Here are some lessons from the stock market for small-time retail investors like myself. Perhaps if I become good enough at writing tips I can make a living off it and no longer have to see my money go up in the flames of the market. Most of this information is probably available in some form or other in one of the infinite websites, books, magazines, seminars, and talk shows on investment, so this is a simple compilation more for myself than anyone else. (Then again, this entire blog is probably read only by me.)
Firstly, it is most important to keep in mind the main advantage retail investors have over institutional investors: time. As long as you are not investing to feed your family but for, say, your retirement or the new BMW F800R, you can afford to hold positions for a long time. And in the long term, a growing economy like Singapore's will pretty much deliver.
Therefore, avoid trading but take long positions for the long term. Retail investors will always be several steps behind the professional traders who can profit from market volatility. Don't become one of those who lose money in a bull market by chasing short term or intraday gains.
Buy when everyone is selling and sell when everyone is buying. Remember, you are in this for the long term. Those who bought UOB in March when no one dared to touch anything are laughing all the way to the bank today. It is only the big boys that fear tumbling counters. You are the fearless David. The lower the price goes, all the more you can afford it. Of course, don't buy into companies headed for liquidation.
Generally, the best investments are STI and blue chip shares when the market is in the doldrums. Remember to sell when the mood gets buoyant!
