Sunday, 30 October 2011

My story -Typical know nothing to know a little thing investor

When I first started work in June 2008, I listen to my friend aka financial adviser and bought ILP because I just started work and I know that I need investments and protection but I was total noob in finance. (This ILP still haunt me today. Pls see: Best Bargain: Must buy: ILP)

Then I read up more and think that investing by myself is better. (Rich dad Poor Dad changed my mind. Previously, I hated anything to do with finance.) Hence, I bought unit trust in March 2009. I tried different kind of funds including method such as RSP.

I was lucky as March 2009 was market bottom and sold them in Oct 2009 for a bit of profit when I realised that I am actually feeding my profits as annual expense to the rich fund manager. Then I switched to stock.

In Oct 2009, I don't know anything about TA and FA. I listen to radio, see tv, see CNA market forum, see news etc and whacked my first stock golden agriculture at 0.45. In the next few days, the price drop to 0.42 and I felt worried and kan jiong. In the next few days it went back up to 0.46 and I sold it for low $xx profits as my emotion cannot take it.

Since then I started to buy and sell many stocks, but only dare to hold for a few days to few weeks because I do not have any plans or method. I have no confidence in my buy and easily panic as it is my hard earned money. In addition, I am easily influence by the media. The worst investment which I made during that period was blinding following BB Peter Lim, that mistake is still haunting my portfolio.

Since then till today I keep reading up books on FA and TA, learning all the methods which I could in stock investing. Somehow when I go through financial blogs, I discover LP's cbox and started to chat and learn from the people there.

I thought I had already learn many methods in investing such that it will make me a better investor. However, my performance is not good at all. I tend to buy and sell quite fast. I also tried forex but loss badly and read up on warrants but luckily did not tried that. I also wanted to try CFD, I got the account form but end up I never sign up.

Slowly slowly I realised that knowing the methods - TA and FA is not enough and in fact there is no holy grail in the methods. No matter how well verse you are in TA and FA, there is no way which you could predict the market movement.  Hence I started to give up listening to all these noises.

I learnt that I need to manage my portfolio well and do asset allocation. This directly and indirectly link to the emotion in my mind. I learnt and know that how much money I should and can put in each individual stock such that I will not panic when the market drop heavily. I learnt that I should and can only do average in but not average down. I learnt and know that when Mr Market is in panic, I should not panic. Instead, I should start whacking some good stocks slowly according to my asset allocation plan. When Mr Market too optimistic, I know I should start selling and should not have seller remorse.

Overall, now I know that I need to have a strategy. A carefully planned strategy such that I will have asset allocation according to my risk level and what I will do if market goes up and what I will do if market goes down. There is no point to predict market movement. The so called gurus also made so much mistakes, how can a layman like me do prediction? Nowaday, I started to buy slowly and sell slowly. Although it is hard, I force myself to stick to the rules which had planned.

However, I still have 2 past mistakes which is still haunting my portfolio. The school fees incurred in this process of learning is painful. Hopefully, Mr Market will give me a chance to repent.

I hope I am on the right track and I think my XIRR will tell me how I fare in future. All the best to me!

Lastly, thanks to all those had gave me guidance and I will continue to learn as much as I could so that I can improve! Thank you!

3 comments:

AK71 said...

Hi OT,

You have attained Nirvana! :)

School fees must be paid. I don't think anyone can avoid paying school fees to Mr. Market. Important thing is to learn from our mistakes and refine our methods.

There are many roads to Rome. Your route might be different from mine but as long as it gets you to the same destination, it is a good one. :)

Good luck and I look forward to reading more about your adventures on the road to financial freedom. ;)

Singapore Man Of Leisure said...

Hello OT,

I raise my cup to you in cheers!

The road to self-discovery can be interesting. And you may get unexpected spin-offs that may benefit you in your career and relationships ;)

Financial freedom is just one aspect of life.

OT83 said...

Hi Ak,

You are in level 3.5 of Nirvana!! I interested to learn from you more too :)

Hi SMOL,

Self discovery is really interesting but it is painful too.

I hope I could discover other unexpected spin-offs too!

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