Many street smart retail investors will have heard about the conventional wisdom of buying low and selling high and would try hard to achieve that. Yet most of them fail to do so because of various factors that affect their decisions.
In the main, emotions and greed will hamper their ability and decision to buy low and/or to sell high. Another important factor is that of timing cum trade cycles – within the country or global. (Foreknowledge of timing cum trade cycles can be had by Yijing diviners with the particular expertise.)
Keeping the heart still amidst emotions and greed in investing is just as difficult as in neidan (inner alchemy) meditation.
Having preset targets to buy and to sell would make it easier for retail investors to act on their decisions and/or to create their own luck. (Remember my “Free Lunch” advice given to regular US and UK readers to buy plunged blue chips in their respective countries during the recent global financial / credit crisis?)
Adhering to preset targets would circumvent greed, unless retail investors keep moving their goal posts. Who do not want to buy at the lowest or sell at the highest, if they could?
Having bought stocks and shares at low prices, we must also know when to sell them to take profits or to cut losses. Therefore knowledge of timing cum trade cycles and of the investment is important to creating our own luck.
In line with conventional wisdom, I have had invested in five public quoted counters in the KLSE in May 2013 - during a time of uncertainty; the then ongoing PIGS credit crisis and the then upcoming Malaysian general elections. The prices of these five counters had by then already fallen by 50% to 70% from their three years high. I know four of these counters well having traded them on several occasions since 2005.
The first counter which had reached my preset target of a 100% capital return and sold was Kumpulan Perangsang Selangor Bhd, a state majority owned company. I had bought its shares at RM 1.09. The shares were sold before its price reached the year highest of RM 2.49 cum special dividend.
The second counter bought and sold was Borneo Oil Bhd, a company dealing in fast food. Its shares were bought at 35 sen and sold below the highest of 74.5 sen.
The third counter bought and sold was Talam Transform Bhd, a property development company. Its shares were bought at 5.5 sen under its previous name of Trinity Corporation Bhd and sold below its highest of 11 sen – the then high volume trade momentum did not push the price any higher.
The fourth counter bought and sold was RCE Capital Bhd, a small “finance” company which provided loans to government civil servants. This counter was bought to make up the numbers (five) and allocated the minimal investment. It was a safe bet and I also know the traits of the owner. It was bought at 30.5 sen and sold on the same day as the sale of Talam shares at a small profit.
The fifth and last counter is being held waiting for its majority shareholder to make his move. This particular very experienced owner can outplay any investor or trader of his counters. He tends to buy the lowest and sell the highest – because he can.
Therefore a lot of patience is required to make some money from this investment. Let us see how it goes.
Every four years there is a major modern event that can affect global shares markets trade. That particular event is called the FIFA World Cup and the competition kicks off on 12th June 2014.
Following the convention of selling in May and go away – to watch World Cup football – in 2014 could be the correct timing. Savvy Malaysian retailers have been net sellers in the KLSE in the last week of May. Nothing wrong with taking profits since stock markets would be rather quiet for the next one month.
Perhaps you could also create your own luck in shares investment after reading these two articles?
