During a time when people are hit hard by the pandemic and many are trying to stay afloat, finding ways to multiply money is as vital as breathing. Investing in the stock market can be an option but requires making informed decisions and choosing the right strategy for the best return.
“The pandemic has reminded us of the importance of having a budget. When you know where your money is going, it can make it easier to isolate needs and wants and shift toward necessities,” said INTI International College Subang (IICS) alumni Ng Chu Ye who spoke at a virtual session organised by the Bursa Young Investor’s Club (BYIC) titled ‘The Secrets to Consistently Win in the Stock Market’.
CGS-CIMB Securities Malaysia is a joint venture between CIMB Group Sdn. Bhd. and China Galaxy International Financial Holdings Limited, a wholly owned subsidiary of China Galaxy Securities Co. Ltd. They have established a global presence in over 20 countries, with a core focus on providing informative research analysis on financial products such as Islamic Stockbroking, eIPO, Futures, and more.Held in collaboration with CGS-CIMB, the event saw Chu Ye share his experience and knowledge to improve financial literacy among students and provide them with fundamental tools needed to invest while also improving their perception towards the capital market.
Chu Ye, who graduated from the Bachelor of Finance programme in collaboration with the University of Hertfordshire at INTI International College Subang, shared information about the stock market which opened the young minds of BYIC members at the session.
“In the long-term, cash is not a great investment for building wealth. It’s much more helpful to have cash for something such as an emergency savings fund. One of the best ways to combat inflation is investing in assets that will give you a higher rate of return, such as the stock market. In exchange for the risk of volatility, investors are rewarded with higher returns,” he said.
He further explained about the stock market and the nuances of it.
Ng Chun Ye, who is an alumni of INTI International College Subang’s Bachelor of Finance programme in collaboration with University of Hertfordshire, started trading at the age of 21 by using technical skills to pick fundamental stocks.
“The stock market is where investors buy and sell shares of companies. It is a set of exchanges where companies issue shares and other securities for trading. It also includes over-the-counter (OTC) marketplaces where investors trade securities directly with each other rather than through an exchange,” said Chu Yen who is currently a marketing representative at CGS-CIMB Securities Malaysia for the last two years.
He likened the stock market investment to a game which has its own set of rules.
“If you follow the rules and play the game, you can win the game over time. To win the game, a ‘never give up’ mindset is important. Emotional maturity and discipline are also required to become successful in the game. Gambling has lesser rules compared to a game. Winning in gambling is based on luck or chances because a gambler takes blind risks. So, in a nutshell, there are people who gamble in the stock market. However, if we take the stock market as a game that complies to a set of rules, it will help us become successful in the long run,” he explained.
Humans have a natural tendency to follow the crowd, but when it comes to investing in the stock market, following the herd can often result in losses. Why replicate the mediocrity of the masses when you can clone the success of Warren Buffet, one of the world’s most successful investors.
“A typical buyer’s decision is usually heavily influenced by the actions of acquaintances, neighbours, and relatives. If everybody around them is investing in a particular stock, there is a tendency for the potential investor to do the same, but this strategy is bound to backfire in the long run. Warren Buffet was surely not wrong when he once advised to be fearful when others are greedy but be greedy when others are fearful,” shared Chu Ye.
He further added, “Warren Buffett said, ‘When I buy a stock, I think of it in terms of buying a whole company, just as if I were buying a store down the street’. Most investors do not analyse the businesses they invest in. They simply follow the symbols or brands of successful corporate houses. That is not ideal most of the time unless you are lucky.”
Chu Ye reminded students that proper research should always be done before investing in stock.
“You should never try to time the market, too. In fact, nobody has ever done this successfully and consistently over multiple business or stock market cycles. Catching the tops and bottoms is a myth. It is so till today and will remain so in the future. In fact, in doing so, more people have lost far more money than people who have made money,” he highlighted, adding that investors are prone to losing their hard-earned money while doing so.
Chu Ye shared another important tip – investing money systematically into the stock market.
“Investors who put in money systematically, in the right shares, and hold on to their investments patiently have generated outstanding returns. Hence, it is good to have patience and follow a disciplined investment approach besides keeping a long-term broad picture in mind,” he stated.
According to Chu Ye, there is nothing wrong with hoping for the best from an investment, but you could be heading for trouble if your financial goals are based on unrealistic assumptions.
“For instance, stocks have generated more than 50% returns during the great bull run of recent years but it doesn’t mean that one should always expect the same kind of returns from the stock markets,” he elaborated.
Living in a global village, Chu Ye said it is likely that events happening in any part of the world will impact the financial market. Therefore, there is a need to constantly monitor the stock portfolio or engage a good financial planner if you face time constraints or if you lack knowledge.
“If people understand the way financial systems work at an early age, they will be able to make a better future for themselves for or even rectify poor decisions they may have made,” he concluded.