Small fish vs big fish

Small fish vs big fish

 

In the very vast ocean sea or even in a small pond, do you think a small fish will stand to have any chance of survival when it is surrounded by some big fishes around?

Most probably you and I will agree that only the big fish will win in the battle for survival.

As most of us are virtually individual lonely retailer in the local stock market, we are somehow very much like the small fish trying to make some decent good profits in our investment adventure.

Our rivals are the so-called institutional funds, unit trust funds, syndicates and even the "major owners" of the companies listed. Mostly compete with one simple goal i.e. to make big money. You see, in the investment world, there is no such feeling of sympathy for any loser. It is a dog eats dog's world. It is a world of every man for himself first! So one must be willing to pay the price.

If one is to over speculate and suffer major loss, nobody is going to be his 'Uncle Sam". After all, if he speculates and win enormous profits, do you think he will even share one ringgit with you? Or give you a big ang pow?

It is common knowledge that most individual retailers lose money in the stock market. (This is a real fact. If most retailers makes money, then most of us would not be working anymore. How nice we can just go to the stock market after a good breakfast, make one or two buys, sells for a profit later in the afternoon or the next day and this is consistently repeated again and again).

But this is not happening, right? On the contrary, most retailers tend to end up the other way round, i.e. winning paltry amount and losing major trades. Seriously, are you able to identify ANY individuals who continue to make more than 100% winning trades most of the times and only suffer the occasional minor loss?

You can't, right? Because there is hardly, although there are a few elites around and most probably, they are a low-profile group.  Because most of us are exactly that SMALL FISH in this BIG OCEAN with full of big giant white sharks around, that is the reason most lose money!

But I beg to differ. Although I am a 100% small fish in the investment world, I also have my advantages.

My advantages are that I am able to move around freely, meaning I can buy some small amount of shares of this company and that company and then I can simply sell any portion immediately or anytime should the counters spike up suddenly.

I am also not restricted to any red-tape where I need to declare my purchase or selling to anyone. I am also not restricted to buy or not allow to buy any amount of shares in any company as long as my cash is there to pay for it.

But I believed the greatest advantage is I have a biggest choices of companies to buy and sell any time. I can choose any company I like to buy and I can set my own criteria for these companies.

What I mean is buy into companies that are preferably cash-rich, making consistent profits quarter after quarter (even though the profits are average), willing to share its profits as dividends with its shareholders), stable business that is difficult for competitors to challenge or overtake) and good management who DO NOT OVERPAID themselves!

Of course, the entry price to buy such companies is also very important. If one buys at price that is trading at over 20 price earning ratios, then one is actually paying quiet a high price. It would be better to scout around for such companies trading at around 10-15 price earnings ratios.

As a small lonely individual, one can CONTROL oneself to invest in such companies. One can even move in and out easily when the stock price moves up significantly.

Similarly, the small fish also has many disadvantages compared to the big fish in Bursa Malaysia. The lonely retailer is the last to know of any sensitive material information that will have a big impact on the share price.

A good example is comes November, many companies would be announcing their quarterly results ending September. During those moment, many companies' accounts are being audited by auditing and accounting firms. Surely these firms are the first to know how the results would be for the companies they are auditing, next would be the top guns of the companies and lastly you know I know are the lonely retailers or small fish when they surf the website of Bursa Malaysia.

That is why the Securities Commissions are very strict when it comes to leakage of sensitive informations. We can call it Insider Trading.

So if you are also a small fish like me, please do not despair of your current situation. You and I have also many advantages and disadvantages.

If you think the disadvantages are too much for you, you can choose not to invest at all.

But if you still choose to invest, then do not blame any others should you lose money in your investment. You determine your own decision as you are responsible for your action.

Lastly, is the world fair or unfair to the small fish?