One week after the general election of Malaysia, the price of Stock Market did not drop as expected. Surprisingly, most of my watch list counters appreciated from at least 10% to more than 100%. Did I miss the opportunity again. I think so. Nonetheless, I think the most important thing (besides earn money from stock market) is to learn from experience, and enhance the investment strategy in the future. This post records what the right thing I have done, and which area should I revise and improve.
Few weeks before the general election, the market was full of emotion, nervous and rumours. In order to increase my cash ratio, I sold few of my counters that suspected to be low quality in terms of fundamental valuation. Yes, the losers that I define are those with bad valuation or uncertain prospect, instead of those market value priced lower than the price I bought.
Cannot be denied, some losers achieved outstanding market valuation in last few days. Since I cannot control how other investors price the market valuation, I think I should focus on what is controllable by myself, that is, keep the winners, and sell the losers, based on my valuation.
What I have learned
Indeed, keep the winners is a good strategy to earn big bucks in stock market. I think it may due to the fact when a business strategy is in the right direction, the moment of grow in terms of revenue and earning will keep moving forward. In addition, investors will be more optimistic to price the market value in a higher level. When too optimistic condition occurs, it is the time for me to harvest my "goods".
The Wrong Thing I have Done - Speculate the Market trend
I must admit that speculating the market trend is an exciting activity. I reserved around 50% cash for that speculation. Unfortunately, I was wrong again. Market rebounded, instead of dived. It was almost expected since many people around me did the same thing, that was, speculating that market would dive after the general election.
What I have learned
I must admit that the market was down, but it was only during the weeks before the general election, instead of after that. In other words, I missed the chance to cheap buy or top-up some nice counters. Besides that, even though the discount appeared not very attractive, that was, around 10%~30%. Frankly speaking, this potential return in that short period of time is very attractive compared to my KPI of 10% annual report.
I should be more realistic
Indeed, after few years in stock market, I realise that to have that 10%~30% return in few weeks is a very attractive deal. Instead of waiting the so-called "Market collapse", I should refine my objective and my investment strategy.
I believe there is still plenty of opportunity to earn money from stock market. Although I missed the chance that caused by general election, I feel I am still lucky because I have reached my KPI within 6 months this year.
Since I still hold around 50% cash, I think I should try my best to be a responsible value investor, that is, optimising the value of my cash by investing them in good companies. Hopefully, I can manage to decrease my cash ratio in next few months. Nonetheless, it is very dependent on the market whether I will realise other profit or not in the future. It is partially uncontrollable. Thus, what I can do is to focus on finding the next good deal from stock market.
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Written by: Xaivier Chia
P/S: The above sharing is solely based on personal insight and information that believed to be reliable. Your valuable feedback are very welcome.