Playing the Rich Man's Game - Do you have what it takes?

The Capital Market in layman term is known at the Stock Market. The general public often associate it as being similar to that of a casino, a legalised casino where punters speculate in hope that they would make some quick cash, or maybe an overnight millionaire.

Many people in Asia, Malaysian in particular often associated the Stock Market as a Rich Man's Game. Try striking a conversation with someone who has not traded in the stock market, and ask if he/she would like to invest in the stock market? 9 out of 10 people would answer by saying that I would love to but I don't have the money at the moment. I would start to invest in the Capital Market once I have enough capital.

Then I would ask, how much do you think you would need to start off. Many would answered with figures ranging from RM10k to RM100k. These are the perception people usually have that lead them to think that Investing in the Stock Market is a game meant for the Rich, Wealthy and Famous only.

Some other respondents would tell me that its too risky and I might end up being bankrupt. These people must have had friends, family, relatives or heard of stories that took place during the 1997 Asian Financial Crisis, where thousands of people lost not only their fortune and family but to the extend of committing suicide. These tragedy definitely brought lots of misery and fear to those who was victimised during the crisis. But who is there to blame? the government? your friends who gave you all those juicy tips? or the rich tycoon who own those companies? Well if you ask me, I would say point the finger at yourself, those who were victimise were merely cause by their own greed and misjudgement. Ultimately, nobody force you to buy or invest at gun point right? So don't blame anyone but yourself.

Apart from greed, it is the ignorants of these small time investors that kills them self. Most of those who got burned and lost their fortune, are not properly educated with the art of investment. If you are properly educated and equip with the right knowledge, you could have well turn the 1997 crisis into an opportunity to strike it rich.

What I am trying to say is, the Stock Market is not a Rich Man's Game, but it is a Game that make the Man Rich. People like Bill Gate, Warrant Buffet, Ananda Krishnan, Tony Fernandez, Li Ka Shing, and the late Tan Sri Lim Goh Tong, are famous tycoons that runs their own empire. But do you know that these people wouldn't have become so rich if their company were not listed in the first place and if they did not buy a substantial amount of share in their own company upon listing. Even the Page brothers who founder made it into the Billionaire Club listed by Forbes because Google went public at the price of USD99 and is now trading well above USD700 per share.

Wait a minute, having say that, I don't mean that anyone that play the game would be rich. You need to be equip with the right knowledge, right attitude, avoid being emotional, and most importantly you have got to be patience (patience is a virtue). Oh ya, before I forgotten, you got to have some capital too, but you don't necessary need to have RM10k to RM100k to start off.
If you have been reading my previous posting, you would know what I would suggest for newbies to start with. For those who are new here, let me save you some time(time is money) by re-telling. Well for starters, I would suggest that you start off with just Rm1000. By now some of you reading would be thinking am I for real?

Yes, and you heard it right, all you need is RM1000 and you are on your way to be a millionaire yourself. How? All you need to to make 100% return for 10 times. Lets me do a simple maths illustration to help you understand;

1.) Starting Capital RM1K x 100% = RM2K
2.) RM2K x 100% = RM4K
3.) RM4K x 100% = RM8K
4.) RM8K x 100% = RM16K
5.) RM16K x 100% = RM32K
6.) RM32K x 100% = RM64K
7.) RM64K x 100% = RM128K
8.) RM128K x 100% = RM256K
9.) RM256K x 100% = RM512K
10.) RM512K x 100% = RM1.24Million

It looks pretty simple right? In anything we say, its always easier say then done, but its not impossible. With more than a thousand stocks listed in the local bourse called the Bursa Malaysia, buying the right stock is as hard as choosing a lifetime partner. But as I've said earlier, if you are equip with the right knowledge, right attitude, avoid being emotional, and be patience you are on you way to join the millionaire.

In fact there has been real life case study where by investors just buy one company and become a millionaire. No I am not taking about overnight millionaire here as I do not encourage people to gamble with their hard earn money. People who invested in companies like Genting and Public Bank since these companies went public became millionaire 10 years later. And how much was their investment cost? Well purchasing 1000 unit of any of the 2 companies mention earlier would cost roughly RM3,000 to RM4,000 only. So how much is it going to cost you to become a millionaire?

I started investing at the tender age of 19y.o and many thought that was ridiculous. But if you were to look at what is happening abroad, student as young as 16yo begun their first investment in stock and are already making it big.

Anyway back to the topic, I would like to strongly stress that the Stock Market isn't a Rich Man's Game but a Game that make a Man Rich. You could well be one of them. All you need is to take the courage and make the very first move, educate yourself and start with RM1000. Remember the most important rule about investment is never invest with borrowed funds. Always invest with spare cash that you have no intention to use over a period of 1 year.

If Warrant Buffet, the second richest man in America can make it big by just investing, I am sure you can too. Buffet 2 most important rule about investing is: Rule 1, Never Lose Money, Rule 2. Never Forget Rule No1.

Well obviously there are a lot of factors to consider in order to make an investment profitable and avoid losing money. All you need to do is read(we are lucky because we live in the Internet age where knowledge is easily available with just a click) and learn from those that are equip with strong investment knowledge.

Just a word of cautious, if possible, try not to learn this from your parents or stock broker, cause I can honestly tell you that sometimes your parents or even the stock broker them self are not well equip with the necessary knowledge. Most older generations in general rely on the newspapers, rumours they heard and believing in tips from people whom they believe to be reliable. Most of these people ended up being a victim of the 1997 crisis.
So what are you waiting for, the knowledge is out there on the WWW and books easily available in your local book stores. Go get all the knowledge you can and began playing the game that is gonna make you a millionaire.


zomfgwtfbbq said...

First and foremost I do agree with you. There are people who make money on the capital markets and there are people who do not. It's basically like poker.

In poker 10% make money, 90% are fish and donate to the 10%. I gamble as much as I can online and I do make money. How? Because I understand the rules of the game and how to play it. I do not rely mainly on 'instinct' rather I rely on my decision making. I constantly finish in the money in AT LEAST 70% of the tournaments I sit down at. My return on my financial investment in poker has reached at least 2000% (cause I start small and I maintain certain rules so I do not suffer the bad swings of luck.)

I set a limit to how much I play, I make GOOD SOLID decisions and not rely on my 'instinct' and when I lose, I blame lady luck or what not. There's a reason why we have 'professional poker players' like Doyle Brunson and Gus Hansen.

I find that if I were to bring my skills to the capital market and even if I start with RM1000, I would be able to beat the game so much if I learnt the rules.

But what I personally feel is that many people are not adept in the art of managing risk. I do it all the time, I do minute calculations every hand I play at poker, and weigh my options up before making a decision. A lot of asians especially, they love to gamble but the majority of them have 0 clue as to how to do it right.

The stockmarket is just like a poker game. You need to evaluate risks, understand the odds, make the right decisions and practice solid discipline one can succeed in it. It is a gamble yes, because we are constantly dealing with incomplete information. The market is not perfectly open. The ones who can master how to make CORRECT FINANCIAL decisions based on the incomplete information will be the ones to succeed.

I spent hours on the free tables (MANY MANY HOURS) during my summer holidays last year, learning how to play the game properly before making the splash into real cash. I have no regrets. I am builing my playing capital up with each passing week (provided uni schedule allows me to). One day you'll see me transfer some capital from poker into the capital market.

Why? Because that's where big money is. I want my share of that big juicy pie.

hao said...

Yes. Charlie. I do agree what you say. Before we go to share market, we must have the knowledge first. I think most of the people loss in market because they don't have the knowledge. They just listen to rumous so we better don't listen to the rumous but we can use the rumous as a guide. Before go into the market, we better do research first. Spend most of your time to do research and invest in the right share. said...

yes yes! Very true! Maybe you would like to share some of the www url with us instead?

Charlie said...

Wah ZOM, this is not your exam question lah, you dont have to write an essay for comment. lol, anyway, its interesting to read.

Alistair, will do so soon in my upcoming entry.

K.S.Lye said...

Agree partially.

However, would like to point the other side of the story.

Learning the fundamentals of a company will help improve the odds of stock market investment. Its still a gamble, but at least the chance is much higher if you know what you are doing.

However, investment through fundamentals are not exactly as what they say in books written by the kwailos (Lynch,Buffet etc). They refer to matured markets like US, Europe and Japan. We are in MALAYSIA.

1)Corporate governance and transparency is a major issue. We are a nation that trades by sentiments not fundamentals. Analysing the psychology of small timer works better than reading the candlestick of the stock or the fundamentals of the companies.

2) Contrarian view: Sell when people buy, buy when people sell, with a lag and knowledge of what the heck is triggering the sentiments. Generally, in developing countries, the big fish make money mostly out of the smaller fish. Syndicates make tons of money fishing on the pasar aunties and kopitiam uncles. Rumours are abundance and you can't really trust what you read. But one thing you can trust, human have a knack for greed. When a huge herds goes into a market and prolong bull, you know something is gonna happen.

3) Economics cycle always prevails. What goes up, will always come down cyclically. trend seems to suggest a cycle of 10-12 years..So if you look at the 97 crashes. Beware.

4) Never trust everything you read. Analyst? Stock market experts? Reading the Edge. Trust yourself and do your homework. The market is not designed for someone to buy a few ringgit margazine, read some rumours and make tons of money. Otherwise, the market will be flooded with billionaires (especially those writers, many who drinks on debit notes..haha). Being a malaysian, we know how media reporting works. If we believe them, and invest, we might as well toss a coin.

Just my 2 sens worth. Cheers.


missyme. said...

the fact there is risks involved, plus the consequences are widely broadcasted. those who knows, i reckon would have instilled some kind of phobia or warning.

its like the moment some talk about shares, markets, and stocks. the alarm at the back of their mind will go off.

of course with reference to past experiences, the feelings of regrets. moreover, the loss is not just the money, family ties would be broken and many shivers at the thought of it.

and for those who know nuts about what you think they will have deep interest in this in the first day? moreover, the fact that they have been living under rock proves that they are kind of ignorant.

what makes you think that they have a better potential compared to other in understanding, to give judgement on what they should or should not buy?

its not just a matter of the amount of money, but rather, how can you gurantee that the person is going to be safe from trying to earn some money. its because of this factor that causes uncertainty, that triggers people to think twice before doing anything.

charlie, my comments are purely logical based and not through the systemic minds you guys have.

besides, i don't think into that area in the first place. i'm telling the general peoples' mind's perspective of how it is. acknowledge them as they are the base of how we, humans think.

best regards,

-be satisfied with what you have and not be over-greedy with what you think you can be.

zomfgwtfbbq said...

Mr Kslye does bring up some good points. Currently the market is not 'efficient' as it could be. The amount of information available to the public is very limited. The market is prolly at best having semi-strong form efficiency.

Insider trading happens as a result etc etc.

But the people who can analyse the
information available and are able to make decisions based on these incomeplete information use it to their advantage to get an edge will be the ones to make. The expected return for traders or players in the stock market is 0. For every person who earns $1 there has to be a person who loses $1. There is no way out of it.

If you want to make money, you gotta give to make, you gotta put effort in and get your money in the game etc .

Seizhin said...

It's views that differ.
As people can give 101 ways to be rich in stock market, but reality isnt that easy.

Jump in the stock market and you'll see the difference.

Denken Tan said...

hi charlie,

knowledge to make what all the graph and up & down mean is important but it is super important to remember to isolated your emotion when making loss with good disciple.

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