Monday, October 20, 2008

Old man Strategy

A retired old man, name Master Fu. He is full of knowledge on share investment. In year 1997, he was lost entire assets in hand. After the crisis, in the past 9 years he was managed earn back all losses. Especially in year 2007, the gain contributed by his investment has been double up.

He always trusted in the middle of crisis, there is a good opportunity for him to establish the investment portfolio. The previous fantastic profit record guide him this strategy is effective.

He was started build up the portfolio in the beginning of this year. Until today, refer on his investment portfolio. The said portfolio accumulated paper loss about RM100, 000, represented 50% on his total investment. Based on previous experience, He is still believed that one day the portfolio should contribute him a good return and was decided would not do any adjustment on his investment portfolio.

I believed in this equity market, a lot of people had hold the same strategy same with Master Fu. Are they would enjoy the gain after 3 or 5 years holding the same portfolio? I really in doubt!

As investors, firstly we should always unambiguous agreed that economic changing would based on environment change. Like an example, Investment Bank in the past 10 years contributed the high yield return to shareholder. But today, the concept of investment bank has been eliminated by current financial crisis.

Thus, investment portfolio must compulsory attached with current economic fundamental to minimise the risk instead of blindly follow the history record and data.

At last, let me make some assumption on the above said investment portfolio. My prediction is: -

a) 50% shares no gain no lose but receive yearly dividend average about 5%.
b) 30% shares still lose but also receive yearly dividend.
c) 20% shares has been eliminated by this heavy adjustment, book value is “NIL”.
If above prediction is correct, after three years the said portfolio would remain negative return.


HappY LinG said...

i hope tat i was him ... can earn bac wat he lost ...

Kuching Remisier Blog said...

yaya... hopefully i can earn some hahaha..

but now share market so poor.. duh