Wednesday, November 12, 2008

The Fly Fishing Day Trader

The Fly Fishing Day Trader

Mr. William McRoberts can often be found fishing the Namdaecheon River in Yang Yang, Gangwondo where he lives and teaches English at Kwandong University . For much of the rest of his leisure time McRoberts pursues another interest, the Korean stock market. This patient rural fishing gentleman is a day trader. So asking him to give pointers regarding entering the Korean stock for beginners was a natural choice. “First of all you have to be aware that there are risks involved in the market. Only invest money you can afford to lose” He recommends, “You can start with as little as 1.000.000 won. Simply visit a securities firm, with your passport, and open an account. They will give you (download to a memory stick) a program to trade from any computer. There are security features to prevent hacking.” Concerning the technology, “The Korean exchange is all electronic, meaning no humans are involved in the trade. You choose a price that you want to buy or sell at and wait. If you want the going price, you get the stock trade immediately.” Regarding current level of fluency in Korean he adds, “You don't have to know Korean to be successful. All stocks have numbered codes. You can review the Korean stock on Yahoo finance, by entering the code, say 004020 for Hyundai Steel, and add .ks to get 004020.ks and you can see charts, high lows and some other limited data. The program you trade with will have more data, but it's in Korean and you will have to dig around to find it.” If you seek a human face to go with your trades, McRoberts cautions, “If you want the agent with the securities firm he can recommend stocks and even buy them for you, you will have to pay a 3 or 4 % fee. I would avoid this. Make your own decisions. It's more fun.” On the topic of taxes and fees, McRoberts is calming, “There are taxes and fees that all securities firms charge, but they are peanuts. Buying or selling is 0.025 % or about 25.000 won on a 10.000.000 trade.” On choosing evaluation tools, “The best indicator for the beginner is the Price to Earnings ratio. This means the price of the stock, divided by the earnings over one year. Hyundai steel traders about 11 to one. So the stock is about 78,000 won per share so they had earnings last year of approximately 7000 won per share. The lower the P/E number the cheaper the stock is. A good starting point would be a stock or stocks under 12. And don't put all your eggs in one basket. Buy a range of companies you understand, or are interested in. Don't sell when others are panic selling. Hold on.” McRoberts remains a fisherman, “Many Koreans see the stock market as a tool for gambling, expecting a quick buck, and prices can swing significantly, but if you are patient, and choose good stocks with future earnings potential, you should make money, over the long term.” Doing your own research and learning as you go are key recommendations, “It pays to research where the sector and the economy is going. Trying to pick bottoms in the stock price is a fool’s game. Remember the stock price today usually reflects the conditions that it is trading in today. But, it is worth trying a little investing, even if it is an education. You can direct deposit money each month, and over time it builds up. You can trade as little as one share. So to sum up, opening an account is simple, you can trade on line, and fees are very cheap.” As with every successful fisherman, McRoberts concludes with a precious maxim, “Patience is the key. Look to the future and access what areas of the Korean economy should be prosperous. Choose a sound leader in the sector. Sell if the stock hits new highs at low trading volumes. Some say sell any stock once you lose 8 % , but that could be raised to 10 or 12 % because of the swings in prices here in Korea . Keep slowly rising stocks. Sell fast rising ones. Don't average down if the stock falls. Greed and fear drive market swings. Be ready to ride out the storms, and you should be fine. Good investing.” If you have further questions, Bill may be contacted at:


Anonymous said...

UK house sales are now at their lowest since 1978. According to Bloomberg, new mortgage approvals have been as lower in over a decade, if not lower. The state of British economy is already pretty bad at the moment. The Pound has dropped 25% this year alone - prompting deep interest rate cuts.

Daniel Costello said...

UK house construction was a major recovery effort upon the advent of depression according to Aldcroft. I often wonder if the entire subprime was a similar stop gap in the US as it triggered rather than solved a few greater problems.