I have been looking at the history of wall street through reading books. I notice that most of the rich people made their money when the market is at extremely dire environment. This is where most of the average people are scare of investing in the market. As i ponder about why do the rich dare to buy in this kind of environment, one of the phrase suddenly pop out to me …

Buy Low Sell High

I always wonder where can we find cheap and good healthy stock? Well it is pretty obvious to me now. It is at this BEAR market where I can find cheap and healthy stock. Those company that are going to survived in this current situation will come out stronger than ever. They will be the major market leader in their own sector. I can really see the future of Citigroup, JPM and BAC. They will be the 3 strongest bank in US.

Why is it so difficult to buy low sell high ?

This is because people including myself is driven my emotion. Emotion will mask our sight. We will become myopia or short sighted. I have ask my student recently if they would buy into this market. All of them give me a no answer. I expect this answer too as most of them is being control by fear. Fear that the market will be gone and their hard earn money will go into the drain. Most of them already being affected by the downturn of the market as they have started to invest when the market was very bullish. The emotion of losing money is too great to handle and people tend to want to do something when things are not going the right ways. So many of them start to sell their stock even if the value is already down by half or more.

Then i ask them again if they would buy into this market if they have cash available to invest for 3 to 5 years and they did not get affected by the downturn of the market. Well majority of them say YES!!!

Gold is a safe haven now ?

Personally i do not think that Gold is a safe haven as they are already at such a high price. No doubts gold will be a safe haven for a few months but definitely not for a few years. This is because if you buy at a high price, then most likely you are going to sell low.

Conclusion

I feel that the stock market especially US MARKET is the best investment opportunity NOW. The reason is the stock market is at a super CHEAP SALES NOW. This crash does not come easily. As long as you have the capital to invest and do not need the money, then i will recommend you guys to invest in stock market. If picking individual stock is risky to you then just buy the index ETF or the sector ETF. Then the risk of individual company being bankrupt is greatly reduce.

Be prepare to see the potential growth in at least 5 years.

Good Lucks Guys and happy shopping

cheers,
lawrence

This is a warning to those people who are buying a call or a put in this all time high volatility environment. Most of the option especially put is price extremely high price. If you buy at such a high premium, most likely you will be selling at a low premium.

I have a student asking me … how come my put option is not making money even when the stock price falling off the cliff?? Well straight away i can only think of 2 possibilities which are TIME DECAY and IMPLIED VOLATILITY. The reason why my student is not making money is because he buy a front month contract and a put contract with high vega. So this mean that even if the stock price move toward his intended direction, he will not be making money as the time decay and implied volatility eat up all his profit.

Even gurus in CNBC say,”people who buy option is either an idiots or a fools without cover the long option”.

If you really want to buy options, please know the risk and do not be surprise if you are not making money …

Good Luck

This is the headline that shown in the newspaper on last saturday. This news is about a financial correspondent finds out what the experts think the average investors should do in this global financial crisis.

Out of the 4 experts, none of them suggest the investor to educate themselves. Personally i find it very interesting on the opinion of the experts. These are the same experts that sold them the dream of good money during the boom.

Why Do People Give So Call Experts To Handle Their Money?

I always believe in handling my own money and doing my own personal account. Well of course i can always hire a guy to do all these for me but who will do a better job than myself. Im very amused that people still do not learn the lesson. The so call experts are just doing their job to sell us the perfect portfolio and the complicated financial product.

Warren Buffet says, “Never buy things that you do not understand”.

The above words are very true. Will we ever buy a shirt or dress without fitting it? Will we ever buy a PSP console without finding out what kind of game they offers? The answer is obviously no.

Why do we buy stocks or financial products without knowing what is it about?
I can only think of greed and ignorant.

So what should i do with my money?
I will buy some books or attend some course to understand the art of investing. When i have the knowledge, I will know what to do with my own money.

The market is filled with full of great temptation. The temptation to make even more money from the market is very real. Today as i have made a couple of bucks from the forex market, I was really tempted to dive into the market even though it is not according to my trading plan. I turn to blogging instead of looking at the trading chart.

How do I counter the temptation?

Write up a trading plan
The trading plan will act as a defensive wall against any temptation. It serve as a warning and a guide for me. Without the trading plan, I will just be like a cowboy shooting any target and most likely i will end up with nothing in the end.

Shut off the computer
This is a good way to pull myself out of the temptation. It is also the most efficient and easy method. I just need to press the shut down button on the computer and there goes the computer. This will really kill off the temptation at least for a while.

Keep myself occupied with other work
After a while, I will feel very tempted to switch on the computer to check out the price to see if my judgement is correct. This is bad as if my judgement is correct then i will then to convince myself that today is the day to make a killing. Thus the next best method is to keep myself occupied for at least a couple of hour. Usually i will be either blogging, playing games or do some reading.

The above 3 methods work pretty fine for me. So i hope it will work pretty good for you guys too. Do not be greedy and fall for the temptation. Trade with a clear and cool mind.