As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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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 biggerLeverage 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

10 comments:

  1. 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."

    Hmm .. 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?



    ReplyDelete
  2. i may regret with hindsight that i always buy & sell too early but i regret more those counters i am not able to sell and bite the bullet.

    One counter from IPO since when i started not long in the market.

    About 28 years +-.

    ReplyDelete
    Replies
    1. So can't let go the baggage or a little "inhuman" spirit?

      Delete
  3. "When it is up, you must sell some so that you have money to buy when it is down."

    I 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!!

    ReplyDelete
    Replies
    1. Can hold STI ETF without selling? Half brain. :-)

      Delete
    2. Can we actually treat STI ETF as a single stock?

      If like that use half brain to buy and no need to sell ma, basing on cycles too.

      LOL!

      Delete
    3. Hi Uncle8888,

      STI 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.

      Delete
  4. Hi Createwealth8888,

    Looking 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.

    ReplyDelete
    Replies
    1. Agreed! Newbies, starters or weak savers to leverage for more dividend income. Let see what lessons learnt at the next bear.

      Delete
  5. Yes for amature ikan bilis don't lose money first before making any is always my motto.

    Leverage is no free lunch.

    ReplyDelete

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