Thursday, 18 September 2014

Lesson From Speculating In Good Stock

I keep record of my previous share trading transaction since I started trading in stock market in year 2006.

Readers who followed this blog should know that in my "early days", I tried to invest only in "fundamentally strong" companies with my very limited fundamental knowledge.

After a few years, when I have the luxury of working in front of a computer, I witnessed the up & down of share market live on the screen, almost everyday. 

So why not buy low and sell high to earn some money for a good dinner?

Inevitably, I started to speculate in stock market.

Nevertheless, to minimize the risk, I only speculated in those stocks that I think were fundamentally sound.

Recently, I plan to write a bit about my stock market investment journey. So I go through my previous transaction records. Guess what I found?

HUAYANG. Yes, it's that property developer.

From my record, I bought Huayang on 14th Oct 2010 at RM0.985 per share, and amazingly sold all at RM0.990 on 12th Nov 2010. It was a small loss after transaction fees are included.

I almost forgot about this transaction.

I bought it just shortly after Huayang's first bonus issues went ex-ed on 24th Sep 2010.

       Huayang: 2010

Huayang's share price fell soon after its first bonus issue, which should be the reason that caught my attention. Previously I like to speculate on those stocks which dropped a lot (catch a falling knife), as I thought I will have better chance to gain from them.

As you can see from the chart above, 3 months earlier in July 2010, Huayang is still an unknown stock with minimal volume. If I were a long term investor that time, the timing and share price of my entry would be great!

Unfortunately for me, I think I have lost patience in Huayang only after 1 month, as there was no U-turn in share price! I decided to dispose entirely at minimal loss.

What will happen if I hold its shares until today?

       Huayang: 2010-2014

After the first bonus, Huayang has another 3 bonus issues which are:
Oct 2011 - Bonus 1:3
Oct 2012 - Bonus 1:4
Oct 2013 - Bonus 1:3

If I bought 1,000 shares of Huayang at 98.5sen on 14th Oct 2010 and hold until today, I'll have 2,222 shares today. At current share price of RM2.40, it is worth RM5333. 

So from RM985 to RM5333 in 4 years, it is a 440% or 5.4 times gain not including the dividends!

For me, it is a 440% loss...

The lesson is, aim to hold good & growing company forever, until its fundamental has changed or profitability has declined.


  1. Wah, since 2006 .. 8 years experience, no wonder you so pro :) How old are you ady? I assume you're a guy since ladies are more sensitive to age declaration :)

    To hold a good & growing company for a long period of time. I can say it's easier to say than done. Discipline is nt an easy thing to learn and master especially given the technology nowadays with the ease to get the latest information.

    Furthermore, when you're surrounding by a group of investors who achieve better result than you, then you will start to have a doubt whether your investment technique and philosophy is correct or not especially the price of your holding stocks are not moving as you wish. Confident starts to shrink and so on ..

    Anyway, it just part of the learning curve to me. Learn how to set my own target, not to compare, stick to my own philosophy, stick to bursa dummy :)

    Well again, it's easier to say than done ... :)

    1. Yes, discipline & confidence are the key. May be we will cabut first if we see the bear. Many of us like to compare with others including myself, have to learn no to do so :)

      Well. I'm in stock market for 8-9 years. But I'd say it's 7-8 years wasted. I find that you're at least on par, if not better than me. It's sad that you stop posting in your blog.

      Lets find out 5 years from now whether I'm pro or still a dummy. If pro, then have to change blog name to Bursa Pro, haha!

      I'm definitely older than you, my elder kid is already in primary school. I have to strive for at least 9 more yrs for my financial freedom :)

    2. So you're 36 years old, since you put to achieve financial freedom at 45 in your profile details :)

      I'm typical man saving for wedding and house down payment. Settle this before target to achieve financial freedom.

      I'm not a good writer. I hope to write but found no topic to write and I do not cover much companies like you. Wonder why you have so much time to study so many companies

    3. I think u should start to put aside some for retirement now, so that u won't spend too much on wedding & others :) You're definitely a good writer.

  2. To what extend of profit decline do you consider a stock is to be dumped?

    1. Hi Mun Loh.

      For me, there are no hard & fast rules for this, as reasons for profit decline can be complicated. The main issue is loss of sales together with loss of competitiveness (eg tight margin). One-off reason is excusable. If bad result is a bit unexpected, wait & see or dump a bit. If very bad, dump more or all.

  3. I appreciate ur honesty, Dummy bro where ppl always brag about they sucess but nvr dare to speak out loud of their failure (for example-- KYY who already 80 years old n above).

    This article has enormous valuable lessons that a dummy like me can learn from.

    1. Actually I don't think sharing my failure story in investment is a shame. I know that everyone must have experienced failure at some stage. I will be pleased if someone can get something positive from what I share :)