Warrants and CFD are very powerful financial instruments. They allow investors to use leverage to gain huge percentage gains (and losses) in the stock market.
As i only have roughly $10 k to play the stock market with, and since i can afford to lose this 10k, maybe it's worth looking into these 2 instruments.
For example, the broker recommended me Keppel Corp when it was at $9 flat. Unfortunately I couldn't commit all my monies to one counter, hence I couldn't catch that train. 1 month plus and many Keppel contracts later, it's currently around $10.60. Had I understood how to use warrants at that point, I could have invested maybe 2k and gained exposure to about 10k of Keppel Corp. Unfortunately for me, i didn't know about warrants at that time :(
On another matter altogether,I was reading thru the prospectus of Mewah and there was only 6.5 million shares up for subscription. Hence i decided not to waste my $2 on it. Little did I know, whilst reading the papers today, that small investors had a 56% chance of getting 1 lot! (balloting ratio for those who subscribed from 1-9 lots was 28:50) I was kicking myself until the market opened today, when Mewah opened BELOW it's offering price.
I was thinking had i got Mewah, i would be stagging the share. Luckily for me I didn't apply and get, since I would have lost money had I sold off the share today. The agri sector is very promising, however Mewah doesn't seem to be a good choice. Other oil processing firms, like Golden Agri and Wilmar are vertically integrated. Means they own the farm, the trees, the processing plant. Mewah only owns processing plants and hence if they fail to secure contracts, or if the price of raw materials skyrockets, it will face difficulties.
Anyway, I subscribed to Sabana Shariah Compliant REIT today. The board promises 8.0% p.a. next year. Since the dividend will be pro rated from date of listing till end of FY10, it will be only about 40 bucks dividend. So if Sabana opens at $1.15, i will be selling the counter. (if i get it) Otherwise, Cache Logistics looks to be a better REIT, 9+ % pa.
I will be learning more about the stock market. Currently I'm reading "Who took my money?" by Robert Kiyosaki, where he says using leverage is one powerful way, not only in the stock market, to accelerate your wealth. Next on the list is "stock investing for dummies", and then Adam Khoo's Secrets of Millionaire Investors which I bought from JB at a steal. RM 45, which is less than 20 bucks. Selling for 28 here, so I saved quite abit :)
One book i recommend, which can be borrowed from the library, is Robbie Burns' "Naked Trader II". Tells us how to buy stock using simple strategies. He doesn't believe in candlestick charts and the like. Very interesting and humourous read.
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