USD/CNH: The major resistance at 7.2800 is likely out of reach
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1 hour ago
Sunday, 9 December 2018
My biggest mistake in not selling - Koon Yew Yin
Any big lesson for ikan bilis retail investors to learn from whale investor like Koon?
Read? The Effect of Market Timing And Time In The Market On Multibagger Stocks
Read? JAKS - My Most Expensive Mistake - Koon Yew Yin
Based on the above, the share price should go above the share placement price of Rm 1.40 when the 1,200 MW power plant is completed in 2020.
CW8888: Leverage is double edged sword. Bo Lampar retail like Uncle8888 won't touch leverage. He is very satisfied with his account size; no need to be bigger. Leverage may be seen as Greed in disguise. No?
My wife started to accumulate more shares and we finally bought a total of about 160 million shares with margin financing. We bought too many shares with margin finance. Our average price should be about Rm 1.20 per share.
If you look at the price chart, you can see the price went up to Rm 1.85 in Feb 2018 and when I saw it started to drop, we started selling. I should have sold more to avoid force selling. It was my greed that I did not sell more shares.
In fact, forced selling was a blessing in disguise for us.
We had to sell to meet margin calls. The more we sold the more the price would drop. Forced selling is a vicious cycle. (CW8888: Ownself kills ownself during forced selling)
We were fortunate introspectively to have sold a huge amount of our holdings at higher prices in comparation with the current price of 50 sen per share. We have completely sold all our holdings.
Based on our average selling price of 80 sen, our average purchase price of Rm 1.20 per share and our total holdings of 160 million shares, we have lost Rm 64 million. Coincidently this is the 64 million $ question many people have asked me.
This is my most expensive lesson in my life.
Read? My biggest mistake in not selling - Koon Yew Yin
As I said before, no share can go up or go down indefinitely for whatever reason. When it is up, you must sell some so that you have money to buy when it is down. My biggest mistake is that I fell in love with my shares so much that I did not sell when they were at their peak.
EGO: Ego is the root of my problem. I am so proud to have found shares that went up a few hundred per cent within a couple of years and if I sold them, I have less shares to boast.
GREED: Another problem I have is greed, which is one of the deadly sins. It can be a virtue or a vice. In the stock market, it encourages investors to work harder to find good stocks to buy and continue to buy but then we forget about selling. That is often one of my biggest mistakes.
From the several articles I have written and published, you would know that I have discovered Latitude, VS, Lii Hen and a few other stocks which have gone up a few hundred per cent in the last couple of years. But my big mistake is that I always find difficulty in selling. I fall in love with my discoveries and I did not sell more when their prices were peaking
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Quote : "We had to sell to meet margin calls. The more we sold the more the price would drop. Forced selling is a vicious cycle."
ReplyDeleteHmm .. This "forced selling to meet margin calls" can be an interesting show case to watch out in the next Bear market when a Community grows bigger and bigger to the next Bear market and more and more learning how to leverage from margin financing for passive income to FIRE! How the members in the Community stampede on each other to get out?
"When it is up, you must sell some so that you have money to buy when it is down."
ReplyDeleteI call this harvesting ... especially when the harvest is especially bountiful. :)
"But my big mistake is that I always find difficulty in selling."
There are MANY methods to help with selling, from FA to TA.
With TA there's oscillators / momentum indicators, trend indicators, overbought/oversold indicators.
There's also PA (psychology analysis) e.g. commitment of traders, put/call ratio, asset class ratio analysis.
Or you can just use Global ETF ... no need to sell ever ... look ma! No brains needed!! LOL!!
Can hold STI ETF without selling? Half brain. :-)
DeleteHi Uncle8888,
DeleteSTI ETF can lah. The reason why I mentioned global ETF coz countries can also get wiped out. E.g. investors holding stocks in Ottoman Empire during WW1, Russia in 1917, Germany & Japan during WW2, Shanghai stock market in 1949, Saigon stock market in 1975 etc.
Even though some companies & countries can survive and revive e.g. German and Jap like Daimler or Mitsubishi, but the previous investors are mostly wiped out.
US and UK are outliers i.e. very lucky. But you also see UK losing its status, innovativeness, earnings growth abilities over the decades. Who is to say when is US turn?
ETFs can be good becoz it has automatic self-renewal i.e. bad companies get replaced by better companies, deteriorating countries get replaced by thriving countries. Provided the ETF is based on good fundamental index.
That's why can be no brains needed lol!
For this no brainess, you lose out on the chance of big fast returns possible with single stocks.
Hi Createwealth8888,
ReplyDeleteLooking at the chart, Mr Koon Yew Yin actually made a good sell. In fact, since he said he started selling in Feb 2018 which is near the top, his timing was very good. I think his mistake was that his position got too large with respect to the liquidity of the stock.
His job and interest was in the stock market. For people like him, it is natural to use margin. For retirees with no more income to recover from a bad fall, using margin is not appropriate unless they have deep interest in the markets and confidence in their skills like Mr Koon.
Agreed! Newbies, starters or weak savers to leverage for more dividend income. Let see what lessons learnt at the next bear.
Delete