Monday, December 30, 2013

20 Years in Stock Market

2013 marked a milestone for me personally, 20 years in stock market.  Dare not say after 2 decades in stock market I have become an experienced investor or trader but gain lot of valuable experiences in investing and trading.  For that 20 years, been through couple of bear and bull markets and see global economy moved from prosperous stage to recession situation and not to mention the profits and losses that accompanied it in stock market.

Entered the stock market in 1993 in which then it was a very hot stage, every uncles and aunties were talking about stock markets.  Back then it was a totally different environment.  No internet trading (every transactions have to go through a broker), brokerage was 1% (compared with now average 0.28%), IPO was able to bid for it apart from the normal balloting, contra trading for 7 days period as compared with current 3-days, teletext was the main source of monitoring stock prices back then and trading in Malaysia stocks were punters favourite due to their wild swing of prices. 

Was still an undergraduate when I entered the stock market in 1993, with little capital, all I can do was doing the normal buy and hold style, applying for IPO (then IPO was super hot, difficult to get and if get, it will be sure win type, before the bubble bursts in the later stage) while some of my uni friends were daring enough to punt (of course later got burnt when the stock market collapsed).  After numerous unsuccessfully attempts in getting IPO then, finally managed to get my first stock, SingTel, was successful in getting the balloting portion as well as the bid portion.  The IPO price was $1.90 while the bid price to pay was $2.10.  As a novice then, initially has an intention to just sell it off on its first day of trading but later have a second thought only sell off the bid portion (can't really remember at what price did I sell it off but definitely with a gain) thereby making my very first profit in stock market.  The remaining of the balloting portion I kept it to collect dividend after listening to what most of the people were saying then.  It later turned out to be a very good advice.  After that IPO success, I continued to aim at almost every IPOs that came out but most were unsuccessful.  Finally, near end of 1993, I got my second stock through IPO bidding, Pan Utd and the price to pay for was $1.80.  However, that also spelled the end of my novice investing/trading.  Stock market soon crash in the subsequent years, bubble burst and I still holding on to both SingTel and Pan Utd and stomaching those paper losses.  A novice mentality, do not know how to cut loss.  As I only have small capital invested in those 2 stocks so I didn't bother much, just put one side and concentrate on my studies and career.

From then till 2006, I was holding to both the stocks and totally not active in the stock markets.  Maybe due to inactive, I have sort of escape the various bear markets in 1995, 1997, 2001 and 2003 undamaged but then also missed golden opportunity to bargain hunt during those periods.  In 2006 when I decided to re-enter the stock market, found that I wasn't too unlucky with the 2 stocks.  SingTel has been giving me good dividend annually, so as Pan Utd.  A big bonus was PanU Mar share being given to me free by Pan Utd.  My second spell in stock market was more eventful and exciting than the first and from that I have learned a lot in the stock market, transforming myself from a novice to "verteran" ( :) ).

In 2006, I decided to take more risk in stock market and started doing trading on top of investing.  Like any novice trader, win some lose some and probably nett off still make a loss but the most important was finding out the reason how I ended up losing money and learned from those mistake to improve myself.  In 2007, I decided to become a full time trader (5 Year Full Time Trader Recap -- Part I, 5 Year Full Time Trader Recap -- Part II) and started another chapter of my life in stock market, the third spell which I considered.

Before that, from 2006 to 2007, lot of things happened as stock market was in the bull stage, I finally sold off my SingTel share in 2007 after holding it for 14 years at a price of $4.10, making very good profit (plus dividend return), the PanU Mar share I  got it for free was being acquired, the Pan Utd share I also sold off with a loss (but with the gain from dividend and PanU Mar share, nett off still not so bad), I also bought share in MMI and Robinson which later also being acquired making good profit.  The only stock which I made a loss was ChinaESave, which I eventually sold it off at a loss (some 50+% loss if i remembered correctly).  That was my first investment portfolio, overall still make a profit, considered a good investment for a novice standard.  It was also in 2006 that I started to construct my second and current investment portfolio.  The first stock for my second investment portfolio was Genting SP, bought it before they were being announced the winner to build the Sentosa IR (as then I was very confident Genting SP will win the bid) and that turn out to be my best investment so far.  The next 2 stocks which I bought before the market crashed in 2008 was First REIT and Cambridge.  Both of them were reits and like many were attracted to their dividend so decided to hold it for long term.

Good things never last as most said and it turned out to be true when the US sub-prime crisis soon hit in late 2007, global economy went into recession in 2008 before it rebounded in 2009.  It was a terrible start for me being a full time trader during those periods.  I also have to stomach all those unrealized losses in First REIT and Cambridge and barely surviving in Genting SP.  Then I remembered most were very negative on S-Reits but I am determined to hold on to it for long-term and stomach the paper loss as much as 50%.  My determination did not fail me as the 2 S-Reits allowed me to collect dividend throughout those periods and now the amount of dividend I have collected is equivalent to average 30% of the capital being put in.  Not a bad deal by ignoring those critics and held on to my belief.  The bear market, the "first" bear market that I experienced surely taught me a lot of valuable lessons.  From that after several reflections, I learned to become a better trader and investor.  In 2009 when I started to trade in my own unique method to slowly recover all my losses in 2007-2008 and by end of 2009 I did it.  It was also in 2009 that I started to have capital to buy more share in my current investment portfolio.  Though now on an annual basis since 2009, I am making nett profit on trading but nothing compared to being a fundamental and value investor as you got to buy quality stocks at great bargain, hold them for long term and have peaceful night sleep without worrying of volatility.  That was the most valuable lesson I have learned from the 2008 market crash.

Presently, I am doing trading for a living and with my own unique trading methodology, I am able to get at least 75% hit rate in doing purely contra basis trading and even have a 100% hit rate (without suffering a single contra loss) in a month in August 2012 (Trading Statistic) but to me trading is never the way to build up one's wealth and it is only through value and fundamental investing then one can truly build up the wealth.  Trading to me is to build up capital and earn daily expenses.  For investment wise, though my current second investment portfolio is doing pretty well but that is not the end to it.  In fact, currently, I am planing on my 3rd investment portfolio (Investing Research), learning the mistakes that I have made in my 2nd investment portfolio.

Stock market is a long and winding roads, with never ending learning opportunities and one has to stomach the roller-coaster ride in order to eventually achieve the reward.  Never afraid to make mistakes but must learn from every single mistake in order to improve.  The most important is to believe in yourself, do your own research, have the patient to wait and determination to overcome all the downs.

No comments:

Post a Comment