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A long term investor has a different approach from a short term speculator.
02 Jan 2020 (24 views)


My friend has an interesting strategy for investing. He said - what what Temasek and GIC are doing and do the opposite. When they buy, you sell. When they sell, you buy.

He said that he had observed their investments for many years. They often buy at a high price and sell at a low price. He quoted a few examples, e.g. the global banks during the financial crisis.

He quoted a recent case where Temasek or GIC bought Bayer at 95 euros. It is not trading at around 70 euros. He thinks that it is now a good time to buy Bayer. At this lower price, I agree. 

He is a good friend and has many years of experience in investing. But I do not agree with his approach.

Temasek and GIC are long term investors. They have to buy in large quantities and that will move the price up. When they stop buying, the price will come down. So, a correction of 10% or more can be expected.

Their approach has to be different from that of a short term trader.

I think that Bayer may be a good share for a long term investor at the current price.

Let me quote another example.

Another friend told me that GIC bought China Molybdenum at close to HK $3. It dropped to around $2.40. I decided to buy this share at around the price. I found that it has good fundamentals, and has a strategic value as a rare earth mining company.

The share price stayed below $3 for several months. Towards year end, it jumped sharply above $3. I sold my holdings, having made a gain of 20%. It has since increased further to $3.30.
 


A long term investor has a different approach from a short term speculator.
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My friend has an interesting strategy for investing. He said - what what Temasek and GIC are doing and do the opposite. When they buy, you sell. When they sell, you buy.

He said that he had observed their investments for many years. They often buy at a high price and sell at a low price. He quoted a few examples, e.g. the global banks during the financial crisis.

He quoted a recent case where Temasek or GIC bought Bayer at 95 euros. It is not trading at around 70 euros. He thinks that it is now a good time to buy Bayer. At this lower price, I agree. 

He is a good friend and has many years of experience in investing. But I do not agree with his approach.

Temasek and GIC are long term investors. They have to buy in large quantities and that will move the price up. When they stop buying, the price will come down. So, a correction of 10% or more can be expected.

Their approach has to be different from that of a short term trader.

I think that Bayer may be a good share for a long term investor at the current price.

Let me quote another example.

Another friend told me that GIC bought China Molybdenum at close to HK $3. It dropped to around $2.40. I decided to buy this share at around the price. I found that it has good fundamentals, and has a strategic value as a rare earth mining company.

The share price stayed below $3 for several months. Towards year end, it jumped sharply above $3. I sold my holdings, having made a gain of 20%. It has since increased further to $3.30.