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Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
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Investing in the local stock market is becoming more popular among Malaysians nowadays. Although stock investment carries a high degree of risk, especially among the speculative issues in the Second Board, many local players are simply fascinated by the ups and downs of stocks listed under the Kuala Lumpur Stock Exchange.

Recently, there were a number of local analysts who expressed optimism on the outlook for the local stock market. Some analysts predicted more gains on the speculative Second Board although it is unlikely that the 1996 super bull will be repeated this year. Again, anything can happen on a rumour-driven market like the Second Board. Other analysts were largely positive on the main board given the improving economic outlook. Such bullish comments are likely to attract many investors who are hoping to make some fortune in the Year of Ox.

For first-timers, analyse before rushing in to buy a stock as recommended strongly by someone close to you even when the market is running really hot. If you are the conservative type and you can't sleep or eat well after buying a stock that has gone down by a mere 10 cent after few trading days, stay away completely from speculative issues in the Second Board even though your source "guarantees" you that the recommended stock price would increase tremendously.

What options will you have as a first-timer if you are a conservative type, interested in playing shares but do not have the time to monitor the ups and downs of the ever-changing market trend?

Consider less speculative issues in the main board. Buy good quality stocks or blue chips listed on the main board for long-term security. The length of time you will or can remain invested can directly affect your ability to reduce risk. Buy and wait for the value of the stocks to grow over the long-term. You should not invest for short-term gains if you are the conservative type with low risk tolerance.

Do not be "lured" by all the short-term profits. Just ignore them! Simply remember that investing over a longer time frame has its advantages. As a long-term investor, you will not be subject to frequent price fluctuations. Time diversification is critical for volatile investments. Price fluctuations smooth out considerably over longer time periods. Other suitable investments that you could select are fixed deposits, bonds and unit trusts.

If you are the more aggressive type or "punter", then there are a number of rules that you should be aware of in order to minimise your investment risk. If you are a newcomer to the investment scene and wish to speculate for short-term profits in the second board, then you should be prepared to take on higher risks associated with your investment.

You should invest in speculative issues only if you have a substantial amount of spare cash. When acting rationally, you are unlikely to heavily commit yourself with speculative issues by using a large portion of your hard-earned savings allocated for your child's college fees. If you are a beginner, then you should start investing with small capital base.