Buy A Business, Not A Stock

If you read any investment advice from the world greatest investor (Warren Buffett, Peter Lynch, Philip Arthur Fisher, John Templeton, Benjamin Graham, David Dreman etc), you will find one common advice: “Buy A Business, Not A stock”

When you buy a stock, you have to understand what does it really mean to you. If you didn’t, you might be a stock market gambler.

Peter Lynch

Peter Lynch’s famous investment quotation (Excerpt from his famous books – One Up on Wall Street, Beating The Street, Learn To Earn):

“Stocks aren’t lottery tickets. There’s a company attached to every share.”

“Behind every stock is a company. Find out what it’s doing.” 

“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.”

Warren Buffett once said (1998): “I buy businesses, not stocks, businesses I would be willing to own forever.”

If you buy a stock with the mind of set of owning a business, you will change your mindset against what majority of stock investors in the market. Most of them think that stock market is a form of casino (though they may not realize it). They just buy and sell almost everyday without knowing the true meaning of buying a stock nor own a business. To them, it is just buy and sell a piece of paper.

If you wanted to own a business, what comes to your mind should be the following:

1. Business that you really understand well
2. Business that can be very profitable for a very long time

You do not want to buy a business that can only sustain 6 months and shut down for another year. Don’t buy a company that you are unable to understand its business model (what a company does, what a company produces, how a company makes money, what are the business risks etc).

Point to ponder: “All we want is to be in businesses that we understand, run by people whom we like, and priced attractively relative to their future prospects” -Warren Buffett 1994

How to Open An Investment Account in Bursa Malaysia

Steps to become stock investor is to open an account with Bursa Malaysia. Below are the steps:

Step 1: Open CDS account with Bursa Malaysia. CDS is an acronym for “Central Depository System”. The Central Depository System is a system that is fully owned and operated by Bursa Malaysia Depository Sdn Bhd (formerly known as Malaysian Central Depository Sdn Bhd), a wholly owned subsidiary of Bursa Malaysia Berhad. There are 3 forms that you need to fill in:

CDS Card Form

Open account with Bursa

E-Dividend Form: This is for crediting dividend direct into your bank account

Investors who wish to trade in securities listed on Bursa Malaysia must open CDS accounts with Authorised Depository Agents (ADAs), i.e. stockbroking companies. Securities bought will be credited into CDS accounts that the investors have opened. Likewise for securities sold, these securities will be debited from the CDS accounts.

You need to pay RM10.00 fee to open an account. But some brokers do waive this fee.

Step 2: For your trading account (trust account) with authorized brokers with Bursa. You can call them and ask them to meet you which is nearest to your home:

Bursa Registered Brokers

The buy and sell activities will be transacted with brokers. If you asked me, i am biased for CIMB Securities, Malacca Securities and Jupiter Securities

What you should be looking for when choosing brokers for investment?:

1. Cheaper brokerage fee. Normal standard fee is around 0.40%. The cheapest would be around 0.05%
2. Excellent, efficient service and definitely fast response or feedback from them
3. Extensive Report analysis for stock. CIMB Securities provides excellent analysis on this.
4. Easier to transfer money from and to your trust account. You can withdraw the money from trust account and transfer your saving account if you need the money (only once you sell off your shares)

Sample screen of Trust Account

Step 3: Start transferring your money into your trust account. Don’t worry, your trust account is safe and secure.

Step 4: Set your investment goals and strategies

Step 5: Start your investment transaction – buy and sell stocks

Contact me if you are interested to open with any of the above brokers. I can refer to my dealers to arrange your account opening.

See ya around!

Journey to Jutawan Saham

There’s a chinese saying, a thousand miles journey begins with a single step. You have to start somewhere and I will guide you to become one. What do you need to become Jutawan Saham? Follow the simple steps:

1. You need to have a desire to become Millionaire. If you don’t have that, nothing can help you become one
2. Choose what sort of investment  that can help you to become Millionaire. I believe Stock Market investment is one of the way to become Jutawan since most of billionaires in the world (The World’s Billionaires) nowadays are Stock Investors like Warren Buffett – Berkshire Hathaway, Bill Gates – He owns Microsoft inc Shares, Tan Sri Syed Mokhtar Al-Bukhary – he owns DRB-HICOM (biggest automotive conglomerate in Malaysia), Pos Malaysia , Tan Sri Robert Kuok – PBB Group, Tan Sri Ananda Krishnan – Maxis, Astro, Bumi Armada,  Teh Hong Piow – Public Bank Owner. These people own shares in public listed companies. 
3. You need to have knowledge the how-to invest in Stock Market. Invest in your knowledge first before putting your hard earn money into stock market. Or else, you have to price for your ignorance which sometimes is an expensive tuition fee. Fortunately, all the required knowledge will be available in this portal.
4. You need Capital (Money), patience and time. The best thing about stock investment is that, you don’t need big capital. You can start as low as RM100.00 (depending what stock you want to own). Of course, time will be an important factor. People don’t get rich overnight and this is not a quick-rich scheme (Skim Cepat Kaya) but it is guarantee rich scheme if you have patience and time.
5. And lastly, you need to open a trading account with authorized brokers in Bursa Malaysia and begin your journey becoming a Millionaire Investor.