Malaysia's Second Board is largely speculative and one should not heavily commit
for your future income. Some fund managers believe that one should only invest in
Second Board when you have a very good tip, forgetting about all the fundamental
and technical analysis, thus making investment in Second Board even riskier.
Most times, investors in the Second Board are buying purely based on market rumours
which are often manipulated by group-playing. This explains why analysis would not
work effectively for Second Board stocks which generally have been driven strongly
by market rumours.
It is important to differentiate between gambling, speculating, and investing. Speculation,
unlike gambling on Malaysia's Second Board, often takes a longer time to complete
a transaction but still tend to have shorter duration than investing. Investors speculate
to purchase securities for instance in hope of making attractive profits within probably
a few weeks or months time. Speculators tend to exploit investment research insights.
Investing, on the other hand, involves long-term price appreciation. Generally, fund
managers or financial analysts are employed by investment companies or financial
institutions to identify investments with the greatest long-term capital appreciation
potential. Most unit trusts deal with investments that generate long-term capital
appreciation.
In conclusion, regardless of whether you are an aggressive or passive investor, you
should make changes to your investment portfolio as you go through your life cycle.
For instance if you are 23 years old, what is appropriate for you now (growth-oriented)
might not be what is best for you when you reach 50 years old (income-oriented).
Perhaps investors should realize the benefits of diversification. In short, diversification
works because returns on different individual instruments are not perfectly correlated
overtime. Through diversification, one can reduce the exposure of investment risk
by either maintaining or increasing the expected returns.
