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29
Aug
2009

I have been discussing it on various platforms that households had been acting as business and this is one of the reasons of economic crises. Actually Investment has been growing as a fashion in our society whereby the people who have no rationale think themselves as an Investment professional. But it was the case till the crises has not reached the world. Today every one of us has understood the role of true investment professional. Now this is another aspect that these investment professional have also been making $1000 by putting their clients $100,000 on risk. Wrong decision is another thing but Investment professional’s deliberation has never been acceptable when he exposes his client to the risk that is more than his capacity. Many times the investment professional risked their clients without explaining the risk profile of investment alternatives to client.

 

The bad professional conduct of investment professionals is not independent of client’s psychology. My 30 months experience in Dubai teaches me, there are no crises that can stop blind investments. Simply, swindlers can not die hungry in the societies where people are greedy. Clients have intention to invest in some thing profitable even irrational, that gives an investment consultant a way to guide them for the way that is more risky. In any case investment professionals are not supposed to do this but in the free markets today where advice is not obligatory to be audited, this is the major issue. I always tried working on ways to come up with set of audit for investment professional’s advices. I myself am an investment consultant but, “fair is fair”. So it has to be there. There must be a RATER OF INVESTMENT ADVISORS who rates them so people could be aware about the consultant’s historical performances.

 

Investment is a serious activity and it is an irreversible process, so all the steps have to be followed while making investment decision. Everyone likes quick and big returns but certainly, they are not free of big risks. Actually, these types of returns are not associated with core business but speculative or short term sale of tenders. People generally trust on paper but they never bother in getting the overview of business. It is not bad to invest in these types of opportunities but these opportunities are for those who have good backup to cover risks.

 

People have a lot of cry over loosing money but they never tries to learn why they have lost it. I have seen many times, those who lost the money in 90s in Karachi Stock Exchange, lost the money again in 2006. So what is this? It is simply not a rationale whereby you have to learn from your past and close transactions. Doing investment in stock exchanges is not a fashion, it is hardcore analytical job. If someone earns good money in stock exchange once never means, he becomes a guru of stock trading. Most of the good looking investment opportunities in stock exchanges are the function of greed. It is all the two side game. If small or big investors will change their sentiments and approach to rationale decision making, they will be better aware of it and bring rationality to the markets.

 

I saw a process of sale of property in Middle East & South Asia. Regardless of a fact that some of my investors have lost money in this due to overall down turn but I have firm believe that people have to think property as a fix asset rather than commercial paper or bond or lottery ticket. The instincts of the property have to be assessed. The value of the property is always related to its prospective occupancy. If the cities with 2 mln population are coming up with the sole project of accommodating 0.5 mln people and this is not a single project but more than 5 projects of same nature are there, so sensitivities has to be assessed. I confess that this is the point I under-looked many times unintentionally in the beginning of my career. It was the initial days of my investment consultancy career and I learned also that mind blowing multimedia presentations are not the reality. Realities exist on ground and they sometimes prove more deadly when appears. I stopped many of my investors to invest in property & some derivatives after October 2008, just by assessing that it is not a good time to invest in short term. If you like to invest, so start business. You have to start a business that is related to the production, sale or marketing of commodities or services connected to the basic need of the society.

 

It is highly recommend to people with small savings and amount, not to be induced by attractive marketing for investment but take an advice from seasoned professional or some time use your brain for basics. If you have to invest, so try to find any investment advisor. Ask him to suggest you a mutual fund. Mutual fund diversifies investments in different scripts. They have professionals who work in rationale way. It is always advisable if you have $1,000, so invest 60% of it. Keep some money to cover. Some time minimum return of bank (or Islamic Bank) is good on 40% of your saved money. You can manage your % of savings as investments as per your priorities but 100% investment on once place that has high risk, is not advisable. It is not more than a gamble. U.A.E. Dirham (AED) has earned 24% ROI a year for me since Jan 2007. This anyways is more than inflation in Pakistan. My Risk was moderate. People did not understand it before by saying Investment in AED is not good as property gives 40% plus a year. They came to know when they lost their principal. Even I have lost the handsome amount of money in property but it was a part of my portfolio, not 100%. I always prefer to keep 8 currencies in proportion of 35% of my investment portfolio. Always, try to find ordinary opportunities in the market. Many times they are the genuine source of extra ordinary benefits or the beginning ordinary look of extraordinary opportunities arising.

 

In the end, I must say again, people!!! Don’t make investment a fashion. The societies in which children, woman, man, old, young, students, professionals, non-professionals, labor etc. use to be sound like INVESTMENT PROFESSIONALS, they generally collapse in term of business and their financial system. The best investment any person can do is to start a kind of a business he/she can carry. I am not saying anything with proper structure. If you think your can sell cooked food to a school canteen, go for it. It looks an ordinary work but the returns are good and manageable for a household woman even. Even if you can not do this so find people who are doing business, become their sleeping partners with open eyes. Think extra ordinary for doing ordinary things, the success is in the way. I never say restrict to this level. Excel with your experience and learning. May you will find a big shot later in the way of big endeavors for small investments and businesses.


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Mr. Omer

Mr. Omer [1982 born] started  his professional career as a commercial / investment banker after achieving Gold Medal in Finance at master level from University of Karachi in 2006.

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