My first impression is that how come nobody is giving tips on how to invest despite the bull. Perhaps it's our natural inclination to see prices rise up. Even the major stock exchanges in Germany and US are setting up measures to prevent short trading in case the market plunges too fast and too soon, but they did not do anything to prevent long buying in case the market rushes up too fast and too soon. Quite bias, don't you think?
Anyway, here are the 5 tips. Having nothing better to do, I thought it'll be a good idea to reflect on how these tips are useful to me or not.
It further elaborates by saying that over the long term, you can ride out the volatility. I hate it when people say that. It oversimplifies a lot of things. So do we stay invested in one company over the long term or do we put all our investing money in the market (regardless of the companies actually invested) over the long term? From the people I talked to, they seem to think that the former is the way. They then quote Warren Buffett doing that too (if you think so too, read more about him).
In my opinion, I think that staying vested in the market for the long term is the right thing. But you need no stay invested over the long term on the same companies. Just do the necessary adjustments from time to time.
Ok, this I agree. I made a mistake in the past of not reviewing my investments. A good profit thus turned to a very bad loss. I guess everyone does that kind of mistakes. It's a very very good idea to rebalance your investments. It's like a garden full of plants that you want and a lot of weeds. Just take out those weeds so that you can clear more space to grow the plants you wanted.
The article says to diversify across different asset class. Ok, it's great advice. But to a common retail investor, it's hard to do spread out your assets into more than 2 classes, unless you have a lot of bullets to fire everywhere. To me, if you have less than half a million to invest, you might want to concentrate on just one or two asset class. Perhaps stocks and bonds? If you have more than half a million, then capital preservation might play a more important role, hence the need for a more robust portfolio to weather the shit in life. Stocks, bonds, properties, commodities might even out just nice.
Please don't quote me Warren Buffett's style of focusing. You're not him and he's not you. Besides, he has many many more companies than you will ever have.
Erm, isn't this tip the same essentially as tip no. 3? I guess the author elaborated more on using the funds approach. Coming from the head of UOB deposits, investment and insurance branch, I guess it's normal to talk about this.
I'm not such a big fan of blindly doing DCA. I believe that the market can be timed, not precisely, but approximately. We do not have to buy every month because we cannot time the market. Just do DCA with some chartings, and I think you can do a lot better and save yourself on the transaction costs.
As with all articles, they never never talk about selling. It's all about entering the markets and giving the impression that by holding long enough, you'll have a good return in the end. To me, selling is the other half of buying, and there really is too much literature on how to buy and when to buy. How about doing a DCA on selling? As market goes up, you sell a little more and a little more so as to average up your selling price?