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20-01-2011, 12:21 PM
Thanks for posting the story. I can certainly relate to the story with my own. At the peak of the recent financial crisis, my loss including paper loss amounted to more than $500K.
I was investing and speculating in stocks before the crisis. In a single day, I could make a gain of 10-20k or a loss of similar amount. I bought some stocks with good fundamentals, but I also bought into stocks on tips and hearsay. Like everyone else, the bull run made me believe I have that special skill to pick the right stock. I also bought into call and put warrants, betting on directions of the STI index. I was 70% invested in equity.
I thought I was well read. Armed with all sorts of investment books including books on Warren Buffet, and a frequent visitor to Wallstraits.com, I was searching for stocks from any media I come across. I was teaching friends and colleagues on how to pick the right stocks. I was telling people to just go for low PE and PB. If only stock picking is that simple.....
Sometimes, we really need some adverse event to knock some sense into us. The global crisis certainly humbled me. I was stunned at how the market melt down, and how my portfolio's amount decrease day after day. I was depressed.
The fortunate thing was that I did not borrow, sold out the weaker stocks and held on to some fundamentally stronger stocks which I added bit by bit along the way during the last 2 years. One such stock is ARA, which I bought at $0.80 before the crisis and started to add more when it dropped to $0.40. Though some of my holdings are still underwater, my overall portfolio has posted positive returns since last year.
I am still invested in those stocks. But now, I spent time looking at balance sheets, cash flows and developments in the companies I am invested. I attend their AGMs, and watch their quarterly results. I tried to check up on the CEO as it is the CEO and the management team that delivers the numbers.
Today, I constantly remind myself that it was a lot of hard work plus luck that I have made some positive returns in my portfolio. I am certainly not smarter than a lot of investors out there, nor do I have the midas touch.
I was investing and speculating in stocks before the crisis. In a single day, I could make a gain of 10-20k or a loss of similar amount. I bought some stocks with good fundamentals, but I also bought into stocks on tips and hearsay. Like everyone else, the bull run made me believe I have that special skill to pick the right stock. I also bought into call and put warrants, betting on directions of the STI index. I was 70% invested in equity.
I thought I was well read. Armed with all sorts of investment books including books on Warren Buffet, and a frequent visitor to Wallstraits.com, I was searching for stocks from any media I come across. I was teaching friends and colleagues on how to pick the right stocks. I was telling people to just go for low PE and PB. If only stock picking is that simple.....
Sometimes, we really need some adverse event to knock some sense into us. The global crisis certainly humbled me. I was stunned at how the market melt down, and how my portfolio's amount decrease day after day. I was depressed.
The fortunate thing was that I did not borrow, sold out the weaker stocks and held on to some fundamentally stronger stocks which I added bit by bit along the way during the last 2 years. One such stock is ARA, which I bought at $0.80 before the crisis and started to add more when it dropped to $0.40. Though some of my holdings are still underwater, my overall portfolio has posted positive returns since last year.
I am still invested in those stocks. But now, I spent time looking at balance sheets, cash flows and developments in the companies I am invested. I attend their AGMs, and watch their quarterly results. I tried to check up on the CEO as it is the CEO and the management team that delivers the numbers.
Today, I constantly remind myself that it was a lot of hard work plus luck that I have made some positive returns in my portfolio. I am certainly not smarter than a lot of investors out there, nor do I have the midas touch.