Top 5 Reasons Why You Should Not Invest In Stocks

10:31 PM

I have just been into equities for slightly over a year. I must say, there are quite a lot of reasons why you should not invest in stocks, Bursa Malaysia in particular. I have listed FIVE common reasons.

1. It is capital intensive.
    Let's face it; you need money to invest in stocks. No money, no returns.

2. You will lose money.
    There is no way out of this you WILL lose money.

Duit oh duit!
3. It takes too much time.
    "I can't just look at the screen all day"
    "You can't expect me to look at the chart from 9 to 5!"

A screen capture from iBursa(Android) app

4. The market is going to collapse anytime soon. You should get your money out of stocks and invest somewhere else.

5. There are too many variables to predict the outcome. A counter can go up and down really fast within the same day.

Did I say common reasons?...No lah, these are common EXCUSES.


I am a full time doctor. I work between 8 a.m. to 5 p.m. on weekdays. I don't have that much money lying around to spare as well. I am just an ordinary person. Here's my story on how I started investing in equities.

My Story

I started investing in stocks in late 2013. My first foray was when I applied for UMW Oil & Gas IPO (initial public offering). I got to know about stocks when I went to an introductory seminar by Wealth Magnet. I wouldn't say I was a smart investor then as I didn't do much research about UMW-OG. It was the first time that I got to know that you can actually apply for shares in IPO through Maybank2u!


I opened a CDS (Central Depository System account) the very next working day. Fortunately, I was successful in the ballot and managed to get 1000 units of UMW-OG shares at RM 2.80 each. I spent RM 2,800 on something I wasn't very sure of...that was a GAMBLE!

I have heard of UMW-OG but I did not know much else.
1. Do they provide drilling services or do they sell OIL and GAS?
2. What was their P/E (price to earning) ratio?
3. I did not know who the directors were nor did I read their prospectus.

This is what people call bidang terjun. This is MAIN saham. 
1. I did not know when is the right time to sell.
2. I did not know what are the indicators that show the company is in the right direction.
3. I did not know what Brent crude oil price was!
4. Candle stick? Morobuzu? Uptend? Gap up?....I was really blur.

Fortunately, luck was on my side. After 3 months, I managed to it for a profit of RM 600. That was 21% return of investment (ROI) in 3 months.

Conclusion

What can we learn from this?
1. Capital
You decide how much you want to invest in stock. Don't measure your success with how much you gain in Ringgit. Measure your success in terms of ROI.

2. Gamble
You only gamble when you don't know what to you are doing....like how I was. Pakai tibai je!. It is a never ending learning process. Websites like Bursa Marketplace and The Edge Markets are great places to start learning.

I have only written barely a fifth of my very short journey in Bursa Malaysia. I will share more in due time. I did not even explore the other 'reasons' I gave.

P/S: There is an IPO coming up in the next few months. It will be Malakoff Berhad; a power company linked to Tan Sri Syed Mokhtar Al-Bukhary. Just watch out for it.

MOfrust

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