Friday, 26 February 2021

Recounting My Investment Journey Part 2/4

To continue from my previous post...

On My Own - I did DIY
As I needed a better direction to do stock picking, I turned to analyst reports and the newspaper for more detailed information. This was where I learnt PE ratios, PB, fundamentals, sectoral risks, EBITA etc. These were mainly numbers and it doesn't advocate any strategy. So I adopted the growth method of holding on to stocks which had good business futures. As my war chest was small, I targeted stocks around or under $1 so as to spread my risks. For about five years, my end report card was nothing special. Most were spectacularly good or bad. Call it a coincidence or not, majority of the chosen stocks either failed (eg ACCS, Biotreat, China Flexible, United Food) or outperformed (eg Ascot Residences, First Engineering, Labroy Marine, CWT). I held all of them till they died a natural death or got bought out for a handsome fee. There were painful lessons where I got zero cent back but also feel good experiences where I was proud to have picked the right stock. In the end, I understood better the workings of the stock market and that analysts are just paid fact writers.

Venture Out - Still more to learn
When I was older and had more cash, someone told me that I was at the investment peak. Puzzled, I sought further advice. His idea was I had a stable salary, this amount can only go up and any loan repayment period is the longest there would ever be. So, he told me to buy a property, specifically a HDB flat. But I wasn't about to get married for another two years at least. Instead, I continued to look at stocks since it was more familiar. Then one day, I saw a colleague working at the computer. He was a junior and when I asked what he was doing, he candidly showed me a deal that was just made. He had just closed a trade for OCBC for $300 profit. This happened over 2 days during the contra period and his stake was about $20000! Wow, I had never come close to putting so much money into one trade. Further, he told me he had been doing this for a while and earned quite a fair bit, sometimes doubling his monthly income. I was tempted to try short term trading. However, I knew I was not that kind of trader and stuck to stock purchase for longer period holding. By now, I could afford higher priced stocks eg Ho Bee, SC Global, Starhub. Another difference was instead of stubbornly holding on, if the price of a stock ran up and hit my target price, I would do one of two things. First, I could sell all and hope for a pullback to repurchase. Second, I could sell partially and held the balance for dividends. From then to now, fortunately I have not experienced another spectacular blowout.

Tip: Tudernum Le Lucrezie Umbria Bianco 2018, medium bodied with soft honeyed texture

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