Sunday, January 01, 2012

One Up on KLSE

I am learning to invest in stock market, and I have just finished reading this book:

One Up on Wall Street, by Peter Lynch

Lynch is a former fund manager. He shares many similarities with Warren Buffet – both of them are long term investors who ignore short-term market fluctuation; both of them invest in companies, not in the market.

However, Lynch differs from Buffet in some other ways. Buffet likes to invest in companies with durable competitive advantages. Such companies would have very good track record; they would have been profitable for many years. The problem is: stocks of such companies won’t come cheap.

Lynch, on the other hand, groups companies into 6 categories – slow growers, stalwarts, fast growers, cyclicals, turnarounds, and asset plays. He has devised a strategy for each of these categories.

Lynch likens a potential fast grower to Harrison Ford. The Hollywood superstar was a carpenter before he joined the cast of Star Wars. A stalwart, on the other hand, is like a lawyer. A lawyer’s wagers, while high, don’t come close to Ford’s income.

In his book, Lynch guides on how to pick a winner, when to buy, when to sell etc…

After reading my post up to here, some of you are probably getting excited, and want to get a copy of this book. Those who have read this book may want to resign from your job and become a full-time investor. But let’s be realistic, can you become a millionaire by investing in stocks?

Let’s say your initial capital is RM10,000, and you invest in just one security. (Few people put all their eggs in one basket!) Within five years, the price of this stock rises by 10-fold. Your investment now values at RM100,000 – not bad at all! Even so, you’re still just a 0.1 millionaire.

I have invested in a few stocks, but I still can’t retire, yet…


  1. Hope the stocks will do fine this dragon year :D

    Happy new year!

  2. Happy New Year!

    The stock always favour the richer. However, with proper research without emotion, I believe it is a good way to make money with money in longer terms. Just my humble opinion.

    Wish you handsome investment return in 2012 and beyond...:-)

  3. hmmm, i think luck is a very important element in investment.. it just has to match with the timing also..

  4. great that you are interested and taking up full motivation and initiatives to learn.. don't forget me when you get rich~~ :p

  5. According to the feng shui analysis of this year's Bazi, stock market will rise in March with recovery starting in the USA. Get out of the market by October : )

  6. If P Lynch & W Buffet decide to combine their stock investment with fengshui according to panda foong, they would have a better edge haha. Happy a great bullish 2012 year.

  7. Grass
    I must agree with you: Stock market always favors the richer. Small investors like me pay way too much brokerage fee.

    Some luck required, but we need more than that.

    Thanks for you tip, but Peter Lynch tells us to ignore the market.

    Yeah, hope it will be a bullish year...

  8. I believe in the sharemarket, money and patience make money. Thanks for sharing.

  9. I wonder what Harrison Ford thinks when used as an example for potential fast grower. Potential denotes may or may not, so there's a tendency for failure.

    I think to make money from the stock market requires a combination of research, luck and timing. Good luck in your investments!

  10. By the way, the Malaysian stock exchange is now known as Bursa Malaysia, not KLSE anymore.

  11. Hi, not sure you remember me or not... hehe...
    Anyway, I would like to learn about stock exchange also.. this article gave me some ideas on it. thanks.

  12. Happy New Year, Kheng Siong. ^_^
    It's been a while.

    Anyway, the problem with stock market is that most of us won't be financially free because we have limited capital. If you have $10mil and a guaranteed 5% annual returns, u can retire. But we don't.

    Which is why you might wnat to consider starting a business that has the potential to give you massive returns. With this BIG amount of money, then you talk about investing.

    My sifu taught me to spend more time building a business first before we talk about active investing. My 2 cents.

    May the New Year bless you with helath, happiness and wealth. Cheers! ^_^

    P:S. I miss yummy photos.

  13. Great post.By Investing wisely in stocks for the long term one can become a millionaire. Need to invest in good times and bad however. A discipline many find hard to follow. Good luck.