The Problem With Investments

The problem with investments is that many expect money put in today make money tomorrow or very quickly. Thats not investing, its speculating. It does not help that many people are drawn into advertisements that tell you, you can make millions with just 15 mins everyday. They claim they found the success formula in investing and they are here to share their knowledge bacause they feel good things must share. Their sharing cost $3000 plus. Eeerrr since when did sharing become a commodity?

I knew of somebody that paid that kind of money and when I asked them for their lesson notes, I saw them using charts of companies during 2003 and 2004 period. Any idiot with a dart and a list of stocks during 2003-2004 can make money in equities. Stick the piece of paper on the wall, throw the dart at it. Whichever stock the dart hit you buy, to make it more challenging do it blind folded.

I started to realise that many "investors" is running on greed and these marketers of these programs are capitalising on it. You will notice that these advertisements will be the most rampant when the economy is at a slump and the only way for the economy is up.

And greed caused problems to these "investors" too. Many have bought into technology stocks or funds in year 2000. In 2003 when I was in the bank I met numerous customers that have a negative return on their investments and 99.9% of them has most, if not all, of their portfolio in technology. Why?

Greed has driven the mass buying of technology as tech stocks in 2000 was in favour. Tech funds was doing almost 10% a week! And people were optimistic of the new era of internet. If you think about it, in 2000 if you were a startup company with a laptop and called yourself something.com your shares will be flying off the shelf. But what assets is supporting these share value? You and your laptop....

So whats the difference between investing and speculation. We all know speculation, put money today and try to make a reaping in a very short time. But investing is putting your money in and knowing it will give you a return in a longer time frame because of good fundamentals in a company or fund. Those of you who have watched Forrest Gump will know what I mean. At the ending sequence he said he found some piece of paper his grandfather left behind and it had a picture of an Apple on it. Thats investing but still kinda high risk cos his grandfather may have just put his money in one company. What if it had failed?

There were many more lessons in investments like asset allocation, diversification and time horizon. These I picked up through many discussions with my clients. And some of these lessons are hilarious. I remembered doing road show and when an uncle walked past, i casually asked if he did investments. Yes he said. Wa uncle good! What you invest in? He replied, 4D, toto, big sweep, soccer. Wa uncle not only you invest you also know how to diversify ah? He never became my client but its people like these that makes my job so much more interesting and enriching.

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