Investing - The Basics

[winston]

TOL:-

Invest only in things you understand. Only then will you know the Risks as well as the Opportunities..

A few years ago, my Relationship Manager was hinting to me that I should invest in their "Accumulators" product. As I did not want to be rude, I allowed him to do his hard-selling. At the end of it, I still did not understand how that product works. So I told him that I was not interested as I was not smart enough to understand how it works..

Instead, I asked for some Commodities Mutual Funds but there was none around ( this was a few years ago ). So we left it as that ..

If I have pretended that I knew how the product work ( to show that I'm smart ? ), I would have been in a deep hole, just like some of the big-timers ..

My impression from that meeting was that if I also dont really understand how that product works, alot of people will be burnt by it.....

[Musicwhiz]

yah frankly I admit I am also not smart enough to understand such products.

I have a friend who is in DBS Treasuries (privileged banking) and he told me he was offered all kinds of exotic products by his RM. These include things like ELN and CFD......and he actively "invests" in them. But he also mentioned that he does not understand these products fully, but was told they can give a very good return in the short-term.

So my advice to him is that stay away if you are unsure !

[OE2008]

I did get to hear from my RM on accumulators some 2 years back. When asked what is the down side, the answer is that the investors will suffer huge losses in a collapse of the underlying instrument.

I believe the retail investors don't stand a chance in locking themselves into contracts, writing these put options and committing huge sums of money to pick up the underlying instruments in a collapsing market. Called "I-kill-you-later", many HNW clients have lost heavily on these derivatives.

The same can be said of the mini bonds series and High notes and what have you. Even upto now, I am as ignorant as ever what the underlying mix of products of these derivatives. Better to stay blur and clear of these.

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http://www.forbes.com/free_forbes/2009/ ... r=yahoomag

What were Goldman Sachs and Citigroup doing selling something called "I-Kill-You-Later"?

............... What are banks like Goldman Sachs and Citigroup doing selling this product? The banks won't comment, but their standard disclosure on derivatives is that they are risky products that can win big or lose big. Sure enough, investors weren't complaining about accumulators when the market was still going up.

But in a commentary this spring in the Chinese business publication Caijing, finance lawyer Mushtaq Kapasi, a former Goldman Sachs specialist in exotic derivatives, described how banks structured accumulators to have a big edge over the customer, like the house over the bettor in a casino. Whatever exposure they had with the accumulator client they could hedge away with other derivatives, all but locking in a profit..............

[winston]

The Daily Crux: Before we get into what people should read day-to-day, what do you recommend new investors read to get a good knowledge base?

Brian Hunt: I got into the market when I was 19 years old. I started reading everything I could find… stuff on growth stock investing, chart analysis, Warren Buffett, everything. And I have to admit, I wasted a lot of time on useless crap.

If I could go back to that kid who was just starting out, I would recommend a small group of books.

First off, if you're unfamiliar with market basics, a good source here is a short guide called The Wall Street Journal's Guide to Understanding Money & Investing. It's short, to the point, and will provide you the basics. Now let's talk about the fun stuff…

I believe being a great trader is going to be more important than being a great investor over the next 10 years, so let's start with trading.

Here, I recommend the greatest book ever written on trading, Market Wizards. It's simply a collection of interviews from the greatest traders ever. It's hands-down the best, most useful book a trader can ever read. I've read it five times, and some individual interviews 10 times. Read this book over and over. Drive the concepts "cut your losers short" and "keep your bets small" into your head.

Another fantastic book – and this is one most people don't know about – is Trader Vic: Methods of a Wall Street Master by Vic Sperandeo. It's a great book on what drives the markets and how to set up low-risk, high-reward trades. It also has a lot of good stuff on technical analysis. I don't place much stock in complex chart analysis. I'm much more into common-sense technical analysis, and I learned a lot of what I know from Vic Sperandeo.

A few other great ones here are Reminiscences of a Stock Operator, Trade Your Way to Financial Freedom, How to Make Money in Stocks, and Winning on Wall Street. All are classics that will teach you a lot about trading.

Jim Rogers' books are exceptional: Investment Biker and Adventure Capitalist. Granted, they're more travelogues. But they're also a history lesson and a lesson on contrarian investing wrapped into one... and they're wonderful reading.

Now, if you want to be a great investor, I have three names for you. Learn what they know and you'll be incredible: Warren Buffett, Peter Lynch, and Joel Greenblatt. Read their stuff over and over and don't worry about learning any other stuff for a long time. For Buffett, read The Collected Essays of Warren Buffett. Lynch, go with One Up on Wall Street. Greenblatt, read The Little Book That Beats the Market.

The bottom line here is, there are thousands of financial books out there, and most of them just aren't worth the paper they're printed on... or at most they should be the length of a magazine article.

I didn't have anybody to direct me to what I needed to read. So I spent a lot of time reading things that were a complete waste of time. I wanted to try out every idea… so I read hundreds of books starting out. But if you stick to the books I just mentioned, you'll save a lot of time and become great pretty quickly.

Please, please, use your time wisely and just read these books. There are some other good ones out there, but these will get you 99% of what you need to know.

Source: Daily Crux

[kennynah]

i think if one is serious about investing, one should read as broadly as possible... only after having read enough, should one start drawing conclusions on what is and is not suitable material....

[kennynah]

i hope some one can explain to me....

what is a coordinator of an IPO ?
what is a bookrunner ?

many arigatoes in advance...

[LenaHuat]

i hope some one can explain to me....

what is a coordinator of an IPO ?
what is a bookrunner ?

many arigatoes in advance...

Hi K
Are you serious? I don't believe you don't know.

[winston]

7 Questions to Ask When Buying a Stock

Being in the financial news business for the last 20 years, I certainly know how much information is available out there. I also know it can be overwhelming for investors to make heads or tails of it all.

You have press releases, company websites, comments from analysts, rumors and news reports from which you can gather information about a company.

That's why you need a plan before you dive in. You have to be able to quickly and decisively separate the real news from what I call the noise. How do you determine which is which? You begin by asking the right questions.

Seven Questions to Separate News from Noise

While I ask a lot of questions when I'm researching a company, I have found these seven are always at the top of my list. These questions not only help you gather key data, but also help you put the data into context is a critical part of separating news from noise.

1. How does the company make money? Examine the revenues of each segment of the business to see how much it contributes to the overall earnings. For example, if a company is in the computer business, it's important to know how much of its sales are from personal computers versus software support.

2. Where is the company's growth coming from? If a company derives 50% of its revenue from semiconductors and industry growth has fallen 10% from a year ago, you need to take a closer look.

I always want to know where the company's next three years worth of growth will come from. The answer will lead you to discover new products in the pipeline, new production synergies, etc. key factors for putting the company's growth in context.

3. Who are the customers? Once you know who the customers are, you can see who the company is counting on to continue its growth. How many customers does the company have? Does it have a wide geographical reach? If it relies on one large customer, then it is vulnerable if that customer cuts orders. When the customers are individual consumers, you should always gauge customer satisfaction and demand.

4. Who is the competition? No company exists in a vacuum. While there are companies with similar (sometimes downright identical) business models, each has its own strengths and weaknesses. That's why it's important to examine how competing companies within a sector stack up.

5. What do the suppliers and vendors say about the company? Does the salesperson at Best Buy say no one's buying PCs and they are piling up in the warehouse? Can you connect that to another piece of data that indicates sales could be slowing? You are not always going to find buy and sell signals by walking around your neighborhood but in my experience, where there's smoke, there's usually fire.

6. Who is running the company? It's vital to examine the management team's track record. How long has it run the company? How has the stock performed? If it hasnt done well, how much of that is due to an industry downturn or the overall economy, and how much is due to leadership? Be sure to get a handle on what the company has promised as far as earnings, revenues and growth targets, and check to see if management has delivered.

7. How promising is the overall economic environment? When you're analyzing companies, it's important to put the business into perspective relative to the overall economic environment. Where is the current economic growth coming from, and where do the industry and company you're following fit in?

The next time you're thinking about buying a stock, ask these seven questions. You'll avoid reacting (or overreacting) to the noise on Wall Street, and instead stay focused on the real news.

http://mariaswallstreet.cnbc.com/video/ ... ainarticle

[pigpig88]

Hello peeps!

I'm a newbie in trading world~!

Is thr any short course for trading to recommend?

I wanna learn from the very basic.

Thanks!!!

[iam802]

Hi pigpig88,

Welcome to the forum.

Here's my suggestion before you embark on various trading courses:

1. Read some books
- if you are just embarking on this journey, read a lot of books
- find out if you prefer TA, FA, CANSlim or 'rojak' approach

2. Download ChartNexus ( http://chartnexus.com )
- it is free.
- select a few counters that you are interested in.

3. Post questions in this forum
- I will try my best to answer any question that you may have (and I am sure other members will help as well)
- with the charts and counters, we can discuss TA.


Note:
I have been with this forum since the 1-2 years back and have learn so much from both the FA and TA folks here. Hope you will benefit and enjoy your stay here.