Below are some of the reasons which I have posted under 'Sound Investement Forum' previously:
Many people have the wrong believe thinking stock markets are for speculation & gambling, for making quick bucks. They will buy low & sell high for quick profit. Next they will buy high and sell higher & then buy higher and sell higher higher. No profit they will hold on. They feel painful to cut lost. These people will only sell the winners & keep the losers. (Kia Su mentality) Eventually they will end up holding all the losers which are mostly penny stocks. Just ask yourself why are these companies end as penny???
It is very true one can double or maybe treble their profit within days by speculating/gambling in penny stocks with all their saving or on leverage on margin trading. But remember they can also lost every cents. (Win all or lost all) Why should we expose our life saving to such high risk? Maybe for some excitement it is advisable not more than 5% of our saving expose to penny stocks.
Investment is about value investing. Buy good value stocks & holding for long term for appreciation & dividend yield. Let your money work for you & not work for your money. In this way you are able to sleep well. Review your portfolio from time to time. Here are some guardlines which have helps me in my investment:
1) Invest in Growth Stocks. Investment is about growth of companies.
2) Invest in undervalue stocks which give you a safe margin of risk.
3) Learn about market cycles.
4) Invest in sectors which you are familiar with.
5) Stay in focus & be disciplined.
6) Sell only stocks over-run it value or fundamental. Be thankful & never regard your decision.
7) Cut lost if the company future is in questions. (smell or see cockroach)
