Sunday, October 14, 2007

I technical charts today :P

Had a great time at reservist.

It's a privilege to lie and sleep in the jungle at night and just stare at the stars, thinking about stuff. Seldom do we have time to stand and stare, so this compulsory break away from the hustle and bustle of life is indeed a welcome change to my hectic pace of life.

I dare say I had a personal breakthrough in my life while in reservist. While most of my friends would opt to leave half their brains in the guardhouse before booking in, I prefer to use all my brains to think through my life. What better time when one have absolutely no distractions - no electricity (while out in the field), no tv, no radio, no internet, no watchlist to monitor daily, no work. Just a few books, a bunch of old friends and some bare necessity of life. And of course, plenty of downtime to think about stuff.

In a span of 2 weeks without checking the market, I managed to overcome my losses and made some profits along the way. All paper, of course, and I do remember the dangers of counting your eggs before they hatch. I'll be taking measures to cut down my positions in the market to protect my capital first, leaving only those stocks with a great margin of safety to ride the (possibly) last wave of the bull cycle. Absolutely no intention to buy anything now, just thinking of selling my portfolio. Haha, but sometimes intention might be quite different from action, I do understand that.

This time when I broke even, there's no fanfare ( I wasn't even around when that happens). The feeling is somewhat muted but much more assured. I remember the first time I broke even around dec period 2006, the feeling was quite extreme. I was punting on warrants (the highly volatile HSI warrants) - winning big initially but losing even bigger towards jan/feb 2007. On hindsight, it was a bad way to break even because it was just pure luck. Luck erased my losses but eventually also paved the way for more losses.

My second break even is due to greed and inaction. I knew something was wrong around June period but I didn't take profit while riding the wave up. When the subprime selldown came, I went all the way down to losses again. However, I was much much calmer than when I lost the first time. There is a quiet calmness in me that must have come from experiencing a few market corrections (haha, 'corrections' or crash is on hindsight - each correction could well be the beginning of a crash back when it was unfolding). I even capitalised on the selldown by buying cheaply a few lots of swiber. This had proven to be a wise strategy as it is giving me returns in excess of 28% presently.

My lesson learnt during the recent selldown is that one shouldn't put so much into the stock market when it is riding and trending up. The best bargains happens when everyone is dumping their shares - BUT before buying, one have to make sure that the selling is not really related to whatever stocks one is hunting to buy. Simply put, don't just buy on dips - look, analyse the reason for the selldown, decide if it affects the business of the stock you are hunting, then go in and buy on dips. Simplified rules are good for amateurs, but without understanding the risks and rewards of rules - it's just plain silly.

Of course, the above is valid only if you have the cash to buy when everyone is selling. Well, I don't have much, so I only bought 2 lots of swiber cheaply. That brings me to my next lesson learnt - conserve your cash! One don't have to jump in at every opportunity - so pick and choose those opportunities that would offer the least risk and most reward.

I figured out if more market crashes (or corrections - or whatever name you wish to call it) happened and do not bankrupt me, it'll just make me stronger. Why? Because I do reflect upon my mistakes and try to derive some lesson from it. How could one not be a better trader/investor if we loop this learning process again and again? Not that I want to experience one more time, but without my past experiences, I probably won't be the same person as I am now. All in all, a good experience.

Going into stock market had been the most wonderful experience for me. I learnt to manage my emotional, to jargon crunch (I remembered that when I started out, I have to deal with so much jargon that it's just pure overwhelming pressure) and the confidence to act upon my analysis. Now is the time to refine this craft and bring myself and my portfolio to a higher level. I'm definitely going towards fundamental analysis (FA) - but i'll never forget technical analysis (TA). I do not believe in being a FA or TA purist. The world isn't so clear cut and simplified, so why should I? Each have its own advantages and it's for me to manipulate and use each analytical methods to derive my own thinking.

Good luck to me!

Thks jonathan for your constant updates in the commentary for previous few blog postings! And thks for everyone who visited and read my blog frequently to share in my experiences. It's been such a pleasure to blog my thoughts again - if there's anything I gained from blogging, it's a sense of satisfaction in knowing that each day, somebody is waiting to see my next posting.

A big thanks! : )