He told me he wanted to buy Sime Darby. He said moderate PE ratio with some growth prospect and recommended by few analysts. I did not object, although I felf that it was not a very good growth, it was not a bad stock. If I object, I will have to explain why and the stock actually was not bad as per the research reports. Cannot spoon-feed him and he need to learn by experience also. Furthermore, he is on the opposite side of the earth, I day time he night time. When we talk, better talk about his studies, girls, jobs, movies, etc.
He bought it and lose 20% with few months and sold about 11 months after buying. I think most probably is because of the low palm oil prices from last year until early this year.
One day he suddenly told me he wanted to sell Sime. I asked him why, he said many analysts recommended sell.
I was very reluctant to say yes, sell. Because he is very busy and few months only buy one stock, portfolio also not many and now want to sell.
Then he told me he got two stocks in mind and will buy one and next month one.
I agreed for him to sell, because....
1) let him learn to cut loss. Analysts said not good, can consider to cut loss.
2) he has identified two stocks. So one is to replace Sime and one is additional and his portfolio will be bigger. After selling one, buy two stocks at a time. He is super slow, just can't wait for him to finish off all the money allocated for buying stock.
Coming back to Sime, one day after he has sold, Sime share price went up strongly.
For the past few weeks the crude palm oil prices kept going up. I just check, Sime share price is RM7.88.
His timing was totally out. Bought at the wrong time and sold at the wrong time. But at RM7.88 not a big difference from his selling price.
Will share what are the two stocks he bought.
Once again, timing is important in stock market. But as you see, this newbie went in at the wrong timing many times, but his overall portfolio is still making money.
He bought oil and gas company (Barakah), plantation (Sime), car company (DRBHICOM proton and Bjauto), all were badly hit by big drop of oil prices, palm oil price and Ringgit.
But as a normal investor, how do we know how to time the market? How to predict? That's why I normally do not time the market. Because I do not know how.
Fundamental is important. Newbie got no experience also can make money.
Will continue to post Newbie trades, journey, experience and lessons learned.
All the best to you newbie.
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Thanks
http://politemarket.blogspot.my/2016/04/how-newbie-lose-20-from-stock-market.html
