lessons from last week
i have stopped posting on my blog for a week because i felt like i failed myself once again from a bad trade. i lost Php 5,200 from a bad decision, which should not have happened if i did stick to my plan.
this is what happens when i do not follow my plan, and get bored easily. boredom is a dangerous enemy in investing-- we want to gain so much in such a short period of time. the truth of the matter is, i knew that i was making a critical decision but i did it anyway just because i was already bored with my stocks. if you are curious about it, let me illustrate so you will learn from this bad trade that i have executed last week:
with the Php 100,000 fund that I have left in my bigger portfolio (because the bulk of my fund i invested in my mom's forex business), i bought three starting positions: $MER (Meralco), $RRHI (Robinsons Retail), and $BHI (Boulevard Holdings).
🌀mistake 1: i did not buy in tranches. if you have a relatively big fund like this, do not buy at once. buy in tranches. the reason here is that if you buy one stock in bulk just once, you will miss the chance to buy more if the price drops lower than your entry point.
🌀mistake 2: i was having this trader temperament. as i have proven many times over, i have not been a successful trader as i am as an investor. to be a day trader is to buy a certain stock when it looks like it is gaining momentum to go up in the near term, or within the day (for example). i have had lucky trades, because i was copying my friends' trading plans. but, they exactly know when to cut their losses and when to take profits. i do not. kung feeling trader ka, you must know technicals professionaly well. the thing is, i do not. i know some basic stuff (reading candles) and some advance stuff (understanding ichimoku clouds and jay's Arc). i am really still learning to master them.
so there. i have good reasons for buying these issues. $MER was oversold because of the bad news about the electricity issues in manila. also, it is on its support level when i bought it (lowest level you can possibly buy it). i bought this when everybody was fearful that Meralco is in deep shit because of the power outages and the legal woes that sorround it.
$RRHI was looking good, too, as all of the gokongwei stocks are doing well. $URC and $JGS just reached its all-time high, $CEB is having higher lows in the past months, and the retail industry just can not be influenced negatively just in case interest rates hike a little more.
and finally, $BHI because i have had a good experience with this stock before. i gained as much as 23% last year with this stock, and it apparently returned to that support level again. i bought it also because there were rumors that it got its puerto azul and friday's establishment going well again (which turns out to be true according to their public disclosure); it is not bad to speculate, especially when you have good fundamentals to back up your reasons of buying a certain stock.
i held my horses, and just waiting for my target prices to be met perhaps within 3 months up to a year. i had a sound plan to offset my wrong decision of buying all at once. 50% on $MER, 25% on $RRHI and another 25% on $BHI.
in the next 3 days after i bought these stocks, $RRHI and $BHI were already green (they are already trading well above my buying price) but $MER was having a hard time going up. i read the disclosures and the recommendations of my broker (col financial) and it published a reiterated buy rating on $HOUSE, a property stock. i was apprehensive that it is an interest rate-sensitive stock but the fair value is just so high versus its current price back then. what i did, i held my breath and sold all my $MER shares to buy $HOUSE. and i just did the greatest mistake of my life.
🌀mistake 3: i sold at a loss. i sold $MER even when it was red. if you are an investor, you do not sell when it is red, you should buy more because it is giving you a chance to accumulate more shares at a lower price to have a lower buying average. but i did not.
so, i have been posting all these financial wellness stuff on my blog but i have not been so disciplined myself either. it also crossed my mind that i can not control my greed very well just yet. waiting has never been an easy thing to do for me, but it is an important ingredient for success, patience. i ended up losing from my trade on $MER which from the time i sold it at a loss has already risen almost ten percent, and $HOUSE has not stopped going down as of writing.
but, i have to stick to my plan. if i followed my instinct again, i would have sold $HOUSE again and buy another rising stock, but i am keeping my original decision, to buy and hold until my target prices are met.
🌀mistake 4: i did not follow my original plan. all right, so i can not emphasize enough the importance of sticking to your plan. if you plan to do peso-cost averaging, you have to stick to it no matter what. besides, it is the most effective plan that i know right now that suits long-term investors like me. i just got too bored and too greedy, but i also learned my lesson once more.
if you are planning to do invest in the stock market, i also recommend that you do not just believe in recommendations from your brokers, people online, or me, as a matter of fact. it is difficult when you belong to a herd, you believe too much your shepherd without due diligence. i follow bo sanchez but i also have many mentors, and sources. and in the end, i will have to execute my trades based on my own decision without blaming anybody for it.
and i decided to commit my last mistake in this blog 🌀 mistake 5: revealing your current positions. it will not help you when you expose your current stocks because, in fact, some traders can scare you out of your stock picks for you to sell low so they can buy them. another negative thing about it is when you post your projections about a certain stock, people will think that you are writing well about them because you want to lead them into buying the same stocks that you have. well, it is the price i am willing to pay because i am helping others to know my mistakes, that i hope they will not replicate in the future.
so i am getting over my past mistake (and regaining my confidence now), and at the moment, i am ready to just wait. waiting is good. classes will already start this 11th, and i am reading in advance so i can update my syllabus with newer and more relevant poems, stories and novels. i will be doing my job and will not be needing to monitor my portfolio very often because i can sleep well thinking that i have good stocks to wait on, and ready to be invested on even more every 15th and 30th of the month. :)
remember, plan your trades and trade your plan. it always works.
(i am writing this blog from my ipad moleskin app, so i apologize for the lower case typography)
