What a Greenhorn!

When I rented the house of my late landlord in SS2 Petaling Jaya, I used to wonder why he was continuously receiving dividend cheques and annual reports of Maybank and other blue chips. I was a real ignoramus.

As I recalled, my initiation into stock dealings began when my ex-lady boss confided in me one fine day that she was punting on the market and the tips she got were really chun-one-lah! And believe me; they were-since she had one fierce information network.

The year was 1978. I was a church mouse. I bought my first lot of Dragon and Phoenix, a textile company. Cost me RM1, 000. My first dividend was to come from Guinness Stout. I remembered it was about RM60.00.

In those days, all you need was to buy into a stock and then hold the stock until the dividend goes ex-date. There is no need for you to sell immediately when the scrip arrives. However, you would need to pay some interest to tide you over until the opportune selling time comes along. It’s akin to an open-ended trading position. Once the price of that stock goes up, you sell it and close your position. You cannot do that now.

A lot of water was gone under the bridge since then. You now need money to play the stocks. The back-to-back overdraft option is risky. If the value of stocks go down, the banks will margin-call you.

Currently, the best thing to do is to look at counters which have good dividend yields and buy into them before they become pricey. If the price of those stocks reaches your desired investment return level, sell out and keep the money in the bank. Be patient and wait for the market to go cyclical and then buy in when the time is right.

Have fun picking your stocks. Do remember - Caveat emptor!

Quote of the Day:

“Learn all you can from the mistakes of others. You won't have time to make them all yourself.” Alfred Sheinwold

Heartsong