Have you had bad experience losing money investing in mutual funds? The funds which lose money over time. It is not the issues with any mutual funds, but rather the agents who can promise you the sky but end up under delivering. When they recommend a fund, they would tell you as if they can predict how the market is going. If you are uninformed, agents would have overloaded you with all the jargons of using technical tools to so-called determine buy-sell decisions. Or can tell you that this or that fund can perform 10-20 percent over the next year.
Frankly, no one can promise you “x % return” or say it is “picking up”. Not even myself with CFP or a fund manager with CFA. We can only say – average return from track record. No one will ever know how market going to perform that’s why we diversify to reduce “concentration risk”. Plus, do asset allocation.
Compare that with humble statements from a fund manager, below – excerpt from CIO of Philip Capital Management (PCM), Ang Kok Heng – latest memo in April 2014
“There are many types of profit available to be made in the stock market. Many investors like to make short-term speculative profit which could provide quick gain when the market surged. Meanwhile, conservative investors would prefer to buy high dividend yielding stocks which are generally safer. The return from speculative stock is exciting for punters. Investors who try to make this type of profit must know the rules of the game and the potential risk.”
“The potential quick gain is very tempting and hence, some investors may throw away their traditional investment strategy to try their luck on penny stocks. The stock market is an exciting place to make money and there are different types of profit that can be made in this marketplace. Bigger fund houses would prefer to make capital gains from blue chips, while some smaller fund managers would go for growth stock. Nonetheless, investing basing on fundamentals of companies remains the most common strategy among fund managers. However, retail investors have more avenues. Technical traders would just rely on chart to provide for buy or sell signal. As such, trend followers will just jump into the bandwagon by riding on the trend of mid- and small-cap stocks which have been performing very well recently.”
“The substantial gain made from the price appreciation among penny stocks has emerged as the most profitable strategy of late. Overall, there is nothing wrong for any individual to adopt this kind of speculative strategy to make quick gain from the stock market. However, an investor must bear in mind that investing in fundamental stocks is different from trying to make quick gain based on speculative newsflow. The risk of trading on these kinds of stocks is different and hence the strategies are also distinct. Trading profit can be from penny stocks, turnaround stocks, under-valued asset rich stocks, syndicated counters, stocks under hot theme play, “insider” recommendation etc. Just a reminder, trading stocks are only meant for trading and punters who dabble in speculative stocks must prepare to cut their losses when the market turns downward unexpectedly. The most common mistake made by punters is that they like to try their luck on speculative stocks but when losses set in, they will refuse to sell and instead of being short term traders they will end up becoming long term investors.”
At the time of this writing, you can see that probably a lot of speculators are being hit if they dabble in penny stocks – Shocks continue as Malaysian penny stocks sold down
Lastly, this shows a BCI (business condition index) rebound in Q1 2014. This means we would not have recession anytime soon, yet!
- Business Conditions Index rose 103.1 points against 92.0 points in the previous quarter
- Manufacturing sales picking up
- Moderate domestic demand and export orders
- More job openings in the manufacturing sector
- Business activity likely to accelerate in the next quarter