笨mummy invests in the shares market too. She does not see herself as a savvy investor. She does not read up a lot on financial books, even she wants to read, she has doubts whether she would understand what are written in the books. She also knows nothing about TA, etc.
But she does have her own theory in her investment. She treated her shares like rearing chickens. She believes that all chickens (shares) in her farm should lay eggs (i.e. dividend) on a regular basis. The eggs can then be sold to pay for the cost of buying the chickens, as time goes by, the revenue from the selling of the eggs would eventually pay for the purchase of the chickens and the result is free chickens.
The selection of the chicken is very important to ensure that the chicken purchased can generate regular flow of output of eggs. One needs to ensure that the chicken is healthy and able to lay eggs. Following the same principle, before buying a share, 笨mummy read the financial statement of the company she interested to buy the shares in and also to understand the prospect of the business the company is in. She also need to decide whether the dividend payout policy of the company is sound and what are the factors that may affect the dividend given to shareholders.
After the chickens are bought, one needs to continue to moniter the growth of the chickens to ensure that they are growing healthly. If one of the chickens starting to fall sick (i.e. a share price dip) or the eggs laid are lesser (drop in dividend yield), then it is time to review that chicken to find out the reason why it is sick or why the eggs laid are reducing. And lastly the decision has to be made whether one should keep the chicken (hold) or sell the chicken (i.e. cut loss).
So far 笨mummy's chickens are giving her a satisfactory output that allows her that little extra cash to fund her hobby.
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