EGO: Ego is the root of my problem. I am so proud to have found shares that went up a few hundred per cent within a couple of years and if I sold them, I have less shares to boast.
GREED: Another problem I have is greed, which is one of the deadly sins. It can be a virtue or a vice. In the stock market, it encourages investors to work harder to find good stocks to buy and continue to buy but then we forget about selling. That is often one of my biggest mistakes.
From the several articles I have written and published, you would know that I have discovered Latitude, VS, Lii Hen and a few other stocks which have gone up a few hundred per cent in the last couple of years. But my big mistake is that I always find difficulty in selling. I fall in love with my discoveries and I did not sell more when their prices were peaking.
A few days ago I posted an article with the title “ Export manufacturers share prices dropped too much” where I said that due to the 3.5% strengthening of our Ringgit their share prices dropped too much. Most investors overreact to good or bad news.
The MYR per USD chart shows the average rate for the last 3 months was Rm 4.30 to one USD and the rate on 5th . Feb 2016 was Rm 4.15 to one USD, a 15 sen or 3.5% drop. Smart investors should be able to see that this 3.5% strengthening of our Ringgit should not cause the export manufacturers share prices to drop more about 20%. For example:
VS dropped from Rm 1.68 to Rm 1.32 a drop of 21%. Note 1st Q eps was 5.22 sen.
Focus Lumber dropped from Rm 3.02 to Rm 2.28 a drop of 25%.Note EPS for last 3 Q was 3.22, 7.8 and 9.35 sen respectively. It has no borrowing. Some of its cash saving is in US$.
Chin Well dropped from Rm 2.28 to Rm 1.84 a drop of 19%. Note 1st Q EPS was 6.07 sen.
Latitude dropped from Rm 8.05 to Rm 6.63, a drop of 18%. Note 1st Q EPS 28.95 sen. It has about Rm 200 million cash saving and some portion is in US$ deposit.
Lii Hen dropped from Rm 2.97 to Rm 2.35, a drop of 21%. Note EPS for last 3 Q were 6, 7, and 8.6 sen. It is cash rich and no borrowing.
If I had sold more when their prices were at or near their top, I would have a lot more cash to buy back when they subsequently dropped so much.
Last night, on Chinese New Year eve, Ooi Teik Bee rang me to seek my opinion regarding the strengthening of our Ringgit. He said that he has spoken to a highly respected investor who said that due to the bad publicity of our political situation, he thinks that our Ringgit will continue to be weak which is good for exporters.
I also agree that our Ringgit will continue to be weak and I foresee more foreign funds will come back to take advantage of our weak Ringgit.
Most investors have difficulty in selling. As I have learned a humble lesson in not selling, I hope this article will help you improve your investing skill to make more money.
I wish you a happy and prosperous Chines New Year.
http://koonyewyin.com/2016/02/08/my-biggest-mistake-in-not-selling/
