Friday, 25 March 2016

My strategy and lesson learnt

The past few months have been a roller coaster to many investors and traders, the market corrected like no tomorrow and there were many gloom and doom news from the media. At one point, STI went to below 2600. However, the last few weeks, most of the index and counters have recovered with a vengeance.  Looking back, what have I learn from this episode so that I can be a better investor and prepare for the next correction.

Most of us know to buy low and sell high, but how many of us have the patience to wait before committing to buy. Most of us like to chase when stock price has gone higher, we feel "safe" when many other people are also buying. And we know that most of the time, the result turns out to be disastrous. February was the worst month for most of the stocks, but it turn out to be one of my best buy, as at the point of writing this blog, all my counters are in positive. Due to the price correction, it gives me opportunity to invest in some of the stocks which I have put it in my radar for sometime, e.g. DBS, UOL Capitalcomm and Sembcorp.

 Noise & GUTS
Nobody knows whether it will go even lower in Feb., thus when the opportunity presents, I chicken out initially. It didnt help also when there were so many negative news about the market then. All this turns out to be noise, trying to distract you from keeping to your own investment course and strategy. I relooked at the FA metrics e.g. PB, and all these counters were trading at near low in Feb. With this as base (and for DBS, it gives great confidence that the CEO bought lots and lots of DBS shares), I bought all those counters in Feb., it was not easy, as this has been my biggest purchase in a single month.

Money Management and CUT loss
As mentioned earlier, no one knows if the stock price will go even lower, thus it is important that we do not expand all our bullets or some bloggers call it warchest. I have also keep reminding myself to cut loss, if it has gone down 15%, but a few times, I did not adhere to this rule and learned a painful lesson.

Entry and Timing
Most of the people might disagree with me, but I feel that the timing of entry is important. It is not a 100% sure win if you use TA to time your entry, but it gives you another perspective of entering the counter. In Feb. when I bought DBS after looking at the chart, the stock price actually went down a little, thus TA is just a guide, that's all. If you are interested in TA, you can read my post on Capitalcomm.

One of the very insightful article from Ms Teh Ooi Ling in Feb., the GDP forms the base for the market, and currently this base is 2510. This was also one of the reason for my purchase in Feb.. In the coming months, I am sure there will be more noise and opportunities will also present itself, will you have the guts to press the buy button.

Source: Straits Times, Aggregate Asset Management