The market is pretty high now. Will it continue to improve as economic condition improves, or will it correct itself? There are many conflicting bulls and bears out there. Just today, the star published a news whereby Mohamed El-Erian, chief executive of giant bond manager Pimco, says the market is gonna correct by at least 10%. So, investor like us should listen to them or not? (well i have not listened to the bears since half year ago, and am happy to reap the rewards now).
i think it is pretty futile to try to predict the macroeconomic condition. We should rather have long term strategy with the companies we invested into by analyzing their actual business. Now is a good time to go and read some books or refresh one's memory from the books that we have read. From the many investment books i have read, today i would like to recommend The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market by Pat Dorsey. Reading it isn't just a matter of understanding PE ratios and other ratios or metrics, which most other books explain more or less adequately. Instead, the author has in a lively and clever way, presents analyzing balance sheets and cash flow and income statements clearly. It has a simplified hot dog business and some real companies to compare with as example. It has shows how bad companies cook their account by popping up some figures. In fact this book has helped me to avoid myself investing in a hot stock (Megan Media) listed in Malaysia years ago which has since gone burst due to account irregularities. In that case, one can see that the debt of the company has increased way faster than it sales.
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