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Friday, August 10, 2012

How to measure success in stock market?

How to measure success in stock market?
There are many ways to measure success in stock market. Success here means gain from trading in stock market or gain from shares or share price movement. Someone made $2 million, may not be more successful than someone who made $1.5 million. Refer to the list below and you will have more understanding.

In measuring success in stock making, it can be measured based on the following:

Total money made
Someone who made $2 million is more successful than someone who made $1.5mil.

Percentage return
The higher the percentage gain, the more successful. Example if Mr A invested $10 million and made $2 million (20%), compare with Mr B invested $0.5 million and made $ 1.5 million (300%), Mr B is more successful.

Mr C made 30% per year for two years and then never touches stock market anymore. Mr D makes average 25% every year for the past 15 years, then Mr D is more successful where Mr C’s track record is not proven yet.

Portfolio Performance (stock and cash) rather than just Stock Performance.
Mr E’s stocks value increased from $50,000 to $80,000. Cash $5 million.
Mr F’s stocks value increased from $50,000 to $70,000. Cash $10,000 only.
Mr F is more successful because with total portfolio of $60,000 ($50,000 stocks and $10,000 cash) he managed to increase $20,000 or 33%.
Mr E with portfolio of $5.05 million, only managed to increase $30,000 or 0.59% only.

Total Profit in comparison to Personal Total Net Worth
Mr G is a rich man with $100 million net worth, he made only $100,000 from stock market.
Mr H is an average working class worker with $200,000 net worth, he managed to make $80,000.
Mr H is more successful in stock market.

Time needed.
Mr I made $100,000 within 10 years. Mr J made $100,000 within 5 years only.
Mr J is more successful.

Effort Needed
Mr S just look at some simple research figures and made $50,000 within 5 years.
Mr T made deatailed study, attended seminar, do detailed analysis, buy and sell many times, and made the same $50,000 within 5 years.
Mr S is more successful.

Mr K made $100,000 within 10 years, Mr K now is 35 year-old.
Mr L made $100,000 within 10 years, Mr L now is 34 year-old.
Mr L is more successful.

Mr M’s tips are more accurate than Mr N.
Mr M is more successful.

Actions and Result
Mr O’s tips are more accurate than Mr P, but Mr P made more money than Mr O because Mr O talk only, no action, he himself seldom buy. Mr P is more successful.

Economy and Stock Market Index
Mr Q made 200% from year 1992 to 1996.
Mr R made 200% from 2007 to 2011.
Mr R is more successful because from 1992 to 1996 the economy and stock market index perform better than from 2007 to 2011. More easy to make money from 1992 to 1996 than from 2007 to 2011.


The list can actually goes on and on.

You can see that it is very difficult to measure who is more successful.

If I tell you now that I have made $5,000, it does not mean that I am less successful than someone who made $6,000. It does not mean that I am more successful than someone who made only $4,000. Many factors need to be considered.

Some people may make less from stock market because they use their money to invest in other investments which make more money than stock market, example in their own business, property, or gold, and some may want to invest more in their children by giving them better education, food, care, etc.

I’m not saying that we cannot compare. If we want to compare, please bear in mind that there are many factors involved, and direct comparison is almost impossible.

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  1. can you teach me how to turn 500k to 1.5mil in 2 years?

  2. On the average, 7-8 years may be possible.

    Futures market may be possible within 2 years, if assumption is correct.

    Trade Futures. Investor just need RM4000 for one contract of FKLI (KLCI futures). 1 point = RM50.
    RM500k can buy 125 contarcts. Assuming Short market
    If the market down 200 points. 200 X RM50 X 125 = RM1.25mil.
    RM1.25m + RM500k initial cash = RM1.75mil.

    If the investor long market and the market up 200 points in two years, same profit


    FCPO (CPO futures)

    One contract FCPO = RM6,000.
    1 point RM25.
    RM500,000 can hold 83 contracts.

    If swing 500 points.
    RM25 X 83 X 500 = RM1.037mil
    + cash RM500k = RM1.53mil


    Just an assumption for sharing market information. Futures trading is extreamly risky. Have to refer to Financial Consultant, they are the expert.

  3. how come only possible in 7 or 8 years? your pick Hua Yang 2 years only can make 200%,if bought 500,000 shares already make more than 1 mil.pick another counter that can make a million in 2 years can or not?

  4. I THINK YOU MISS OUT WHAT I MENTIONED IN THE POST. . . . . .Please don’t be fooled by me or other persons if I said or they said we made few hundred %. If I buy many stocks, not surprise if some stocks made few hundred %. More important is the overall performance of fund year after year, all stocks and cash combined.



About Me

Dollar Cost Averaging and PEGGY Method. Sharing info on cheap (low PE) company with high growth, low Gearing or Net Cash and High Dividend Yield.



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