Friday, May 18, 2007

Timing the market, or time in the market?

Been thinking a lot these days. On what? On the amount of money that I paid to the market (21.7k loss now!) and on my trading strategies and how it could have been better.

For today's market, I just want to make some comments on CSC. I posted a few days ago that the huge buy ups over at CSC is something to look out for. Today too, there are very huge buy up - 10,000,000 buy ups at around 0.330. There are several 2 to 5 million buy ups too, way way too big for retailers to buy. Must be fund/institutional/high net worth individual or groups a.k.a Big boys or BB.

CSC announced trading halt around 12, still pending official annoucement. Rumors are already flying (from reuters and wan bao) that CSC is going to announce contracts for IR sentosa. We'll see the big news from the relevant authorities over the weekend, much like the F1 race.

Been pretty cautious (read:chicken) lately. Missed my fair share of speculative stocks. Might be good. Today is really the best one. Ferrochina - i've been eyeing this the whole morning, but when I read my emails for a few min, it ran up 0.060. luck at all for this year.

Enough of the daily comments. I've been thinking about all my value investing as a strategy, instead of my purely technical based one. I know nuts about FA, that's why I go TA. Not a good excuse, that's why I went to upgrade my knowledge.

Was trying to upgrade my FA knowledge when I came across this wonderfully new book at national library, which I went ahead to borrow. I just finished reading today.

Talks about a lot of issues, most of it I agree totally, after reflecting on my last year's transactions, as well as this year

These are most of the stocks I bought around last year and the price now.

1. Fibrochem: then 1.17, now 2.50, increased 114%
2. Adampak: then 0.22, now 0.44, increased 100%
3. Koda: then 0.50, now 0.90, increased 80%
4. Tiong woon: then 0.375, now 0.675, increased 80%
5. ECS holdings: then 0.365, now 0.565, increased 58%
6. Cosco: then 1.87, now 2.77, increased 48%
7. China essence: then 0.685, now 0.98, increased 44%
8. Pac andes: then 0.835, now 1.19, increased 42.5%
9. Sinopipe: then 0.375, now 0.445, increased 18.6%

Of course there are the bad ones:

1. Longcheer: then 1.195, now 0.650, decreased 46%
2. China diary: then 0.685, then 0.48, decreased 30%
3. Yellow page: then 1.67, now 1.36, decreased 18.5%
4. Media ring: then 0.48, now 0.41, decreased 17%
5. China sun: then 0.715, now 0.66, decreased 8%

What do u guys notice?

1. Cut loss is very important for speculative stocks. Most china stocks are speculative because their fundamentals are not strong. Any ipo with CHINA in it would surely attract a lot of attention. Those that are strong are listed mostly in HK. I don't know why we're getting the 2nd rated ones. Without proper cut loss, minor loss snowball to huge loss.

2. Time in the market is important. I bought the correct stocks a year ago, based on nothing but broker's call. It dropped and it recovered higher than my buy price. Of course, if I cut loss (which I did for some), i'll get nothing.

I guess the point here is to buy on stocks which you are confident. Stocks I buy must be those that I would add more if the price drops!!

3. Now I admit I know nothing (and i still don't) about the fundamentals of those stocks I listed. But even then, the price increment is so much more than the price drop! This amazes me tremendously. I bought last time before knowing any TA, FA...just pure brokerage cover, I'll buy. Look at what happens a year later. Some drops, but those that I did hold would more than cover those that I lose. With proper cut loss and sound fundamental analysis, therefore choosing good stocks shouldn't be a problem. Combining this with technical so that I will buy near support level, I don't see how I can lose money?!

When I'm ready, I'll work out the FA of those stocks I mentioned in this post. I want to see exactly why holding certain stocks ensure profits while some gets in the dump. Cheap doesn't mean good, even I know that. Stocks are cheap for a reason. I WANT to know those reasons for those stocks I bought last year.

I'll work on this ... I will!