As I read more about investing, the topic will also pop up out of nowhere nowadays. Me being overexcited, I will always start talking for at least 10 minutes non-stop. With the current GME fiasco, the topic has also popped up even more. So, here are some of my responses.
I will not invest because my capital is too small.
I think this mindset probably came from our parents. The conservative mindset always tells us that investing in the market is not worth it because we risk losing our money. We are better off focusing on our job to get a higher income.
I think the strongest point to counter this is: you are losing money by not investing.
You are losing out to inflation. There is no need to go out there and seek crazy alpha (market-beating returns) if you really are not interested. Stick to a low-cost diversified index fund. The market returns are more than enough to beat inflation. Once you do that, focus on your earning power again.
I will invest when I have money so I can let the big investment banks do it for me.
Nobody wants the best for you except yourself. What makes you think the big investment banks will want to help you make money? They want to make your money.
I definitely do not discredit their value and appreciate their presence. But that doesn’t mean you can’t start now on your own with a small capital. Investing has never been more accessible and it has been democratised. You are so fortunate!
What do you think of Gamestop/AMC/BB/Nokia/whatever shorted stock?
Disclaimer: I do not have a position in any of the above mentioned stocks.
I believe it became more like a social justice movement at this point. Not really about making consistent predictable profits. People have thrown away all sorts of rational thinking and forgot about the risks that come with these short squeezes and volatility. People have lost money trying to time the peak, and many of the sell orders were delayed because of the crazy volume which led to money lost.
Honestly, if my portfolio is bigger, whereby 5% of my portfolio is a sizable amount, I may consider joining in for speculation. But, I believe it is not worth it for me at this point.
To those with positions in these stocks, power to you. 🚀💎🙌🏻
Also, GME still seems to be still largely owned by institutions. My take is that the movement has largely been started by r/wallstreetbets. This later on went viral because of the potential profits we can make and the “social cause” of market manipulation. But the institutions at the background were probably buying the stocks in the background, while letting r/wsb take the blame by the media. Also, the gains by the retail traders have been largely exaggerated. Not everyone is making millions and there are people who have lost money. (even if they are not a 🌈🐻)
What broker should I use?
Ok I hope I can summarise the list of regulated brokers I am familiar with.
Bank related brokers (DBS Vickers, UOB Kay Hian) – Can be linked to CDP, tend to have pretty high fees
Tiger Brokers – Newcomer to the scene. Chinese based company. Low fees and good conversion rates. No access to LSE markets for tax efficient UCITS ETFs.
SCB Online – Moderate per transaction fees but with no account inactivity fee. Access to LSE.
FSMOne – I used to love the broker for the RSP feature. I have since stopped using it because I did not realise that the dividend withholding tax was killing my returns. No access to LSE.
SAXO – High fees and bad conversion rates, avoid
IBKR – The broker I use. Very low fees, access to almost every market, but has an inactivity fee
Is investing the same as trading?
No. Trading is the short term view on stocks. Think: Getting a quick buck. Think: Similar to speculation.
Investing is the long term view on stocks. Think: General prospects of economy/company improving. Think: Lower potential returns but probably most suitable for everyone
What do you think about crypto?
I think there are merits to crypto. After reading up on it a while, I gained a better understanding of it. Here is a quick take.
- Increased used by institutions (JPM, DBS, Square)
- Threat of inflation due to US’ fiscal policy is real
- Small portion of your portfolio being exposed to crypto is fine (less than 5%)
- However, crypto is ultimately an asset whose value is given through the market and has intrinsically no value
- Also, it is also just a demonstration of blockchain technology
Do you solely buy and hold?
No, I buy and hold for the most part. But I do sell out some of my short/medium term positions.
What do your positions look like?
I wrote an article here.
Since then, I have added small positions in ARKK and BTC.
How much effort do you put in your research?
I read a lot about the company, learning about its competitors, business model, management as well as financials. I watch other people talk about it. I let it simmer in my head for a while. I would say it can take 2 weeks? It really depends.
What is your research process like?
- Find a stock you like.
- Go to seekingalpha.com and finviz.com
- Read financials
- Look at competitors on said websites
- Understand business model
- Learn about management
- Search for the opinions of other people online
What kind of resources do you use?
I get my ideas from wallstreetbets.
Of course, I am still learning along the way. My opinions will almost definitely change as I read more. But until then, this is my perspective!