keep tracks about changes in the stocks' business market situation)
after some experiences, I think I start to understand what he means;
I try to give the easiest way to explain it here;
for example, one have money to buy 3 LOTS of share A at $1
usually, it will be very good if the share gives a growth of about15% annually.
but let's say the market gets very exciting and grows 30% within one year.
so the return is almost double of the expecting return, it's good time to sell some of it but it is still "a stock with good business future" (however, I do not plan to buy more of it when it is now 30% increase in price)
according to this "point of view",
let's sell 2 LOTS of share, for the remaining LOT is actually costing nothing (it is purely from the 30% profit)
so now one can decrease the risk, gain some cash flow so he/she can strike again in the next market crash or big adjusment, but he/she still owns shares of this stock "free"!!
I have experienced his theory since I bought a stock in late 2006 in relatively much lower prices than what is today.
It works alright because it puts me in a situation where I can gain return if the market price continue to surge, and I still make profit if the market crash (I still make about 15% profit even its price crashes 50%)
and the best part, I get cash flow to "choose" to strike again when the stock price reflects its "reasonable" true value. or, of course, I can use the money to invest other things.
But even doing this way, I think it is not wise to put any "new money" into stock market today.
China is doing everything to cool off the market.
America is the biggest importing country, so any political changes and economy downturn, currency exchange rate will affect the world, I doubt if anyone can be left alone.
Inflation is the most worry factor now.
for choosing the reading materials, I still find these 3 books to be the best resources;
The Five Rules for Successful Stock Investing - Pat Dorsey
The Intelligent Investor - Benjamin Graham
One Up on Wall Street - Peter Lynch