(Tradeview 2017) - Your Risk Appetite Vs My Risk Appetite on NOTION (0083), DNEX (4456), D&O (7204)
Dear fellow readers,
Dear fellow readers,
Once
again, these writings are just my humble highlights (not
recommendation), feel free to have some intellectual discourse on this.
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Readers
who have read my articles know that I am quite conservative and careful
in my selection of stocks. I will not recklessly call a buy on any
shares without due deliberation and in-depth analysis or research.
Additionally, I will avoid listening to share tips without substantial
basis to justify just for the sake of investing or satisfying my
readers.
My father have always reminded me when I first started investing, "The market is always there. If you missed the opportunity today, there is many other opportunities in the market. Do not rush into it just because everyone around you is doing so." This simple but poignant advise has always stuck with me all these years. I will admit, it is not easy sticking to this investment philosophy especially if people around you, colleagues, kopitiam customers, uber / grab drivers, pasar aunties and uncles are all sharing with you how much money they made from DataPrep, Dnex, Efficient, IWCity and many others.
In
fact, "sitting still doing nothing" is one of the hardest thing to do
in investment. Even up till this day, I still have problem achieving
this. A good example would be Visdynamics and MPI. I remembered we
first called Visdynamics at 22 sens end 2016 and cashed out fully at
around 45 sens when I felt the share price is beyond its true fair
value. For MPI, we called at RM8.03 in early 2017 and cashed out fully
at around 10.30+. Look at the price today for both counters.
Spectacular. Sitting still requires huge amount of discipline. But it
has a lot do with RISK APPETITE which brings me to the crux of my
article.
Everyone has their own risk appetite. It may be low, medium, high and so on. However it differs from one individual is different from another. In short, it is subjective. Let me share with you through the illustration of a few stocks :
1. Notion VTec
Few months back when it was still around 45 sens, I received information from several parties that Notion will be in the play and TP was RM1. Quickly, we researched and decided against the investment. We felt Notion was too expensive and even if indeed the rebound play thesis came true, I rather put my money with Dufu, LCTH or Visdynamics for that matter instead of Notion. Why? My risk appetite did not allow myself to invest in Notion. Logic and sense prevented me from doing so. Clearly, my risk appetite prevented me from making a windfall. Today, Notion is RM1.26 and overvalued. Did I regret missing out? A bit. However, my funds was securely diverted to other companies which made me good return as well.
2. Dnex
Dnex
was one of the favourite penny stock for the past few months. Some
banks also initiated coverage on it. The share price moved from 20+ sens
to 40 sens today. We first noticed Dnex when it was 26 sens. Oil and
gas was rebounding, Vehicle Entry Permit contract, new contract by
government etc, the investment thesis looks sound. All seems to be on
track. Again, after due research and consideration, we decided to pass
on Dnex. We believe Dnex is a case of over optimism as earnings just
started to show only plus largely derive from associate contribution
which has a fixed timeframe. Mostly, stocks like this always starts out
strong then dwindle as time passes on. Hence, to us, the investment
thesis while attractive and tempting, my risk appetite did not allow us
to proceed with it.
3. D&O
This
was another stock that jump ridiculously due to market rumours on the
takeover offer. Like most people, we do not have any inside information.
Everything is based on hearsay. The thing with investment is requiring a
person to take calculated risk. If an investment relies solely on
hearsay or rumour, it is very dangerous. However, different people has
different risk appetite. Some people like to buy on rumours sell on
fact. However, we do not like to rely on hearsay or rumour. We act on
the basis on fundamental valuation of the stock coupled with future
prospect. This is largely because my risk appetite will not allow us to
consider this counter as well.
4. Jack Ma, Alibaba Effect + Loss Making Penny Stocks
Conclusion
Everyone has their own risk appetite. Some higher than others. Some lower than others. So the question we should all ask ourselves before every investment decision is "whether am I willing to take this risk to put my hard earn money in this counter". If the answer is yes, go ahead and invest. If the answer is no, avoid. If the answer is neither, take a step back to reconsider your position otherwise, just sit still. That way, at least your investments will give you the peace of mind when you go to bed every night.
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Website / Blog : http://www.tradeview.my/
Facebook : https://www.facebook.com/tradeview101/
or Email me to sign up as private exclusive subscriber : tradeview101@gmail.com
Food for thought:
(Tradeview 2017) - Your Risk Appetite Vs My Risk Appetite on NOTION (0083), DNEX (4456), D&O (7204)
http://www.tradeview.my/2017/03/tradeview-2017-your-risk-appetite-vs-my.html
http://www.tradeview.my/2017/03/tradeview-2017-your-risk-appetite-vs-my.html
