How I trade and invest in stocks and bonds by Richard D Wychoff - a reading digest
Been reading Richard D Wychoff's book. I find it rather fascinating. This book was in the 1920s, but most of it remain relevant today. Richard D. Wychoff is a sophisticated investor of his time, and most of his thoughts are documented in the book.
On unearthing profit opportunities.
He refer to each of investment exercise as campaign. In his words, "to make readers think and plan and carry out their campaign in the investment field just as they do in their own business."
In his opinion on which kind of stock is best, he gave a few examples of his time. one is Sears, Roebuck & co, which pays stocks dividends every few years. These companies use the share capital for profitable expansion and distribute stock dividends every years. This way investor got to double their holding without any further investment of cash by him. This method reminds me of the dividend reinvestment plan available in Malaysia. One company that practices this rather successfully is Maybank Berhad. Investor in these companies will watch their dividend bringing more units to them as the dividend is reinvested into more units.
Another type of investment method is to invest in good firm that falls in bad time. In modern days, it is known as a situational play. Business being a dynamic endeavour will involve risk and at times, there will be situations that might threaten its business. This situation will the market value of these companies to fall, and shrewd investor could take advantage if they think it will pass. Some companies that are falling in bad time include the many property counters due to the rising interest rate and the ending of the easy money policy in the US. But will demand for property continue to dwindle in Malaysia or it will surely come back? And there will surely be some companies that will fall in bad times, but how to differentiate the wheat from the chaff.
The book also explains why high price stock is better than the lower price variant. Among others, the high price stock pays dividend, have hidden equities which may not benefit the stockholder right away, but which are working for them anyway. In order to profit from such investment, he advised investors to follow the corporate development and its industries.
Been reading Richard D Wychoff's book. I find it rather fascinating. This book was in the 1920s, but most of it remain relevant today. Richard D. Wychoff is a sophisticated investor of his time, and most of his thoughts are documented in the book.
On unearthing profit opportunities.
He refer to each of investment exercise as campaign. In his words, "to make readers think and plan and carry out their campaign in the investment field just as they do in their own business."
In his opinion on which kind of stock is best, he gave a few examples of his time. one is Sears, Roebuck & co, which pays stocks dividends every few years. These companies use the share capital for profitable expansion and distribute stock dividends every years. This way investor got to double their holding without any further investment of cash by him. This method reminds me of the dividend reinvestment plan available in Malaysia. One company that practices this rather successfully is Maybank Berhad. Investor in these companies will watch their dividend bringing more units to them as the dividend is reinvested into more units.
Another type of investment method is to invest in good firm that falls in bad time. In modern days, it is known as a situational play. Business being a dynamic endeavour will involve risk and at times, there will be situations that might threaten its business. This situation will the market value of these companies to fall, and shrewd investor could take advantage if they think it will pass. Some companies that are falling in bad time include the many property counters due to the rising interest rate and the ending of the easy money policy in the US. But will demand for property continue to dwindle in Malaysia or it will surely come back? And there will surely be some companies that will fall in bad times, but how to differentiate the wheat from the chaff.
The book also explains why high price stock is better than the lower price variant. Among others, the high price stock pays dividend, have hidden equities which may not benefit the stockholder right away, but which are working for them anyway. In order to profit from such investment, he advised investors to follow the corporate development and its industries.
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