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I'm a Singaporean. The purpose for all my blogs is to share my life experiences in Singapore.

My Lessons on Investment

What are Shares, Unit Trust and ETF?
See which investment instrument is suitable for you.
What are Preference Shares?
It is different from the common shares.
How to invest using your CPF saving?
Enhancing your retirement saving
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You still can invest if you can save $100 per month
How to buy gold in Singapore?
Different ways of investing in Gold.
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Having a winning strategy is important
Be a investor or a trader?
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Peace of mind after buying shares?
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Things to avoid in stock market.
Don't attempt to try these even you are an expert
My favorite quotes from Warren Buffett
Very meaningful and useful investment quotes
Buying stocks based on price and value
This is the method I use when buying stocks
Investor, Traders and Speculators Charts
Charts are affected by different players in the markets
My Quotes/Rules of Investment
My own investment rules and quotes
The Goose That Laid the Golden Eggs
Protect them at all costs
Dealing with Market Randomness
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Who can be trusted in the market?
Beware of people who give you tips
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Know your own limits and rules of the game.

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STI Index
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Taiji Symbol VS S&P 500
S&P 500 25 years chart
True value of S&P 500
Based on dollar index from 1988 to 2009
US Dollar Index
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S&P(2007 to 2009) VS NIKKEI (1990 to 1992)
Is there any similarity?

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Wednesday, December 2, 2009

The Goose That Laid the Golden Eggs

One of my favourite childhood stories is "The Goose That Laid the Golden Eggs". I believe most of you have heard of the story. For those who have forgotten the stories, I have written a summarize version of it below.

The story goes like this: A farmer had found a goose that will lay a golden egg every day. Even though his life is getting better as he no longer needed to do any farming, he found himself not getting rich enough. Due to his greed, he decided to kill the goose thinking that he can get all the eggs inside the goose. Unfortunately, he was not able to find any egg inside the goose. For that day onwards, the farmer grew poorer and poorer as he can no longer find another goose that will lay golden eggs for him every day.

In the stock market, there are many such farmers or investors around who do not know how to value their stocks. Some of the stocks are actually providing a lot of yields or golden eggs every year, but because of a sudden increase or decrease of stock price, they decided to sell the stock away for a short term gain or cut loss. After selling their stock, they realised that the price and the yield of the stock went up even higher. They had decided not to buy back the stock as the price has increased a lot.

My purpose for this post is to suggest that it is good to hold those good fundamental stocks with good yields which are bought at low prices. It doesn't matter that the price movement of the stocks may be slow. What is more important is that these stocks are providing good yield consistently. So don’t try to sell them for a short term gain or cut loss as most of the times the price of the stocks will go up after selling it. You will find yourselves very hard to buy it back at high price even thought it is still a "Goose that laid the Golden Eggs".

4 comments:

ZhuKoLiang said...

one day, the goose falls sick and is not able to lay golden eggs anymore (ie during recession, company don't do well, and don't give dividend)..

U try to sell the goose, but nobody wants... Or only buyers r willing to buy your goose at an ultra low price which u r very willing to sell.

How??

Freedom Achiever said...

Hi,

Sell when you think the goose is overvalued. Buy when it is undervalued. Always look for good fundamental stocks that is very hard to fall.

Regards,
Freedom Achiever

Coolzone said...

looking for good fundamental stocks that is very hard to fall, any suggestion fr such stock under $1 with gd dvd? i hv set aside abt 10K.. Most blue chips hv climb high so maybe too late to buy. Also dare not buy S chips, got very bad experience.
Any advice r welcome.

Freedom Achiever said...

Hi Coolzone,

Singpost might be a good choice. So far, the dividends given is quite consistence over the last few years. At the current price of about $1, the yield is about 6%

Regards
Freedom Achiever

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