Tuesday, 21 October 2014

My Stock Market Investment Journey

Looking back at my previous history of share trading, I can divide it into 3 phases.

Phase 1 (mid 2006 - mid 2009):
  • Buy good "fundamental" stocks, sell if achieving good profit (10-50% gain).
  • Never thought to hold a stock for long term. 
  • There was no target price and no clear concept of stock value.
  • Buy and sell when the "feel" is right.
  • No time to monitor the stock market.

Phase 2 (mid 2009 - mid 2013):
  • Started to taste the excitement of speculating in stock market (using technical analysis).
  • Allocated half of the fund for speculating, another half for "fundamental stocks".
  • If speculated successfully, usually will sell for little profit.
  • If failed in speculation, usually will cut loss at <10%.
  • If "fundamental" stocks perform well, usually will sell for profit of 10-50%.
  • If "fundamental" stocks perform badly, not willing to cut loss while hoping for a fairy tale turnaround.

Phase 3 (mid 2013 - present):
  • Resist from speculating in stock market
  • Plan for longer term investment in fundamentally sound growth stocks.
  • View buying shares as investing in a business or companies

I can't rule out further change in my stock investment style, perhaps phase 4, phase 5...

Overall, I actually made profit from speculating, even though not much. This is because first, the overall market in that period of time (2009-2013) was good. Secondly, I only speculated on those "fundamental" stocks. Thirdly, I cut loss.

Ironically, my biggest loss in stock market actually came from "investing" in those "fundamental" companies. Now you should know why I put " " for the word fundamental above.

In fact many of those "fundamental" stocks did well and earned me good profit since 2006. However, my stupidity to buy more to average down, and my reluctance to cut loss on just a few of those bad apples almost wiped out all my previous gain.

So, it's not speculating that made me suffer in the stock market.


Below are a few notable examples of my historical transaction:

Phase 1:

  • Bought WCT @ 3.32, Sold @ 4.74 (+43%) in 7 mths (My first ever stock purchased) - WCT share price reached RM10 one year later even with a bonus issue in between!
  • Bought YTL @ 5.30, Sold @ 8.55 (+61%) in 14 mths
  • Bought PBB @ 6.80, Sold @ 8.05 (+18%) in 5 mths
  • Bought IOICORP @ 5.15, Sold @ 7.47 (+45%) in 6 mths
  • Bought Topglov @ 6.35, Sold @ 8.19 (+29%) in 20 mths
  • Collected Mahsing since 2007, Sold all (+45%) in 2011 (My biggest gain in value)

I guess everyone including Ah Cat Ah Dog will do well in this period of time.

       My first ever stock


Phase 2:
  • Collected KNM since 2009, Sold all (-50%) in 2011 for massive loss
  • Collected MEGB since 2010, Sold all (-80%) in 2013 for massive loss (My biggest loss in value)
  • Collected Notion since 2010, Sold all (-40%) in 2013 for massive loss
  • Collected Tambun since 2011, still holding (My biggest paper gain so far)
  • Collected Masteel since 2011, Sold all (-45%) in 2013 for massive loss

       Beware of this


So those in red above are the "Four Big Heavenly King" or “四大天王” that were responsible for wiping out my previous gain. Luckily Tambun does help to ease the bleeding.

Phase 2 was the period of time that I have plenty of time to watch the market live in action in front of a computer. It also marked the worst period in my stock investment journey so far. So, we actually don't need to watch the market everyday to be successful in stock market investment.

For the part of speculation, I can't list out all of them but I think it is best shown in a real example.

When I first bought Amedia at 34sen in 31/1/2012, I thought it was a "fundamentally" strong counter with good prospect.

       A pearl turned stone


Referring to Amedia chart below, I decided to sell after a sudden surge in share price just 2 weeks after I bought it. I was happy with a 20% gain (white arrows).


I bought in again on the very same day near day low and sold all the very next trading day for a quick 8% net gain (blue arrows). 

A day after this I bought again and sold 2 days later for another 9% net gain (pink arrows).

Two weeks later, Amedia's share price dived unexpectedly and very bravely I caught this falling knife. However, its share price did not rebound as I would have expected so I was forced to "invest" for longer term and eventually sold it off at 37.5sen for small 3% net gain (yellow arrows).

After this, Amedia's share price was fried by big sharks to the level of above RM1 in just 4 months, only for it to fall back to the ground in days.


Amedia Buy
Sell
Net Gain (%)
1 31/1/2012 0.34 17/2/2012 0.41 19.5
2 17/2/2012 0.38 20/2/2012 0.42 8.1
3 21/2/2012 0.39 23/2/2012 0.43 9.1
4 07/03/12 0.36 27/4/2012 0.38 3.0


From the time I first bought Amedia to the last time I sold it, its share price has appreciated about 12% (34sen to 38sen). However, I gained almost 40% in this same period of time by speculating on its price movement.

This is the "beauty" of speculation in stock market which is why so many people are venturing into it.

Besides, I also bought my first and also the only call warrants in Mahsing-CB in 2011. I traded it 2 times, and both ended in gain.

Of course there were also failed speculation, but all were not big loss. Some examples:

  • Bought BJCorp @ 1.08, Sold @ 0.985 (-9%) in 1 mth
  • Bought CIMB @ 7.78, Sold @ 7.55 (-3%) in 1 day
  • Bought HSL @ 1.81, Sold @ 1.76 (-3%) in 1 mth
  • Bought Hiaptek @ 0.99, Sold @ 0.99 (-1%) in 3 days
  • Bought Huayang @ 0.985, Sold @ 0.99 (-1%) in 1 mth

       Cut by falling knife


Phase 3:

All my stock transaction in phase 3 have been recorded in this blog.

The major changes in my investment style are:
  • Set financial goals or targets
  • Look deeper into company's balance sheet & cash flow
  • Look for more free investment info online (blogs etc)
  • Set stock target price using PE method
  • Set buy & sell criteria
  • Try to be as disciplined as possible

So far I am satisfied with the outcome of a change in investment style, so no doubt I'll keep to it at the moment.

I'm fully aware that I am in a bull market in which almost everyone does well. There is also a luck component involved in picking up some good stocks early.

Nevertheless, recent market correction has hurt my portfolio to a great extent, and the bearish sentiment might not have finished yet.

Perhaps I should sell to pocket the profit first, but I actually prefer to buy more in a bear market.

.


Everyone has different styles in stock market investment. Two persons who use the same method may have totally different results. So I'm not in a position to tell people what method should they use.

As the purpose of this blog, I'm sharing my journey to readers regarding what had happened to me when using different stock market investment methods. Hopefully readers can learn something from it.

If you're suffering the same fate with me in losing, then at least you know that you're not alone.

If you're doing better than me, then at least you know that you're better than someone else :)

8 comments:

  1. I suppose if u hold those good companies from 2007, they'd be at least doubled or more?

    ReplyDelete
    Replies
    1. That's why now I think I should hold good companies for longer term, until their earnings fall significantly or may be no more growth.

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  2. read your acticle so many times, this is the first time come to your blog help u click the advertisement, hehe~ thanks for sharing ~

    ReplyDelete
  3. Confucious said: "好学近乎知,力行近乎仁,知耻近乎勇"
    A man is brave when he is dare to admit his mistakes honestly.
    I wish i can reach ur level (境界), Dummy bro!

    ReplyDelete
    Replies
    1. I think everyone will make mistakes in investment. You know, I know, everybody knows :)

      Delete
  4. Huayang is doing well BD :)

    ReplyDelete
    Replies
    1. Yea, hope it will continue to do well.

      Delete