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you know that the US Market provides the most number of successful global companies that have proven track record of consistent profits in good and bad times? Some of these strong brand names and big franchises like McDonald, KFC, Starbucks, Pizza Hut, etc. produce fast food we are still consuming today.Kathlyn Toh, the director and chief trainer of Beyond Insights, based in Petaling Jaya, has been earning her wealth from investing and trading in the US and global equity markets for many years. She has also coached and trained more than 1000 investors and traders in the past few years.Toh said while some people complain about the uncertain and volatile economic conditions, she has been making 300% returns from the stock market in the past four years.
According to Toh, here are some of the advantages and benefits of trading in the US Stock Market:
US companies have great potential to grow globally, compared to local companies. US is the biggest financial market and it has the most available online research information available for individual investor/trader. US is the world’s largest consumer market. Even if you trade the Malaysian local markets, it’s still important to understand the US Stock Market as it drives the global stock market with 80%+ correlation. There is a saying when US sneezes, the whole world catches a cold. Since Jan 2013, the US S&P500 (index for Top 500 US companies) has tracked a 40% return to date, compared to 15% for UK (FTSE100) and 10% for the Malaysia (KLSE).
Toh started her stock trading journey in the KLSE stock market way back in 1993 and US Stock Market in 1997. She then pursued Options trading in Jan 2005. Since then, she has traded actively in US Stocks, Options, CFD, Forex, and some Commodity Futures.She said: “I consider myself fortunate to have experienced the full cycle of the Bull Run, the market crash, after crash recovery, the sideway markets and the high volatility markets like the recent ones which gave me great experience in
SATURDAY,
MAY 10 2014
adjusting my strategy depending on the market conditions”.Toh is also very passionate about coaching people on trading psychology based on her personal journey of managing her own trading, through her company Beyond Insights based in Petaling Jaya. In this Q&A, Toh explains why it is safe to trade in the US Stock Market despite the general fears and uncertainties of the global marketplace, economic downtrend, and how to profit from it.
Q
What is the general outlook of the US Stock Market in the first quarter of 2014?
The market was volatile in Q1 2014 due to major profit taking for the Technology stocks that represent a significant part of the US market. This is expected since the technology stocks, healthcare and some other strong growth stocks have rallied since July last year, and some has even gained more than 50% in less than a year, so such a market correction is healthy.There are signs of rotation to more conservative stocks like Utility and Consumer Staples.The good news is that the US government is monitoring the economic indicators closely, and this support from the government provides confidence for investors.
INTERVIEW THE EXPERTS
All questions and enquiries can be emailed to:
gchuah@gmail.com
or call
1300 226 787
By Gerald Chuah
Q
How to trade the US Stocks, for those may not fully understand some of these companies?
The fact is that many of these companies have a pervasive presence in our daily lives, e.g. Apple, Google, Facebook, Proctor and Gamble, Johnson & Johnson, McDonald’s, Mastercard, just to name a few. As we use them in our daily lives, it is relatively easy to understand the business model of these companies, compared to some of the local ones.
Q
Is it difficult to trade in the Global Stock Exchange as they are located far away?
That’s just perception. In fact, the global stock exchanges provide us with so many more ways to manage risk using instruments like CFD, Options, and Futures, which gives us the ability to make money in both uptrend, downtrend, and sideway markets. So we can make money even in bad economy.There are ways to manage risk e.g. Options provides many way to limit the risk. Without Options you can use a stop loss to limit the risk.In fact, US has one of the most regulated stock exchanges in the world and the most transparent. With the advent of technology, everyone can just trade and monitor their stocks from home with just a computer, a tablet, or smartphone. It’s very convenient.
Q
How to overcome our fears and trade successfully in the US Stock Market?
Consistent Success in trading is 90% psychology and money management, and just 10% mechanics especially when you have got the initial learning curve out of the way.Our main job as an investor or trader is to deal with uncertainty by lowering our risk to the minimum. For example, one of my “Golden Rule” is that I only risk 2% of my capital in any single trade, which means if something goes totally wrong with the trade, I will only lose 2% of my capital. When I know that market volatility is high, I will also hedge my positions, i.e. placing trades that can help me recover losses if the market goes the other way. Fear always comes from what is unknown. When we have the proper knowledge about trading and the right mind set about risk management, the fear will go awayWith all the risk management in place, I can sleep soundly at night because I know how much I can possibly lose in the worst case scenario.*Beyond Insights offers regular class on Investing and Trading with CFD (Contract for Difference) as well as Options. For details, visit
: www.beyondinsights.net,
or their Facebook page at
fb.com/beyondinsights.
“The United States has one of the most regulated stock exchanges in the world and the most transparent. With the advent of technology, everyone can just trade and monitor their stocks from home with just a computer, or even a tablet, or smartphone. It’s very convenient.”
– KATHLYN TOH
(DIRECTOR AND CHIEF TRAINER OF BEYOND INSIGHTS)
