Thursday, 28 January 2021

How To Earn >100% in A Stock?

When I started this " Bursa Dummy" blog in 2011, I like to read other investment blogs too.

At that time, I felt that many investors were "dreaming" of finding a "gem" in stock market which can double its share price, or give 100% gain.(开番)

As a relatively new stock market investor, I was also dreaming to catch such a stock which can give me 100% gain.

Now, after 10 years of experience in the stock market, I find that making 100% gain in a particular stock is not that important anymore, even though it's actually simple to make 100% gain in a single stock.

What!? It's simple to make 100% in a stock? You must be "cocky" or arrogant in saying so.

However, let me tell you first the secret to make 100% or more in a stock.

The ultimate secret is: wait, wait and wait until it hits 100% gain.

You don't even need to buy a very undervalued stock to achieve this. Any stocks can make it but of course undervalued and stock in trend will give you a shorter time.

If you bought a few stocks in Mac, April & May 2020, there is a good chance that you should have made more than 100% gain in a few of them.

If you are willing to wait for 10 years, it's very likely that at least one of your stocks will encounter positive trend in its industry or general bull run in stock market when every stocks fly to the sky.

So, more than 100% gain in a stock is simple as long as you can hold and wait.

Does making such a 100% gain make you a more successful investor than those who can't achieve this feat?

Lets say both Investor A and B has RM100,000 capital to invest in stock market.

Investor A allocates RM10,000 to a stock that rises 100% in a year, while Investor B allocates RM50,000 in a stock that rises 30% in a year. Who performs better?

Investor A invests RM50,000 in a stock that gains 100% in 3 years, while Investor B also invests RM50,000 in a stock, sell it for 50% gain in the first year, buy and sell another stock in the second year and gains 50%, then buy and sell another stock in the third year and gains 50%. Who performs better? 

In the examples above, Investor B earns more money in stock market than Investor A, even though Investor A can make 100% from a stock while Investor B can't. Investor B wins!

It's the same when your friend mentions that he or she gains 100% in the stock market in a year, while you "only" gain 50%.

While certainly your friend is not bad in investment and has a bit of luck, it doesn't mean that he or she becomes "richer" or fare better than you.

You might have a portfolio of RM500,000 to start with and 50% gain means a RM250,000 gain. Your friend might have RM100,000 and a 100% gain means a RM100,000 gain.

In the end you are RM150,000 richer than him or her. You might be on track towards financial freedom but he or she is still struggling. 

Nevertheless, while making a 100% gain in a stock is simple, it's not that easy.

What?! You just said that it's simple but now you say that it's not easy? What are you talking about?

It's simple as long as you can buy and wait and wait and wait. It's not easy because not many people can wait.

When you buy a stock and its share price goes up 30% in 1 month, would you sell?

I'd say that most people will sell either part or all of the shares, as they are afraid that they will earn less when the share price goes down.

For those who do not sell all the shares, when the share price gains 80% from their entry price, most people will sell all to lock in the profit, as the fear of losing the profit is greater at this level.

As a result, it's not easy to wait until you hit 100% gain, as the fear of losing the big gain might prompt you to sell all. 

Anyway, selling below reaching 100% gain mark does not make you a poorer investor at all.

In the early years, I felt very proud to hold stocks that exceed 100% gain mark. I even listed out all those stocks in some of my blog posts.

Even though I have quite a few stocks that give me more than 100% in return, my portfolio's overall progress is not that great. 

It's because of two main reasons, the allocation of cash to those stocks were not big enough and I withdrew the cash out of stock market for other purposes. 

Nevertheless, I'll still continue to record those stocks which have successfully breached 100% gain mark in my monthly portfolio review. 

From year 2013 until now, I have 16 stocks which I held until their shares price at least double. How do I achieve this?

Before I buy a stock, I will calculate my own target price. In general, I won't buy if the entry price can give me less than 50% gain in mid term of around a year.

If my target price for a stock in one year time is RM2.00, and its price is currently at RM1.50, normally I won't buy it unless in special circumstances such as it is in a strong trend or is expected to have good growth beyond one year.

When you have limited fund, you have to choose more carefully.

As my own target price cannot be always correct, I also bear the risk of missing out on magnificent investment such as many of those crazy tech stocks. 

Most investors sell too early before 100% mark because they don't have a clear target price. So when the share price rises 30-50%, they tend to sell to lock up the profit because they are not sure how high the share price can reach.

In a nutshell, if you wish to gain more than 100% in a stock, you must be disciplined enough to:

  • buy only undervalued stock (for me it's at least 50% to target price)
  • wait, wait and wait
It's indeed simple, but not easy.


  1. "Before I buy a stock, I will calculate my own target price. In general, I won't buy if the entry price can give me less than 50% gain in mid term of around a year."

    My target gain within a year is >25%; I notice yours is >50%.
    This triggers me to think the main reason for too many stocks in my portfolio is probably i aim too low, i.e. merely >25% gain. Resulting, i have a lot of "non-core" stocks.
    Hmm..I think i should trim my portfolio, aim higher and keep only stocks that can give higher return. The concern i have is if i change the target return to >50% per annum, my portfolio may leave only very few stocks :p
    It is surely a good thing to keep fewer and better stocks in one's portfolio. The pre-condition is i must really know which to filter out and which to keep..this is the difficult part.

    1. I still end up with so many stocks in my portfolio, may be my target price is set too high and that results in many stocks being qualified.