Making Your First Million.pdf - Association of Net Entrepreneurs and ...

Making Your First Million
particular share are created by complex variables such as mob psychology, marketing
push, takeover rumors, company earnings, write-offs and so on. The underlying factors
are greed and fear. Greed pushes up the price. Fear induces the flight to cash and profittaking.
To make money you simply need to out-think the game. Understand the underlying
principles of the share market and you are positioned to make money. Plan long term.
Ignore the fears of the mob. Think for yourself. Understand that the share market reflects
the commercial health of the country. Long term it rises and outpaces most other
investments including real estate. Shares are more liquid than property and you can sell
them in small parcels. Examine each company carefully. Look at its management, its
USP, its prospects in the light of current trends. Seek advice from successful traders and
develop your own judgement. Look for companies which are undervalued but, in your
judgement, will experience improving sales and market conditions.
At present, for example, we see a great rush to the telecommunications industry. All the
big players are represented, Telstra, Optus, AAPT. A year after floating, Telstra shares
had doubled in value, and they continue to rise. Optus has completed its investment phase
in cable laying and should soon start to pay dividends. Key smaller players such as
One.Tel have attracted take-over interest from Packer and Murdoch. Vodaphone look set
to float this year. A definite must-have. We stand at the edge of a telecommunications
explosion. We can join the rush or we can look for strategic investments in presently
undervalued companies that service the big players or companies with emerging
technologies such as satellite phones.
The key is knowledge. Develop it yourself and avoid the urgers and spruikers operating
from self-interest. The world's most successful share market trader, Warren Buffett,
simply reads as much as he can about a company from newspapers, magazines and
company reports, makes a decision based on his own opinion, buys and holds. A good
company is good for a long time. If you've made a sound investment decision, allow time
and synergy to compound its value. Choose a company with good management and they
will work for you.
Understand also, that the market is cyclical but its overall trend is up. We are heading for
a market correction with Wall Street trading on an average 28 times P/E and uncertainty
over the Y2K effect, so keep your head. Play long term. Don't be swept along with the
mob. Use them. Understand mob psychology. The majority of trades are less than 24
hours old. Short term there are no rules. Short term you're in there taking a profit, selling
too soon, essentially gambling. Playing the market short term it's easy to make money but
hard to keep it. Short term players start every third sentence with "If only . . ."
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