Managing expectations and sense of proportions...

In my many years of dealing and conversing with clients or friends alike ,it comes
as a surprise to me when well educated and highly intelligent people falls short when  applying basic mathematics to the stock market..even fellow professionals
like accountants can lose their "sense of proportion" when trading or investing in the
market...I cannot pin point the exact reason but  I suspect it has a lot to do with relatively "cheapness"
and high volatility and liquidity of this asset class (shares ) compared to say real properties ,bonds or time
deposits...A return of 10% to 15 % on capital gains for properties are deemed acceptable, As for time deposits
a rate of 3 to 3.5% is accepted norm though it hardly covers the real inflation rate...But somehow when it comes to shares
most seem to think a single bid gain as been "ridiculous " when it may mean a 5 % return on a 10sen share....that 5% can
be realised in a second literally or perhaps in an hour or two ..hypothetically translating to an astronomical 1300% return per annum
if you succeed in doing this every day...Granted there are brokerage and other charges ,this can be surmounted or much reduced due
the low or near zero cost environment nowadays with the advent of online trading...not to mention in real life situation one will buy
considerably more than one sinlgle lot of share...
The other common observation noted is that some retailers seem to disregard return based on % altogether.Instead they look at
absolute returns eg 3 to 5 sen as a minimum desired return when that quantum may translate to gains approaching 50 or 100% if the
share price is around that level! ...and we all know that would be highly improbable (except for extremely rare occasional plays or privatisation
exercises ) ...Tell a retailer to sell his 10 ringgit counter at 10.50 and he will love you to bits ..tell him to sell a 10 sen share at 10.5 sen and he
may think you are nuts !

Ironical but true !

Note : To know more about me, you can also visit my website www.chrischootrade.com or you may contact (012-2009389) to find out more.

Regards,

Chris Choo