Thursday, 30 December 2010

FTSE Bursa Malaysia KLCI closed for the year at 1,518.91

52wk Range:1,072.69 - 1,531.99

Interesting graphs of FTSE Bursa Malaysia KLCI over different periods.  Do you have a strategy to protect your downside and to profit from the upside, from the volatility of the stock market?

Warren Buffett lamented that many business schools are teaching the wrong stuff to their students.  He is of the opinion that basically to be a good investor, you need to be taught two topics in great detail.

Firstly, you need to have a very thorough understanding of how to value various assets.  Secondly, you need to understand the behaviour of the stock market, so that you can take advantage of it and not fall folly to it.

This year has been another very rewarding year for my investing.  My portfolio has shown good returns.  A worrying point now is that in my portfolio of stocks, twenty-two stocks have huge gains and two stocks have small losses.  The two small losses were in stocks bought in 2007 and they constitute a very small proportion of the overall portfolio.  It wasn't a surprise that most of my stocks would be showing gains, especially those that have been in the portfolio for a very long time and bought at regular intervals (dollar cost averaging).  However, when almost ALL the stocks bought in recent years showed gains from their cost prices, one has to be apprehensive of the stock market.

Many geniuses are born in a bull market, so the saying goes.  Therefore, one may assume that either one is a genius (don't be fooled) or perhaps the market is too gregarious and optimistically overpricing most stocks (one can be easily and unknowingly fooled by this too).

Perhaps, with the New Year approaching, a re-look at my portfolio with view to re-balancing is not inappropriate.

Happy New Year to all.

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