Thursday, July 12, 2007

My investing journey

Got a happy announcement to make: I've erased my losses!!

At this moment, not only have I erased my losses, I'm sitting on $860 profits (fluctuates between 500 to 1000, see how it closes today). It had been one hell of a ride.

If you've been following my blog since I started around dec 06, you would have seen my trials and tribulations and how I've grown to give crappy analysis (I cringed when I look at my older postings) to a more proper one now (complete with target price, support and resistance level, formations). I've learnt a lot a lot of things, much more when I lost money than when I gained. Friends surrounding me gave me the inspiration and support when I needed the most help, especially during the trying period from Jan to April, where I see my start of year portfolio going from + 3.5 k to -30 k.

Must thank a few impt people first (bear my oscar speech, haha):

For never giving up on me even when I'm at the most down period of my life. Lesser person would have told me to give up on investing/trading, but you didn't. Thks for believing in me when sometimes I don't believe in myself anymore. You're like a beacon of light in a dark place.

Thks for introducing me about value investing. Reading the "Intelligent investor" changed my trading instincts and made me think hard about my past mistakes. After reading up upon your introduction to me about value investing, I blogged one of the most important entries in this entire blog, truly one that made me reflect upon my mistakes. This entry, made me realise how much I've lost out by focusing on short term gains and neglecting the bigger picture. Never looked back since.

KT and WB:
I still remember the two of you sms/called/msn me during after I posted this entry. Made me realised my wealth in the form of friends. I still remembered WB telling me to focus on what I have instead of what I had lost...very true.

Not to forget Decipher, who is my constant source of inspiration. By following closely the steps he made to bring his portfolio from -50% to more than 100%, I aim to do the same thing too. LS, for "sort of" pushing me to Decipher's TA course (I'm not interested at first), but it made me do more practice on TA, on a daily basis, until I'm no longer overwhelmed by it.

I'm even more humbled by the stock market than ever. Last year in 2006, when I first started, I made losses to the tune of 18k. My mistake? I knew nothing about TA or FA, basically just went in with brokerage report. I followed them religiously, thinking that if experts gave a target price, they should do a better job than me. How wrong was I! It didn't help that a month after I started, May selldown came because of interest rates issue in US.

I eventually made back my paper losses (I didn't know what's cut loss, so I didn't cut loss). It's easy, because it requires no effort on my part, I just have to wait for market to recover. To speed up, I started warrant trading on HSI, when I knew nothing about TA. It's only AFTER I started on HSI warrants that I learnt more about TA. It's just a disaster waiting to happen. A string of good luck with HSI powering up towards the start of the new year made me recover my paper losses and even an extra 3.5k.

Disaster did happen around Jan to April. I started losing my warrants trade. For every 0.5% gain, I was losing 10-20% in warrants trading. I won big, I lost even bigger. I won so much last year due to luck, not skill. I thought I was good, but I wasn't. Just lucky. That ability to distinguish between luck and skill is impt, even decipher mentioned it before.

As you can see, I was trading warrants almost everyday, gaining a few hundreds but losing a few thousands. It's so incredible....I would NEVER do that again! Before long I was around 15k negative again.

Then came longcheer saga. I was so caught by up the 3G frenzy that I kept adding on to longcheer. Even KT advised me to play according to what I can, but caution was thrown to the wind because I was confident of it. No margin of safety at all. I didn't even differentiate a speculative stock from an investment quality kind. The big fall came when longcheer posted less than expectated results, price fell from 1.20 to 0.60. I still didn't have the discipline to cut loss...I lost around 15k due to that (I had 25 lots of longcheer).

That pretty much chalk up my 30 k losses. I already had 15 k realised losses (not paper losses) and realised another 13 k losses by selling longcheer. I wanted to start on a fresh new portfolio, but this time, slowly and surely gaining back all my losses. It's harder to erase my 30k losses (28k realised, 2k paper) than last year's 18k losses (18k paper).

Okay lah, enough of my story.

I still aim to earn $200 per week ($10,400 per year) from the stock market. Last time, I was focusing too much on the "week". I wanted to earn 200 every week. But I realised it's not like that...the 200 per week target is averaged over at least 1 yr. If I can make back 30k in 4-5 months, who knows if I just might hit the target?

Haha, cheers!