Thousands and thousands of people want to strike it rich on the CSE. Initially they are spectators, then speculators and finally if successful, spectacular manipulators.
This article is not meant to serve as an Investment Guide. Instead, it is to make a person aware what it takes to be a successful investor. It’s an assurance policy.
Why is there a sudden interest in share trading? It is the fact that trading on the CSE is so easy today unlike in the past where we were compelled to go through a broker to buy or sell shares. With the advent of the internet and mobile telecommunications trading on the CSE is a piece of cake. Everyone and anyone can now do it from the comfort of their own home. No Office, no furniture and equipment and no staff. Just I, me and myself!
We are also well informed through the instant online news, reports, analysis, forums etc.
But then, does everyone succeed? Well, most people who join the fray have the least idea about trading. They know nothing about companies, basics in accounting and understanding financial statements and limited in their analytical skills. From day one they become vulnerable to the swings, peaks and descents of the indices and share prices and the risks are high.
One may argue that buying and selling land, property or vehicles is also risky. True, there is a risk element in any business and a person not knowing the ground rules and doesn’t have the skills will fail miserably. That’s why we cannot classify trading shares as ‘Gambling’. Trading on the CSE is legitimate business and involves hard work in analysis, reading, being aware or ‘putting one’s ear to the ground’ as it were. Success all depends on the knowledge, skills and experience one has.
What are the pre-requisites for trading on the CSE?
o Knowledge of companies with updates on their performances
o Ability to keep aside a fixed capital for 1-3 years which are not needed for recurring expenses.
o Being aware of current trends and demands in relation to each of the companies
o Be emotionally stable
o Free from debt
o Have rationale / logical thinking
o Free from greed
A person who wants to take big risks on the CSE should be prepared for the worst. If not, he better hang himself straight away as a better option that losing his capital, wealth, property, family relationships, health and finally hanging himself.
Just consider one living example and one dead example.
I met an elderly Japanese investor last year who had invested in the Stock exchange in Japan. Since he could not keep updated on the stock market on a daily basis and his broker did the buying and selling for him, he had to sell all his shares for below 50% of the value of purchase. The broker did not keep him informed until the last moment. All this happened within a short time. His mistake is obvious. He did not have the inclination and time to look after his investment.
Last week a wealthy businessman known to me committed suicide. He jumped in front of an oncoming train. Too bad. What led to this drastic action? Many things went wrong. He failed to heed the writings on the wall. First, he was dishonest. He was a drunkard and a womanizer. His wife, children and relatives forsook him. Finally, his way of life caught up with him and this crambazzeled man plunged to his death.
There are many hidden dangers lurking in these murky waters. Such as, financial bubbles, bankruptcies, political upheavals, natural disasters, manipulators, insider trading, war, inflation, crooked brokers just to name a few.
So investors be aware about the hidden dangers. Think twice about investing in the CSE.
If you have what it takes welcome to the Club with eyes wide open. If not, find a more suitable investment that you can handle.