Blog and Artwork updates of Singapore caricaturist, portrait artist and illustrator - Jit

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Monday, November 24, 2008

Comic illustration -short term vs long term investment

Comic strip illutration - Short term vs Long term investment watermark
Short term investment/trading is usually fast. You zip in and out of the market.
Risk is lower. So does your profit and lost.
Long term investment is usually when your short term investment went wrong (Hahaha...)
i.e. you are trapped and refuse to cut loss. These type of investors usually will tell you that they are looking at the long term. They don't care about the short term loss. Their profits will go up and down, as they were taken away by the short term invetors/traders.
Bigger risk = bigger profit. They have to stomach such loss.
It could be true.
However, if you don't know how and when to take profit and exit your long term positions, you may end up losing your profit and even capital. The stock market goes in a cycle. What goes up will come down, and vice versa. But in a bear market, the price may not come back to you, if your entry price for your long position is too high.
Just like Citibank. Temasek bought it at US$35 per share. All time high is over US$100.
It could be a good bargain at that time.
Citibank went to US$3+ per share about 2 weeks ago. Nearly 90% of your capital is gone, if you enter at the same time with them.
The trend is down. The low will get lower. Even if you are doing long term investment, you should wait for the upturn from the downtrend to enter. The chart will tell you if you plotted your trendlines correctly.
The economy will get worse in the coming 1-2 years time. Corporate results will get worse. US$3 per share could look expensive if it comes to US$2 per share.
I think there's no need for the rush now, if you are doing long term investment.

Cosco - short term vs long term investment
Cosco Corp daily chart.
You would have made big profit from the short and midterm uptrend and downtrend.
If you invest for long term, enter into a position, and don't know when to exit your position, after 2 years, in this case- Cosco, it will come back to your price. All your profit just evaporated like that!!!

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