People often flock to blue-chip stocks or REITs, or well-known PLCs when they first start investing in Bursa. After all, it’s considered the “safest”.

I remember buying $MAYBANK / 1155 (MALAYAN BANKING BERHAD) $CIMB / 1023 (CIMB GROUP HOLDINGS BERHAD) $KLSE-CAPITALA $SUNREIT / 5176 (SUNWAY REAL ESTATE INVESTMENT TRUST) $YTLREIT / 5109 (YTL HOSPITALITY REIT) ... that was 5 years ago.

As one progresses further, then you’ll start to know that there are more than just those handful of stocks. Then, you start to learn about basic ideas like dividend yield, and realise many misconceptions like share price doesn’t mean the stock is expensive or cheap.

PSA: A RM1.50 stock is not more “expensive” than RM0.95…… a better measure is to look at the market capitalization. But even then, that’s just barely scratching the surface of valuation.

To determine if the company is a “good deal” or an “expensive deal” is going into valuation, and it is knowing how much you are paying for the thing you're buying.

If you do not know what you are buying, how would you know if you’re paying a good price for it?

Imagine, there are 2 mystery gift boxes in front of you:
Giftbox A has nothing, but may have good packaging, it is RM100 price tag
Giftbox B has 10g gold bar in it, but is in a carton box, it is RM1000 price tag.
Which is more expensive?

In this context, share price is just the price tag, it doesn't indicate if you are buying something valuable or with a reasonable price.

So, how do you know the amount of “gold” inside the giftboxes? Look at stocks as businesses, read their quarter reports and annual reports, to KNOW what you are buying.

Anyway, I digress. I hope more people don’t just say a company stock is expensive just because it’s above RM1. Sekian.

Read more...
2013-2025 Stockbit ·About·ContactHelp·House Rules·Terms·Privacy