Fortunately, my cautious approach to the stock market is shaped by my relatives' serious investment failure (One of them almost bankrupt) during Asian stock crisis in 1997/98 and especially CLOB saga and Currencies crisis that leaded me to focus only in local stock market to eliminate the forex and foreign monetary policy risks.
And 2007/08 Sub-prime crisis has further shaped me to believe that the following approaches may not be right for me:
- Aggressive "Averaging Down" in a falling market can be a double-edged sword as there is no way to tell that the market is just pulling back, correcting or heading towards the next stock crisis.
- Leveraging can force me into really weak spot and cut losses at the worst time.
- Stocks with weak sponsorship or owners are to be avoided as they are less able to raise massive Right Issues to strengthen up their balance sheet to survive or to seek investment opportunities.