Beware of empty vessels in stock market
Our stock market seems to be rather quiet these few days. Perhaps it’s due to Raya season. Perhaps it is finally settling down. Or perhaps it’s the calm before the storm. For me, it’s not important because I always try to stop myself from timing the market. Too risky to time the market anyway.
So the next question is, is this the right time to enter the stock market?
Well, it depends on what kind of stocks you are looking at. If you are planning to invest in a good company with good management (and good cash flow. Don’t just look at the profit), then I don’t see any problem. Buy it when the price is right…..not the lowest and not the highest. Then keep it for few years.
On the other hand, if you are a speculator and want to invest in those stocks with fluctuating price, you better be careful. Don’t forget what happened during the stock market crash especially the one in 1997-1999 period. Stocks which were priced at $20 could disappear within a weak. That is 20k worth of money burnt in 1 week.
These stocks are what I always call empty vessels. Companies which have no proper cash flow, limited assets and yet have a ridiculously high price tag.
My advice, never to invest in such stocks. Yes, you might be able to earn a lot by trading them within a short period of time due to their fluctuating prices but chances are, you will get yourself in big big trouble most of the time. Because the stock price does not reflect the true value of the company.
Remember that investing in stock market is not gambling. And if it’s not gambling, why do you want to put your money into a company which is practically an empty vessel? And if you are not investing in empty vessels, there’s no need for you to panic even if the stock market crashes. 
p/s…. over the years, there have been a number of companies which are regarded as empty vessels. If you have been in the stock market for long, you should be able to see. I won’t give any examples here though.
p/s…. empty vessels are not necessarily petty stocks. Some petty stocks actually have pretty good records, with proper management.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment