Monday, September 29, 2008

Seven Deadly Sins of Investing - Part I


An Interesting Quiz


With the current financial crisis, now is the time to start considering investing in the stock market. Before proceeding, we need to find out whether you have temperament and personality to be an Intelligent Investor. Sounds interesting? Well, take this quiz to find out. Ready? Here we go.

1. To Buy A Car
Oil prices have just gone up and your wallet has taken a huge dent. Your rickety old car is good enough for your needs even though you need to spend money servicing it frequently.

One fine day, you hop over to a car dealer just to admire the car. Immediately a car sales person pounces on you and brings you to look at a shiny brand new Toyota Altis. It appears to be reasonably price and looks gorgeous. Besides, you would be saving on repair costs on your old car. No harm rewarding yourself after working so hard, right? Besides, your year end bonus is coming up soon.

Do you buy the car?

2. An Intriguing Hobby
You have an extremely interesting hobby that you've just picked up. However, due to work and family commitments, you are unable to spend as much time on it as you would like.

Fortunately, this coming weekend, your wife and your kids have decided to go visit their grandparents leaving you free for the week. Your do not have much outstanding work in the office and you do not have any pressing engagements.

Do you spend your entire weekend on your hobby and disregard everything else?

3. A Fantastic Opportunity
You visit your relatives house and notice that they've just bought a brand new 42 inch Plasma TV. Before you can say anything, they start telling you about an investment scheme they participated in. It turns out that that they have placed their money with an offshore investment institution dabbling in oil futures. So far, they have doubled their principal in a month.

Although you remain skeptical, after much persuasion and encouragement, you invest RM5K in the scheme. To your surprise, two months later you receive a statement showing a total of RM15K in your account. You have the option to cash out at anytime. A check on the Internet reveals that the investment fund is legitimate and there are a large number of good reviews on the fund.

Do you invest more money in the Scheme?

4. Power of Attorney
You wish to purchase a property in Singapore but are unable to personally attend to all the paperwork. Your lawyer is from a medium sized legal firm which has a good reputation locally. He suggests that you delegate the paperwork to him via something called a Power of Attorney.

When you question him further, he tells you to just trust him. Further, he tells you that since you are not conversant with the law, explaining to you would be a waste of time.

Do you sign the Power of Attorney?

5. A Stolen Car
One fine day after work, you reach the car park and find that your car has been stolen. Darn it, of all days - you left your Identity Card, Passport, credit cards and ATM card in the car. Being a forgetful person, you left a password on a post-it-note in the car just in case your forgot it.

Do you scream, shout and burst into a wild tantrum before forcing yourself to calm down?

6. The Two Rivals
You and your fellow colleague are two of the brightest rising stars in your company. Both of you are highly competitive and more or less equal in skills and abilities. At this year end, only a single person was promoted. It was your colleague.

Although you feel that you contributed as much as your colleague, there was very little to differentiate between the two of you.

Do you feel continue to feel angry and upset that you were by-passed for promotion after a period of two weeks?

7. To Eat the Humble Pie
You are known as a meticulous, diligently and intelligent worker. One fine day, your *not-so-bright* colleague approaches you and remarked that there might be an error in your spreadsheet. Instinctively, you give him a piece of your mind, right there and then in front of everybody, After cooling down, the next day you review your spreadsheet.

GASP! He's right.

You want to apologize to him but you feel too proud to do so. Do you pretend as if nothing has happened and discreetly correct your error?

Where are the Answers?
The full Excel version of the quiz above with the answers has been sent via email to my subscribers. If you wish to receive it, you can subscribe to the e-mail subscription on the upper right hand corner, as follows:

Step 1 & 2:


Step 3:




Step 4:



Step 5:


If you are unable to subscribe, fret not. I will discuss each of the seven questions above on a weekly basis together with the answers, so that you understand the pre-requisites before dabbling in the stock market.

Conclusion:
Each of the seven questions represents a facet of the Seven Deadly Sins that one should avoid, when investing in the stock market. We will discuss these Sins one by one, begining with Lust starting next week.

9 comments:

Damien Tan

Hmm.. I subscribed and after feedburner accepted, it said the author had nothing to send...

Avatar

Dear Damien,

I have to manually send-lar. I was searching for your email at your blog, but couldn't find it, so I didn't put you in my list.

Gimme a sec.

Rgds

Keong

out of curiosity...

1. Yes. Honda Civic.

2. Yes. Go for new hobby.

3. No. Probably just let the fund grows. No free lunch huh.

4. No way.

5. $#$#&*^#@P(*&$_

6. Dont have such feeling wor.

7. Just apologise lar, wtf

Bru, r u flying back to your homeland?

Keong

subscribed but don't receive your email?

Avatar

Dear Ah Keong,

Manual mah. Gimme a sec to send over.

Rgds

ronnie_lau84

mind sending me i just register... thanks man

Avatar

Dear Ronnie,

Sure, I have just sent it to you. Hope you find it interesting. Drop by next Monday to find out more about each of the Se7en Sins :)

Rgds

AMIT

Wow what a nice post from you about Investing and the points to be kept in mind.

Finance Bookmark

SEO Forum

Really an interesting post, Read with wish to get the answers,and also makes my own anser, some situations we don't want to be in.
Thanks for sharing

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