Wednesday, June 06, 2007

Chapter 3

Chapter 3 of intelligent investor is, in my opinion, the most boring so far.

It talks about past history of Dow, describing the meteoric rise and fall of the index. Again, in his trademark carefulness, he warns of buying more after the price went up. The worst reason to buy a stock is because the price went up, didn't buffet warned us that before?

Graham went on to talk about the dangers of being overconfident in forecasting. Well, nothing is for sure until it had happened. It happened to me quite often in my trading history too. I was so sure that longcheer can make it and made a big bet on it. Even when it fell off the high pedestral that I raised it, I still believed in it. You should know what happened next.

I guess the key thing here is to be confident enough to believe in your investments, while not putting everything in, in case something happens. Always made your exit plans before executing the trade.

Oh yes, there's one more thing about index. Over the years, the index might rise or fall, but the underlying trend is always up. I guess this is one underlying belief if we want to invest. I might want to enter STI ETF upon downturn and hold for long, still waiting for the right time to enter.