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Can you make money selling shares?

Personally, I have made money investing during troubled times. I am sure most of you with excess cash have also reaped handsome returns buying the shares of troubled financial institutions, such as Citibank, Goldman Sachs, Wells Fargo.

In fact, 2009 was a year when almost every share you touched could be turned into Gold, except for those with structural and deep financial problems within the organisation, such as General Motors.

That was during the bull run starting in 2Q, 2009.

Not sure how many of you were caught during those uncertain times, when the bear and bull were playing tuck-of-war, and you were desperate for money. In those times, you could be sitting on paper losses, or worse still, if you faced liquidity problems, you would have to let go of those shares at a diminished profit (assuming you bought those shares at its troughs), or at marginal to substantial losses.

Can You Generate Huge Returns on Investments
The answer is YES with penny stocks. Unfortunately, you can also lose a lot of money with penny stocks. The key is knowing when to enter to scoop up the pennies, and when to let go of the pennies. Unfortunately, the lay investor are at the mercy of the Market Makers, who manipulate most of these penny stocks through strategy investing. The saying “high risks, high returns” definitely holds true here.

Blue chips may not be able to fetch you super returns, however, they provide a more steady bet with growing your investments through stocks. If you had piled many blue chips into your stock portfolio in 2009, when they were dirt cheap, you would have easily seen a 100% return on your portfolio.

So, what is the way forward, now that most of the markets have recovered substantially? I would love to hear from you, so do leave your comments.

Surviving in this Financial Crisis

The present financial crisis has brought about great financial hardships. The demise of greatly revered financial institutions such as Bear Stearns and Lehman Brothers, as well as the bailout of Fannie Mae, Freddie Mac and AIG, has resulted in significant losses for investors - through direct equity investments or exposures through structured products.

As the global economies have become greatly intertwined, people, companies and financial institutions all over the world have been affected by this present financial crisis.

You read of ordinary investors in Hong Kong and Singapore having lost their money investing in structured products tied to the performance of certain underlying companies, including Bear Stearns. Americans having lost at least 30% of their investments, including their 401(k), due to the bloodbath on Wall Street.

With recession looming in the horizon, people from all walks of life and classes of society are cutting down on their spending and tightening their belts. The ordinary American household is cutting down on visits to expensive diners, spa resorts, and holidays. Thrift is the order of the day.

Business has slowed down at luxury products stores and motor chains, and staff probably spend more time swatting flies. While most businesses have been affected negatively by the current financial crisis, some businesses are thriving in the current economic climate, including hypermarts like Walmart.

Here are some tips on surviving the current financial crisis:

1. Living within your means. If you have managed to pay off your debts, stay off debt. Do not allow yourself to be seduced by those easy credit to buy that piece of stunning diamond ring or SUV. Avoid impulsive shopping.Learn to set aside a budget for everything. Spend only what you can afford. Always try to save some amount of your pay for a rainy day.

   I find the following quote from Brian Tracy as quite illuminating:

   “Financial Freedom comes to the person who saves ten percent or more of his income throughout his lifetime.”

   - Brian Tracy

   Look for discounts on the Internet, and shop for your daily necessities at your hypermarts.

2. Find alternative sources of income. With mounting job losses arising from the fallout of the economy, it pays to always have options just in case you are laid off or your salary is cut. You never know when your turn will come.

   There are many part-time internet-based business opportunities or job assignments that you can consider. Take your time to do research and find something which you have the expertise and passion to perform the work is required.

3. Invest money that you can lose. If have the money to invest, perform due diligence on the companies that you wish to invest in. Given the current extreme volatiliy in the stock market, I would advise you to invest in large capital, dividend-paying company stocks with growth potential. You should make investments with a view to profiting from long-term capital returns.
4. Do not invest in financial products you don’t understand. Don’t take your financial advisor’s words at face value. Never rush into financial products that you don’t understand. In particular, I would flag structured products up for special caution. It is important understand fully the financial risks, the potential downside, the extent of capital protection, your own investment time horizon before making any investments.

For my readers out there, I ask you leave comments on what you think would be useful to others to survive in this current financial crisis. Critique of my article is also welcome, so that I can gain better insights into how I can manage my own finances better, or to correct any wrong understanding of the current state of the economy.

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