adding
@ps3linux to this thread .
pl take time to give input
Yaar sorry, although this thread does fall right in my specialization but I have serious time constraints that's why despite wishing to contribute I have less time at hand to post something.
Anyways
1st rule, every financial product has inherent risks involved, people need to evaluate the risks before jumping the bandwagon. For example lets says toll plaza to toll plaza M2 is 360Km, the max speed allowed is 120kh/hr, simple math says I will cross M2 in 3 hours (under ideal conditions, setting aside ifs and buts), but if I wish to cross that 360 km in lets says 2 hours my average speed will have to be around 180km/hr. While theoretically I will cross it in 2 hours, but there is the other side of it the probability of accidents will start increasing exponentially once I cross 140km/hr, then there is the obvious motorway police speed checking and traffic ticket.
First case is the ideal condition and the other one is desire, same goes to financial products if you don't want to take risk otherwise known as risk averse your return will be at par with the discount rates give or take. but if you want to have higher returns (cross motorway in less than 3 hours) then you will have to take risk. These are entire specializations risk assessment, valuation of financial products, financial planning.
Time is another variable which can determine the returns, shorter the investment horizon smaller will be the returns.
Brokerage in Pakistan is a shithole and I compare them with the hawkers on old bus stands, no training, no understanding just going by stupid sentiments, so is real estate and PMEX.
trust deficit and of course not-so-honest people have really screwed many investors and potential investors that I fail to even comprehend.
There is another side, and that has to do with our jack-of-all mentality. Back in 2007/08 I was in country and met a group of individuals (friends of my father) retired general sb, retired brigadier sb, owner of monal and lmkr they wanted my advise on stock picking in Pakistan, actually general sb wanted was me to endorse his bullish view on MCB which was trading at Rs.450 way above normal P/E, and I clearly told them I will stay away from this as it is way overpriced and the dividend yield at best is poor. Gen sb got so pissed that he told me "tum kal kay bachay ho, tum amercia main kam karnay walay tumhein kya pata mein is ko aglay saal 1000 per share bechaun ga"
I said please be my guest and then I left. Then came the time of benazir murder and stock market freeze imagine what happened. Met the same group after almost two years at my dads place, it was a very pleasant exchange he he.
Same to real estate, investing in real estate particularly in ex colonial countries like Pakistan, India, Bangaldesh has significant risks and one should evaluate them before taking a position. Liquidity is a serious concern when it comes to investing in real estate.
One key tip I give to investors "free of cost" is "stop loss definition", e.g if I invest in a stock under any given circumstance I make sure that I don't suffer more than 20% loss on investment, once it goes to around 15% loss I sell the stock regardless of what to come. Although I manage my portfolio on dynamic CPPI flooring basis. While investing in an financial product one should define his/her stop loss floor, once the investment goes near that loss it should be sold without any ego.
There are so many factor than I cannot even describe them all, technical investing vs fundamental investing vs contrarian investing, etc , etc.
Commodities, options all carry their inherent potential returns vs inherent risks.
If there is a question regarding investing tag me, but please don't expect that I will be answering naiive question like is fort monroe a good investment or not.
