FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post
Poll

Can there be another Covid-19 wave in Sri Lanka?

 
 
 

View results

STOCK MARKET TRAINING
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer


Latest topics

» ASSOCIATED MOTOR FINANCE COMPANY PLC (AMF.N0000)
by Mr. X Today at 11:16 am

» Price prediction on GRAN and TAFL
by Mr. X Today at 11:11 am

» DVP is unfair?
by niru Today at 10:59 am

» Delivery Versus Payment (DVP) on CSE!
by niru Today at 10:56 am

» EXPOLANKA HOLDINGS PLC (EXPO.N0000)
by DimuthuKW Today at 10:09 am

» RAIGAM WAYAMBA SALTERNS PLC (RWSL.N0000)
by shakthi1974 Today at 7:54 am

» ALLIANCE FINANCE COMPANY PLC (ALLI.N0000)
by Gaudente Yesterday at 11:55 pm

» Daily Foreign Transactions update
by Pradeep90 Yesterday at 11:08 pm

» LUCKY LANKA MILK PROCESSING COMPANY PLC (LLMP.N0000)
by Eranx Yesterday at 11:04 pm

» TOKYO CEMENT COMPANY (LANKA) PLC
by Zahara khan Yesterday at 10:40 pm

» Directors' Dealings 23/06/2021
by SAGA Yesterday at 10:07 pm

» SINH.N0000 (SINGHE HOSPITALS)
by SAGA Yesterday at 9:45 pm

» Top Foreign Trading today - 23/06/2021
by SAGA Yesterday at 9:05 pm

» Stock Market Entertainment
by samaritan Yesterday at 5:55 pm

» TOP 20 LISTED COMPANIES BY FINANCIAL CHRONICLE™
by Eranga87 Yesterday at 3:29 pm

» DVP යනු කුමක්ද? Explained
by samaritan Yesterday at 1:58 pm

» Money Printing Up Rs15.8B
by ResearchMan Yesterday at 11:58 am

» GLAS will be winner with Super Gain.
by ONTHEMONEY Yesterday at 7:16 am

» Top Foreign Trading today - 22/06/2021
by SAGA Tue Jun 22, 2021 8:50 pm

» RWSL for short term profits
by madukp Tue Jun 22, 2021 5:17 pm

EXPERT CHRONICLE™

MARKET CHAT


CHRONICLE™ ANALYTICS


ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Getting good returns without too much risk

Getting good returns without too much risk

Go down  Message [Page 1 of 1]

Hanoifortune

Hanoifortune
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
What is risk? The conventional definition of risk in finance literature is price volatility. But to super-investor Warren Buffett, risk is the permanent loss of capital.
Unless you need to cash out at very depressed market levels, or the investments or stocks/companies you own have no more capacity to recover, price volatility is just noise in the market, says Mr Buffett.
On the other side, what is return? Return to an investor is the income you get from your investment, as well as the rise in the price of the investment. Of course, you’d want to be able to get back at some point the entire sum of the capital you put in as well.
How does one get good return from an asset? Well, the more cheaply you can acquire a good asset, the higher your return will be. Your dividend yield is higher, your capital appreciation is higher.
Next question. When you get a good asset cheap, what are the chances of you suffering a permanent loss of your capital? Small. Hence, your risk is low.
So, to get good returns, does it mean we have to take high risks? Not necessarily!
It is very common for us to miscalculate the probabilities and act less than rationally because of our tendency to, among other things, prefer excitement over staidness, to want instant gratification instead of staying for the long haul, and to seek “safety” in numbers, that is, to just follow the crowd.
Take Apple. Given how well the stock has done, I’m sure most of us wish we had the stock in our portfolios, preferably from as early as 10 years ago. A sum of US$10,000 (S$12,200) invested in November 2002 in that “fruit company” – as Forrest Gump described it – would have grown to US$750,000 today.
But nobody could have predicted back then how well Apple would do. This is but one of the many trajectories that the company could have taken in the intervening 10 years. It could have gone the way of Nokia.
In expectation, as scholar and investment expert Nassim Taleb puts it, a dentist is considerably richer than the rock star, the hedge fund manager who made it with one big bet or the successful entrepreneur. “One cannot consider a profession without taking into account the average of the people who enter it, not the sample of those who have succeeded in it,” he says.
We talk about Apple today because it has succeeded. And that’s how typically a stock comes onto the radar of a novice retail investor. The stock is in the news because the company has had three or four years of good growth, or has a novel concept. Our friends and family members talk about the stock because it is in the hottest industry today.
But most times, such stocks will prove to be a less-than-satisfactory investment.
A few things are at play here. One, because of their promise, the hype factor and the fact that many people are chasing after them, the prices of these stocks or asset classes are bid up. They become expensive.
Two, because their prices are bid up and the market’s expectations for them are so high, everything must go right for them. Any little disappointment – and they will definitely run into some – will cause the stock prices to fall. The higher they are, the further they can fall.
Three, being the darlings of the stock market does something to the managements of the companies. Their egos become a bit bigger, they take a few more risks and they become a tad more tyrannical. Thus, the seeds of their downfall are sown.
Studies after studies have shown that, on average, investing in stock-market darlings, buying into high-growth companies, chasing after the latest investment fads, does not pay. Instead, it’s the boring stocks, the neglected stocks, the shunned stocks, that give investors the greatest upside.
Contrast companies that promise world domination with the unexciting ones that cough up consistent cash flows without the need for massive capital expenditure on a regular basis. Without a doubt, the latter group is a much better bet.
Which stocks have been the best performers on the Singapore Exchange in the past 10 years? They include the likes of Dairy Farm, the pan-Asian retailer that runs the Cold Storage chain in Singapore; Vicom, the largest technical testing and vehicle inspection firm in Singapore; and Raffles Medical Group.
An investment of $10,000 in Dairy Farm 10 years ago would be worth about $240,000 today, with dividends reinvested in the stock. Not too shabby.

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Here is the source.
http://www.btinvest.com.sg/blogs/2012/12/03/getting-good-returns-without-too-much-risk/

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Redbulls wrote:Here is the source.
http://www.btinvest.com.sg/blogs/2012/12/03/getting-good-returns-without-too-much-risk/
thanks Very Happy

Sponsored content


Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum