I think it is one of the great blessings of my budding investment career that so early into it, I have been witness to some of the seminal events of global economic and market history. My first year was spent watching the KLCI rocket from something like 1,000 points to 1,450 points, amidst the greatest commodities boom of the last 30 years. And in my second year I watched what was probably the fastest commodities crash since the great depression, the worst global credit crunch since the great depression, a 40% fall in the KLCI and the S&P 500, ongoing devaluations of western currencies and failures of iconic western investment banks like Lehman Brothers and Bear Sterns.
I think one of the things that I think I've learnt from this experience is that as an investor, one should buy into an investment only when one really knows what one is buying into. In other words, Buy What You Understand. And buy for the right reasons. Buy into a business because you believe its undervalued, not because you believe its stock is going to go up. Because a stock could very well go down. If the stock has good value, however, given some time its price will recover.
To put it in another way, whenever I invest into something these days, I pretend like the stock market doesn't exist. When I look at stocks, I pretend that i'm being offered a small stake in a private company. Hence, I pretend that it would not be easy to sell my stock, which makes me choose more carefully.
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