Sunday, 12 January 2014

切入点 vs 心态 (Time The Trend vs Mentality Management)

切入点 vs 心态:(快而准+肯定性难预测 vs 慢而稳+肯定性明显高)







Time The Trend vs Mentality Management: (Quick & Right + Less Certainty vs Slow But Steady + High Certainty)

A lot of investors prefer to buy in a stock that under radar (let's say Stock A) only when its up-trend is come. Even though the stock looks very attractive, but they put a hold on it due to may wait for a longer time in order for the stock price to goes up. For this type of investor, their on hand cash will mostly goes into another stock which is already in up-trend condition (let's say Stock B). This will be a common case due to investor prefer to get immediate return once invested on a stock.

Scenario 1:
For such case, if investor choose it correctly and get immediate return on stock B, they mostly will continue to keep it due to the up-trend won't stop in short period. Thus, even stock A is show indication on up-trend, they may just ignore it. Anyhow, some investor may decide to switch to stock A with condition that stock B is already up too much or they have a very firm decision to switch due to stock A is much better in term of fundamental and prospect.
Effect: (1) At the end, the performance for the stock A and B will mostly depend on its fundamental and prospect. Need to make a lot of consideration by doing this. The return may less or doesn't much different if miss out the necessary switching. (2) If time the stock trend correctly in all the cases, the return will be much greater than most of the investors. This can be done if you are a great investor with strong mentality management.

Scenario 2:
If investor invested in stock B without immediate return or making loss, they will mostly not switch to stock A (especially the stock price spike up at 10% or more in short period) due to mentality management is not easy to handle in such a condition.
Effect: (1) Miss out the good chance to invest in stock A (cash stuck at stock B). (2) Admit mistake by switch to stock A but will earn much lesser.

Scenario 3:
If you knew stock A is very great in term of fundamental & prospect, very high certainty and will able to provide you a great return (let's say 50%), just invest on it by put more patient on it. This way will be less troublesome in investment decision making.
Effect: You may get the return as per your prediction.

Investment is a selective and subjective decision for investor. Mentality management and the way you handle each situation will be the main contributor to your investment return rate.

Along the investment life, do you face this kind of situation? What is the best way for you to handle it?

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