Looking Back
The Pig analyses further …..
When asset prices collapsed, so did their composure and they sold at fire-sale prices.
Grit and bear it, Jonathon Burton, Dec. 11, 2009, 11 Dec 2009
http://www.marketwatch.com/story/10-lessons-for-investors-from-a-dismal-decade-2009-12-11?pagenumber=1
I am able to buy when there is fear in market. It is my belief; we should buy stocks when others are selling. To me, this is simple economic theory of demand and supply. When there is no demand, prices is the cheapeast.
In early 2000, I buy, average down and hold Singtel, and ignore the market for sometimes until 2006. I remember holding Singtel at about 3.20 and buy until it was around 1.30.
After which, I became an ostrich possibly because of feeling the pain of loss and the attraction of business opportunity distract me totally from the stocks investment. Unconsciously, I do not have much desire to look at the stock market then because of the unpleasant loss.
That’s way benign neglect is, for most investors, the secret of long term success.
Ellis, D. C. (2010). Winning the Loser's Game. McGraw Hill. Pg 31
The neglect, whether out of fear or other commitments was tremendously profitable when I sold my stocks and unit trusts in 2006. I would have lost quite a sum on Chartered Semi-Conductor if I have not average down and made profit on Singtel.
In my opinion, benign neglect can be practice on stock held for horizon of 5 to 10 years especially when you are able to get it at good value.
Ironically, many folks who find it impossible to take a loss end up selling later at exactly the wrong time: right as the rally begins.
Taking a Loss Is Harder Than It Seems, Jonathan Hoenig, August 27, 2007
I did not take a loss but I did sell exactly right as the rally begins. I sold Singtel at $2.65 at a $1 margin but it raise up to as high as 3.95 some months later, if I recall correctly. I could have sold my holding partially instead of all at once.
I was betting on the unit trusts or stocks purchased in early 2000. The information from the stocks I purchased was garnered from bankers, friends and the internet.
Start Small. The idea is to initially make the mistakes with small dollars and use the experience to prevent blow-ups from happening in the future.
Beginners Should Heed 4 Steps to Trading Success, Jonathan Hoenig, May 14, 2007
When my early purchases gave me very high yield, I begin to make even more substantial amount in unit trust.
However, I was cautious when buying stocks by myself investing in small amounts at the beginning. The cautiousness ensure I survived.
My conviction of my belief give me the gut to average down in buying Singtel.
On hindsight is correct, not because I am right but the market does recover.
My investment activities during this period is totally out of ignorance and is literary betting. I did learned from the internet forum of Shareinvestor.com which is invaluable until today.
Looking back, the key factor to my survival and profitability was due to 2 critical factors:
First, I invest with “spare” money and is able to hold on to my losing investment for nearly 5 years.
Second, the nature of the market – it does recovers.
I think the diversification of holding 2 stocks purchased for me by Dave saved the day. Chartered Semi-Conductor was a technological stock – its dropped in price was at a fast pace. After averaging down once, I stopped as its price dropped even further quickly. Singtel, a defensive stock, dropped gradually and it is less fearful for me to follow it all the way down.
My cautiousness and dislike for risks may have helped a little. My quest for knowledge investing may have prevented me from more foolish behaviour.
When I checked the prices of the unit trusts still in existence recently, I found most of them are not doing well. Of the stocks I buy on my own, its trading remains illiquid and price stabilized around $4.20 – roughly about the same when I sold it in 2006. That was 14 years ago. This has implications when I started investment actively in 2009.
I also knew that I could not continue investing in this manner.
From my experiences with Dual Currency Investments in 2007 & 2008, I was taken for a ride by the bank due to lack of due diligence.
I bought SPH in 2008 at its peak and before the market crash (strong signs of financial crisis).
Apart from lack of due diligence, I am reckless. It is at this point that I suddenly realized that when my investment was doing well, I was much too aggressive. I forgotten that I am a impulsive man who lack patience. This I think continue in 2009 and by end of 2010, I am nearly fully invested. My aggressive and impulsive behaviors have overwhelmed my usual cautiousness.
This pig must learn his lesson. I have become conceited with the success in my investment, thinking that I am a very smart investor and is infallible. Believe me, my thought all these while is: it was so easy to make money from the market. With the good returns from my investment, I have forgotten the famous phrase - " the market gives, and the market takes away". I have stray from my defensive approach and placed myself at risks.
I will be doing a lot of readings, and need to reflect further.
