Wednesday, December 16, 2009

System and Discipline

My non-investment clients or friends always pop 2 questions for me “Should I buy or sell now? or “What to buy and sell now?”

They always expect that I have inside information and able to give them “Tips” on making quick money. When they realise that I don’t have any inside information to fulfil their expectation, they will go back into the stock market and look for their quick money investments.

Clients often have an unrealistic expectation of advisers and advisers who are able to make them believe that they are able to fulfil their expectation will make a sales. However, are advisers who are not able to create such impression deems as incompetent?

Some advisers who focus on returns can invoke greed of the client. Some adviser who warns on the volatility of the market will invoke fear of the client. The fear factor is frequently stronger than the greed factor and many will choose not to invest. As more people around them makes money, the greed factor will over the fear and start chasing the hot trend.

You can call me a boring adviser but I believe that the crux of investment lies in having the discipline and system in place. My value as a financial planner is to create an environment where I can instil the right attitude towards investment into my clients.
I’m not able to predict the future nor time the market but I’m able to create a system whereby risk and returns are better controlled. I let them see the 2 sides of investments which is risk and returns so that they go for sustainable yield and not extraordinary yield.

As we comes to the end of 2009, I really like to say the following again.
1) Look Long Term
If you invest into a business or property, you will look long term and willing to accept some volatility. As an investor, you align your time horizon accordingly and don’t let the short term noises affect you from investing.

2) Know the difference between gambling and investing
When you gamble, you look forward to returns day after day and hope it can doubles in as short time as possible. When you invest, you look towards a sustainable yield and with a target in mind.

3) Invest with a system and with discipline

Successful investing is often dull, requiring discipline and lots of studies. It is the system in place that gives you the assurance of risk and returns.

I have the relevant knowledge of the market and economics. I am able to help control risk, select suitable products and impart some knowledge that you may not been looking into such as fund expenses, consistency and performances among its fund group peers, etc

Having said all the above, I'm have to disclaim that I'm clueless about any specific hot stocks, hot properties, hot business. Do not have unrealistic expectation about me and my ability.

1 comment:

Forex Educator said...

Having a system is good as it act as a check in your opinion.

Just for sharing, currently my system has signal sell on the stock market. See here: http://tradingeducationprogram.org/2009/12/12/where-is-sp500-index-heading-to/