Thursday, October 1, 2009

Lessons from Previous Investment

My initial 2 investment are still in 'buy-and-pray' mode. I did not know about 'buy-and-pray' till I read around recently. Nevertheless, the earlier you learn your mistake, the cheaper the cost of the lessons. It is good to reflect lessons gained to previous making them again.

Lessons learned:



Try not to read analyst reports if you are easily influenced. Analyst reports are not totally bad. I like them because they organize news related to the companies. My biggest problem is most of the time, you will find reports with BUY rather than HOLD or SELL. It is very easy to be induced to buying every stock they mention and set your target price based on their report. I bought China Powerplus when reading a couple of those reports and other research. Nowaday, I only read reports if I am sure I will not buy the company and have no clue about the sector. Also, try to verify the content of the report too or you just live to regret when it is too late.

My stock will not drop anymore if it hits the 52 weeks low. Again, I believe I bought China Powerplus close to its 52 weeks low. I just ignore 52 weeks high, low nowaday.

Company is in Forbes Asia's 200 Best Under A Billion. Cacola was in the Forbes list at 2008 (check reference for link). However, I did buy Cacola for its rich cash position too but the Forbes list made my buying decision easier. There are a couple of companies too this year, like Ezra and others. Do your research and not just because they are in the list.

No Exit Strategy. Still not sure about what metrics should be used, definitely not price but maybe revenue or something else. It will be better than my current 'buy-and-hold'(if prices rises) or 'buy-and-pray'(if prices drops).

Staying invested. During the lows of STI ETF, I have been avoiding the market because I never felt
a) stock market was not low enough,
b) the recovery was not going to be rapid so I should have some time.
c) I don't have time to research and feel comfortable about any company

Therefore, I missed the recovery, although it is not certain if it is sustainable. I should had listened to my friend sensible advice of buying in the STI ETF and using dollar cost averaging to reduce my market risk.

Overall, I still like investing individual company and gaining more knowledge. However, in the next couple articles, I will probably be discussing more on my personal finance and retirement since
a) personal finance and retirement is more predictable than stock market.
b) I haven't beat the STI ETF yet
c) you are never too young to think about retirement/finanical freedom
d) I probably need my money soon to repay my education loan so I cannot commit in long-term investment unless I find a constant cashflow or defer the payment

References:

  1. Asia's 200 Best Under A Billion: Cacola Furniture International - Forbes.com

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2 comments:

min dfin said...

Agree but There a lots to learn. It's never ending.

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