BUY and HOLD.
Two of the most misunderstood simple words in the share market.
For an investor, what is a BUY? here's some stuff for one to ponder.
- Is any stock a BUY?
- Does a have stock have a price where it is deemed a BUY?
- Are all good stocks worth a BUY at any given price?
What is HOLD?
Hold means hold, not letting go.
Is this really applicable?
Once we get a good stock at a good price, do we hold it forever and ever? What if...
- The stock we had bought b4, no longer resembles the same stock. do u wanna HOLD? The papaya tree u planted, which gave u all the juicy and sweet papaya no longer bear fruits, do u still keep (HOLD) the same tree? don't u wanna plant a new one?
- Talking about papaya trees... trees they get diseases.... how?
What if it contracts a deadly disease, do u just HOPE that things wud get better or are u gonna realise that the tree is a goner? Like in business, if something happens to the business model of the company, and business starts to deteriorate, are u gonna recognise the potential risk in ur investment or are u gonna just HOPE that things wud get better? - If someone offers u a ridiculous high price for ur prized holding, do u wanna HOLD for the sake of the HOLDing principal or do u wanna take their money? for example, u got a dollar for a nickel, and now someone wants to offer u twenty dollars for that nickel. How? Is it a HOLD or is it a ...
- Now back to that papaya tree. Now if the papaya tree is still consistently giving u loads of papaya, which are still as sweet and juicy as ever, what do u wanna do with it? Dun u want to continue HOLDing on to it forever and ever.... until....
So what you think of BUY and HOLD?
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4 comments:
Buy and hold or rather hope.me think if the hope materialised and already well exceed your target(whether you are the trader or investor),why you dont exit?
unless the basis/fundamentals have improved so much that you think it is still worth more than the present share price and you are certain(?) it will be getting better and better.
But wait a minute,dont you do your analysis/study before you invest in a stock and that include the projected(predicted?) annual return
(appreciation of share and amount of dividents). And if the return well exceed the projected in time and moola, why dont exit?
Me lari kuat-kuatloh and let others have something to hold and hope.
tanhin
tanhin
Wassup Doc?
Well, if somebody is offering a truly silly and insane price for your investment.. then.... exiting the investment does make sense rite? unless... of course... (here comes the tricky part) if u really, really think that the offered price comes no where close to matching the future potential value of your investment. (and the trick or trap lies in the 'future potential value')
Ahh... yes... the reasoning to buy a stock does include one's own personal projected fair value of the investment... but... buttt.. butttt since...fundamentals do change in most companies... ie.. good companies sometimes can become bad.. and vice versa... hence .. imo ... it is utmost important to incorporate a solid ROI (review of investment) during our investment period.... else our investment could vanish without sight!
Don't you think so?
yes,totally agreed.the ROI thing,I think you have to do every quarter(3 months)the minimun or more frequently if some bad or good news crop up,and when there are changes in the shareholding/new management/new business ventures/change of government policy etc
thus, it is damn difficult to invest in any stocks if you are not in that business/or have indepth knowledge of that business 's internal and external factors that can have an impact to the revenue and profit.
blindly buying/investing in a stock based on the analyst report is the most dangerous thing to do.
Doc,
This is why exactly i posted the blog entry "The Myth of Long Term Investing".
Most folks is given the wrong impression that as long as they buy a stock and hold it long term, they should do alright... but.. this is such a fallacy!
In investing... I believe there is 2 main steps...
1. U gotta buy the right stock at the right price...
2. U just gotta review and review to see if u had made a mistake in your initial stock selection.. and then u have to determine if the investment still remains a good investment onot... this is when u decide to hold or u walk away from your investment...
Buy and Hold?
That's just too flimsy of an investment advice.
:)
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