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Jake Van Der Kamp

Investors should identify their investment goals.

Gov't investment  adviser No 1

Investors should have risk management measures in place

Gov't investment  adviser No 2

I CAN OFFER YOU absolutely top investment advice too. My tips are, in fact, the same as those quoted above but are worded differently. One is for investors seeking capital gain and the other for investors who are risk-averse.

For those seeking capital gain: Buy low, sell high.

For the risk-averse: Don't deal.

And if you recognise that both of these tips are utterly useless to you, take comfort from the fact that I know it, too. I have the benefit of knowing it from having spent almost 20 years as an investment analyst in that school of hard knocks called the stock market. I wonder if our two government  advisers knew what twaddle they were talking when we quoted them yesterday on stock market doings.

Government adviser No 1 is  Secretary for Financial Services and the Treasury Frederick Ma Si-hing and he ought to know better because he  spent several years working as an investment analyst, although that was in the Canadian market, where they normally talk twaddle because even investment talk must be politically correct in Canada.

But, Freddy, let's stop being so Canadian for a moment, shall we? Just what do you think most investors identify as their investment goal? Is it to see Bambi in the flesh at Cinderella's castle down at the Disney park? Is it to qualify for an internship application to Mother Teresa's school of good works?

I thought (and I'm sure you'll correct me if I'm wrong) that the goal was to make money, lots of it if possible and as soon as possible, too. For most people, this does not mean waiting for a dividend. It means buying a stock that puts rockets on its share price as soon as the contract note is issued.

The best way of doing this, of course, is the one I recommend - buy low and sell high. There is a difficulty, however. How do you know that the price won't go lower yet when you want to buy low? How do you know it won't go higher yet when you want to sell high? How do you even know that it is either low or high? Did your broker tell you so? Your bad luck then.

I shall guess here that by 'identify investment goals' Freddy means 'don't be too greedy'. That's guesswork, I grant you. I can never be quite sure what government people mean when they try to talk investment talk.

But it is not bad advice if I'm right. None of us should ever be too much of anything, including being too greedy. The only trouble is that I still don't know what too greedy is.

Can you help me, Freddy? If I hold out for a share price of HK$120 on Cheung Kong, would that be just ordinarily greedy, an investment goal in other words, or too greedy? What about HK$130?

And what about considering the idea that to be active in the market is always to be caught midway between greed and fear, just as everyone else is, that your identifiable investment goal is no different from the identifiable investment goal of everyone who is in the market with you.

It's like jumping into the deep end of the swimming pool (there is no shallow end in this pool). The object is to swim. If you think it's different for you, well, let's  hope there is a lifeguard handy to fish you out and get you breathing again.

There is no special, tailor-made way suited uniquely to you. That's just investment adviser  talk. People who think they are different in this pool are people who drown.

And now to adviser No 2, Joseph Yam Chi-kwong, chief of the Hong Kong Monetary Authority, who sits on a treasure hoard of HK$1.2 trillion and, for the most part, can't think of anything better to do with it than help that warmonger in the White House fund his military adventurism in the Middle East.

Joe says investors should have risk management measures in place, which obviously leads to the question of how many he had in place when he tossed HK$120 billion of our money into the stock market at the height of the Asian financial crisis in 1998. Ah yes, but that was different, not the same thing at all.

I shall grant you, however, that he is more risk-averse now. He  has all the instruments he could possibly want to help him be risk-averse. If he snaps his fingers a mob of investment bankers will fall over his feet to write him any risk-limiting derivative he could possibly want. That's the power of money.

I don't have that power. Give me an example of a fancy risk management strategy that could work for me, Joe. Better yet, tell me when as well as  how. There are times when I am pulled more by greed than by fear and that's when I want to gear my risk rather than limit it.

But when I want to limit it I have always relied on one very good risk management tool. It's called the Sell order. Do you truly have something better?



Investment tips are just twaddle for greedy stock market punters