8 months of investing journey so far
Have been actively investing for 8 months so far, this post is to summarize what I have learned so far and pen down my observation along the journey and my current views and strategy.
Observation:
1. Stock market is a money game, whichever side (bull/bear) with more money wins.
2. Stock price is merely the daily equilibrium of willing buyers and willing sellers.
3. Anticipation and imagination runs wilder than the actual numbers. Manifestation of such idea:
- magic of profit guidance
- the awake of fallen giant or sleeping giant, or, 咸鱼大翻身 (everyone is excited that the hope that once lost is back again) recent examples: COSCO, Creative.
- the common sell-on news (if price has ran much ahead of expectation).
4. Buyers want to buy low, sellers want to sell high; together with TA trading, momentum of stocks can often carry it away much further than its fair value, in either direction.
And hence, plenty of opportunities arise from the mismatch between price and value. But there must be a good reference value, or else you will be swamped by price fluctuation and doesn't have the gut to buy or sell. A good reference value could be derived from deep understanding of the company, or could be based on insiders' trading, or TP of analyst reports with great pinch of salt.
Secondly, due to the momentum, stocks could be bought at very low price with good MOS, and could be sell at ridiculously high price; which is essentially what everyone wants to do: Buy low, sell high.
5. Super profits are possible to be made by:
a) Buy and Hold on a multibagger stock, with good sizing
b) Apply probable strategy in trading most of the time, win big loss small and keep compounding the gain.
6. Most of the time, there are few super bulls in play; and perhaps a few sectors are in play. When the sector is in play, most of the stocks in the sector will be played up, regardless of its fundamental. And is some days, the whole market is bullish and almost every counters rise. Vice-versa on the bear side.
7. The best time to pick up a good stock cheap is when there is sharp correction in the market and almost every stocks dive (which means that the drop is not due to fundamental reason but just because of market sentiment and psychology) which lock up the liquidity and forces margin closing. A good gauge for durian picking will be a 5-10% sharp drop.
8. Do not be afraid of few % increase of price due to strong buy signals (like Venture's CEO's heavyweight purchase, the start of high volume pump by BBs on good companies, and others), because when they did that, they are looking for much higher % of gain. The boat will be lifted up much higher.
9. If the possible return from holding a boring stock (for example, a net-net stock which price is flat for years) is not huge, the waiting duration might not worth it. So either buy it when you know the catalyst is near, or when the price is at huge discount of what it is worth. After all, what we invest is, time value of money. Nonetheless, such strategy might be useful when bear comes.
10. For cash cow company without much growth (pure dividend play), the stock price could tank in one day after earning results if its earnings is below expectation.
My current strategy & view:
1. 60-70% stocks holding mid to long term, 30-40% war chest for trading (most of the time averaging down for stocks already holding, and sell for few % gain to maintain % of war chest)
2. 20% max for a single stock in portfolio, ideally want to keep 8-15 stocks.
3. Portfolio are made up mainly of growth stocks (manufacturing stocks), undervalued stocks with near term catalyst, and the rest mixed.
4. Still only vested in local market, as I deem myself not experience enough to venture abroad.
5. At one time I have cashed out all my growth stocks, and I didn't feel good for couple of weeks. Still feel it's necessary to keep some growth stocks inside portfolio, as they still give the strongest performances YTD so far.
I am really glad that I have taken the investing journey, and tried various things along the 8 months to gain experience and insights. Hopefully the journey forward will be a more fruitful one, though with market getting more volatile, the fruits that I get may not be financial ones. Just hope by the end of 1 year journey, I could beat the index and the index return is positive.
Observation:
1. Stock market is a money game, whichever side (bull/bear) with more money wins.
2. Stock price is merely the daily equilibrium of willing buyers and willing sellers.
3. Anticipation and imagination runs wilder than the actual numbers. Manifestation of such idea:
- magic of profit guidance
- the awake of fallen giant or sleeping giant, or, 咸鱼大翻身 (everyone is excited that the hope that once lost is back again) recent examples: COSCO, Creative.
- the common sell-on news (if price has ran much ahead of expectation).
4. Buyers want to buy low, sellers want to sell high; together with TA trading, momentum of stocks can often carry it away much further than its fair value, in either direction.
And hence, plenty of opportunities arise from the mismatch between price and value. But there must be a good reference value, or else you will be swamped by price fluctuation and doesn't have the gut to buy or sell. A good reference value could be derived from deep understanding of the company, or could be based on insiders' trading, or TP of analyst reports with great pinch of salt.
Secondly, due to the momentum, stocks could be bought at very low price with good MOS, and could be sell at ridiculously high price; which is essentially what everyone wants to do: Buy low, sell high.
5. Super profits are possible to be made by:
a) Buy and Hold on a multibagger stock, with good sizing
b) Apply probable strategy in trading most of the time, win big loss small and keep compounding the gain.
6. Most of the time, there are few super bulls in play; and perhaps a few sectors are in play. When the sector is in play, most of the stocks in the sector will be played up, regardless of its fundamental. And is some days, the whole market is bullish and almost every counters rise. Vice-versa on the bear side.
7. The best time to pick up a good stock cheap is when there is sharp correction in the market and almost every stocks dive (which means that the drop is not due to fundamental reason but just because of market sentiment and psychology) which lock up the liquidity and forces margin closing. A good gauge for durian picking will be a 5-10% sharp drop.
8. Do not be afraid of few % increase of price due to strong buy signals (like Venture's CEO's heavyweight purchase, the start of high volume pump by BBs on good companies, and others), because when they did that, they are looking for much higher % of gain. The boat will be lifted up much higher.
9. If the possible return from holding a boring stock (for example, a net-net stock which price is flat for years) is not huge, the waiting duration might not worth it. So either buy it when you know the catalyst is near, or when the price is at huge discount of what it is worth. After all, what we invest is, time value of money. Nonetheless, such strategy might be useful when bear comes.
10. For cash cow company without much growth (pure dividend play), the stock price could tank in one day after earning results if its earnings is below expectation.
My current strategy & view:
1. 60-70% stocks holding mid to long term, 30-40% war chest for trading (most of the time averaging down for stocks already holding, and sell for few % gain to maintain % of war chest)
2. 20% max for a single stock in portfolio, ideally want to keep 8-15 stocks.
3. Portfolio are made up mainly of growth stocks (manufacturing stocks), undervalued stocks with near term catalyst, and the rest mixed.
4. Still only vested in local market, as I deem myself not experience enough to venture abroad.
5. At one time I have cashed out all my growth stocks, and I didn't feel good for couple of weeks. Still feel it's necessary to keep some growth stocks inside portfolio, as they still give the strongest performances YTD so far.
I am really glad that I have taken the investing journey, and tried various things along the 8 months to gain experience and insights. Hopefully the journey forward will be a more fruitful one, though with market getting more volatile, the fruits that I get may not be financial ones. Just hope by the end of 1 year journey, I could beat the index and the index return is positive.
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