Stock Market .....

Stock Market .....

Let's cut to the meat...

1. Understand how Stock Market works:

"In the short run, the stock market market is a voting machine
but in the long run, it is a weighing machine."

Now, the person who said this is none other than Professor
Benjamin Graham, the very FIRST Value Investor!

It simply means that, when you look at share prices in the
short term, they are prone to ups and downs, caused by
people's psychological factors. This is very irrational.

For example, in the 2008 share market crash, good businesses
e.g. MacDonald's, continued to run well in the real world. But the
strange thing was, their share prices were extremely low because
everyone was fearful to buy shares.

The amazing fact is, if you had bought into good companies
back then, you would have made money by now. A lot of it.

This is why Value Investors look to buy good companies at sensible prices.

If you cannot see that the market is irrational, you will most
definitely be selling off shares at a loss when Mr Market
depresses your share price. This is what a lot of people are doing,
making Mr Market their enemy.


2. Make Stock Market Your Best Friend

Most people lose money because they are slaves to
the stock market's movements, you should be
making Stock Market your best friend instead!

Whenever Mr Market throw a tantrum and depresses
share prices, it's really the best time to start buying the
great companies at discount. Think of it as the Great Singapore Sale:)