Reporter of Nguoi Lao Dong Newspaper had an interview with Mr. Lam Minh Chanh - founder and Director of BizUni Business and Finance Academy, also an author and personal finance expert - about the issues of this investment channel.
Reporter: Should people open a securities account like a bank account?
- Mr. LAM MINH CHANH: It should not be like that. Because banking products are easy to understand and have low risks, while securities are difficult to understand, complicated and have high risks. In developed countries, the proportion of people participating in securities investment is very high, but they participate through investment funds and professional organizations. The value of direct securities transactions by individual investors only accounts for 20% - 40%, depending on the country.
Meanwhile, in Vietnam, the transaction value of individual investors accounts for 80% - 90% of the market's transaction value. This is too high. And this is also the reason why the Vietnamese stock market often fluctuates greatly. When investors are optimistic, the index and stock prices increase too much and vice versa, when investors are pessimistic, the index and stock prices decrease very sharply.
Mr. Lam Minh Chanh - Founder and Director of BizUni Academy of Business and Finance
In my opinion, Vietnamese people need to invest more in stocks, but it should be through investment fund certificates. This is good for both the market and investors.
If individual investors want to invest on their own, what should they keep in mind?
- The most important thing is that investors must clearly understand the nature of the market and the products they invest in, clearly understand the difference between value and price, understand why prices go up and down.
If investing in the short term, investors need to learn a lot of things, about technical analysis, about trends, about waves, about market reactions and overreactions, market adjustments and overcorrections... Investors also need to learn how to read the market, learn how to analyze information, such as which information creates prices, which information is just noise; learn how to take profits and cut losses at the right time...
If investing long term, investors must learn about fundamental analysis, corporate finance, know about the intrinsic value of stocks/businesses, know how to choose good stocks, good businesses, and know how to diversify their portfolio to minimize risks.
In short, investors must clearly understand the nature of "surfing" or long-term investment, and must answer logically about their investment decisions. Investing based on simple explanations, such as because the price increases, is not enough. Investors must know why the stock price increases, is it certain, and how much it increases?
The next question is how good is the business, by what criteria? What is the intrinsic value of the business? If the investor cannot answer this question, he is just playing a game of chance with his money.
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