As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Value Investing
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Technical Analysis and Charting
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Sunday, 18 March 2012

Understanding Asset and Liability (2)

Read? Understanding Asset and Liability

This concept of asset and liability can be extended to stocks investing.

When we invent in stocks without using margins or leverages we are buying assets; but when we are buying stocks on margins or leverages; they will become liabilities whenever we have margin calls from our brokers as cash from our pocket will flow to our brokers.

Good assets

Good assets are those stocks that are paying regular dividends and putting cash into our pocket and at the same time their stock prices are moving up North. Over time, these assets will make us feel richer and richer.

Non-performing assets

These stocks still pay us decent dividends but their stock prices are not moving up North so they may not actually made us feel richer.

Bad assets

Fallen stock prices with no dividends. These stocks are bad assets that we cannot afford to hold too many of them and for too long as rising inflation over long run will eventually kill us.

To become rich in stocks

This is where Pareto's Law will be helpful in our asset management.

80% of our stocks must be of good assets providing cash into our pocket and at the same time they will made us feel richer and richer over long run.





1 comment:

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