My Overall Approach Towards Investing
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Many people start investing in the stock market without a plan, without research, without any homework. In some cases, they do end up taking up one or two good stocks but in the long run, they fall flat on their face. To invest in stock market, one must first decide what his aim, objectives and goals are. There is short term investing for some people, it is a get rich quick scheme which doesn’t work. Then there is a long term investment, which requires research, homework, references. Try to find trade companies with great performance, track record for a number of years. Let’s go back to some time with your proper home work. You can even make a good amount of money on short term investing as long as you’re investing in well established, with a good track record companies. In dotcom base, practically everyone wanted to jump in the stock market, and I know some of my friends who nothing about the stock market with some of the high fliers. They make some money, and they were bragging in all get-togethers what a great investor they are and how much money they have made. However, it did not last too long. Some of them ended up losing their homes or getting extra mortgage in their homes. Bottom line, they end up losing their shirt.
As you consider a prospective investment, I hope you will keep two things firmly in mind: make sure you trust the people with whom you are investing and take the time to understand, at least generally, the investment you are about to make. It is almost self-explanatory why trust is so important – after all, it is your money. Understanding what you are doing with your money is equally important. A basic comprehension of what type of investment you are making will allow you to apply your own personal selection process. It does not have to be fancy or technical, but it is yours and it assures you that you are making an investment which is consistent with the way you look at things and think about things.
My desire to assist individuals with their investments is nothing more than the next step along the path of service to my community, with the blessing of Allah (swt).
The investments I make are not for immediate gratification. My focus is very specifically on the long term. Over the years, this approach has served me very well in my personal investments. I have been rewarded time and time again for waiting patiently for the long term upward bias of the market to carry quality, seasoned stocks ahead.
It can be very difficult to be patient when market conditions are unfavorable. Few things are more difficult than holding on through tough times. The discipline to hold, rather than panicking out of the market when times get tough, is essential to long term investment success.
I will be the first to admit that sometimes holding quality stocks is monotonous and boring. Not every day brings exciting price movements. Slow, steady progress, though, awaits those who can maintain a consistent pattern of buying good companies when their prices dip and then holding them.
My philosophy is not based on complicated theories. It does not employ convoluted strategies. Rather, I look for strong, quality companies which I can purchase for bargain prices. Then, I simply hold those investments and let time work for me. I am not right every time, but when I am wrong, o cut my losses and move on. It is not an emotional process; it is a disciplined process.
For the trader I use several philosophies which Insha’Allah I will discuss later in the book or seminar only. I use 5% of my total portfolio which I call “play money” and with the blessing of Allah (swt) I have been achieving better than 10% per month. These strategies are:
1. Dividend Capturing
2. Stock Splits
3. Channeling or Rolling Stocks
4. Covered Calls
I will share techniques that demonstrate how you can use the above four strategies Insha’Allah to make your portfolio grow. I will share with you how you can achieve great results investing in companies like Ford, Chrysler, Pacific Telephone and other Blue Chip companies, and get handsome results using my techniques.
At times I also play risky options. Remember, they are risky (very, very risky), but as risks are great, so are the rewards. I describe this as holding an ice cube in your hand as time is ticking away. If you fail to achieve your goal, it will melt away and you will lose all of your investment. But if you play with a plan, study the situation, and discipline yourself, you can achieve handsome results.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
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