Comments on: Protect Your Capital

By: Lai Seng Choy

Lai Seng Choy — Tue, 09 Mar 2010 23:46:55 +0000

Yes. If the contraction is caused by market sentiment, most likely the fundamental of the company remained unchange. Therefore, it is chance to accumulate. However, we should always avoid those company’s that are getting unfavorable caused by poor management.

By: Mrcoolku

Mrcoolku — Tue, 09 Mar 2010 00:49:41 +0000

Well, you have your point. This could be apply during the recession period. In normal time, it would be risky to keep on buying low to average down your buying price. Something happen must have their reason behind it.

By: Mrcoolku

Mrcoolku — Tue, 09 Mar 2010 00:40:30 +0000

Ya, sometimes youngster should be more aggressive but need to be prudent on the same time too. Actually, I invest most of my money in the stock market but I pick stocks carefully base on the fundamental. Investing wisely on the other hand also means protecting your capital.

However, if you really wan to protect your capital, you need to do as Ian said, take out the capital after you gain enough profit.

By: Mrcoolku

Mrcoolku — Tue, 09 Mar 2010 00:34:42 +0000

I am not sophisticated investor but I guest the ‘insurance’ might be the call or put option to hedge against your investment.

By: Lai Seng Choy

Lai Seng Choy — Tue, 09 Mar 2010 00:02:53 +0000

Stock market is full of uncertainty, no one can predict what will happen next minute. I believe what Warren Buffet said is “not to lose money”. Therefore, the issue here is how you counter the risk of losing money.

I believe if you are very sure that stocks you are buying are genuine with good management quality, while their fundamental remained, isn’t a good chance to accmulate more to average down your cost during market downturn. My observation show that these counters are normally recovering in very short time after bad market sentiment. The bottom line, buying quality counters when they are cheap is actually a way of protecting your capital during bad time.

Same here, this is just my 2 cents opinion.

By: kampunginvestor

kampunginvestor — Mon, 08 Mar 2010 09:00:44 +0000

I agree to Ian to a certain extend. What i think is that people at a younger age should be more pick up a more aggressive style of investment style.

They should not withdraw their capital in the early stages but do it on a gradual manner because young people have time.

If you are in your middle age or going to retire age category, it’s better to fully protect your capital as time is not on your side.

Just my 2 cents!

By: Ian Kree

Ian Kree — Mon, 08 Mar 2010 05:08:53 +0000

The best way to do this (for general public/investors) is to take out your capital as fast as you can, leaving the remaining profit rolling. For example, if you had initially invested RM100,000 and at a point in time that investment grow to RM150,000, quickly take out your RM100,000 capital, leaving the remaining RM50,000 to generate more profit. You must overcome your greed. As for the sophisticated stock market investors, you can buy ‘insurance’ to protect your stock market investment against any losses (you know what ‘insurance’ that I meant if you are sophisticated enough).