There are many ways to make money. For instance, one can work, start a business, and invest, etc. For Mr Phan Tjun Sern, the founder of Shares Investment and the Chief Executive Officer at Pioneers & Leaders (Publishers) Pte Ltd, business and investment are the ways to go.
In the last weekend, Mr Phan attended a stocks investment experience sharing session organised by Singapore Sam Kiang Huay Kwan, where he shared with retail investors the methods that enabled him to beat the stock market over the years.
Find out WHY people purchase stocks
During the opening, Mr Phan pointed out that there are always people buying and selling in the stock market regardless of the time.
But in order to make money from the stock market, we must understand why people buy and sell, regardless of whether we believe in technical analysis or value investing. Only then, we can make use of opportunities out there.
The key is to grasp the big picture
Mr Phan attributes his success in the stock market to him being able to see and grasp the big picture.
For instance, when “financial crocodile” George Soros attacked Asian currencies, triggering the Asian Financial Crisis, Mr Phan bought Singapore bank stocks in large amounts as he was sure that Singapore banks would survive the crisis and not go bankrupt.
At that point of time, the share price of Overseas Union Bank (now acquired by United Overseas Bank) had fallen to around $1.80, but Mr Phan reasoned that it could not get any lower. It turns out that OUB shares rose back up to over $10 afterwards.
When the US was launching an attack on Iraq, many investors were concerned that it would damage the US economy severely like what happened during the Vietnam War.
But Mr Phan, who was aware of the US’s immense technological advancements, thinks otherwise. He further speculated that the war would be unlikely to affect tobacco consumption, and thus he boldly purchased the shares of British American Tobacco.
In other words, over the years, Mr Phan had been making money from the stock market through simple logical thinking and careful analysis of the overall situation, every time a major event occurs.
Enter with caution and back out in time
Besides knowing how to seize the opportunity, retail investors should know how to back out in time, said Mr Phan. An example is recovering one’s capital after stock prices have rebounded as expected.
Furthermore, he opined that investors should select stocks carefully, and they should just aim to purchase good stocks at the right time, instead of being obsessed about purchasing at the “lowest price”.
To sum up his points, here are five ways that can help retail investors beat the market:
Analyse why people are buying and selling stocks
Grasp the big picture
Value stock quality over quantity
Buy at a bargain or a relatively cheap pricing
Recover the invested capital first when stock prices grow, and exit at appropriate timings