My best investment so far – 200% return, keeping it and let the profit run)
I start writing about HENGYUAN when it was RM5.31. As of today’s closing, it has hit RM17.96. If someone bought at RM5.31 and keep it until now, that investment would have generated 238% return.
This is the proof
https://klse.i3investor.com/blogs/richDad/123573.jsp
Somewhere in Nov/early Dec, I made a mistake in between by selling it at RM11 but I realized that mistake and buy back at RM11.50… But let’s ignore that 5% opportunity loss and look at the big picture for the discussion below.
As we are ending 2017 soon, I would like to share 3 lessons learnt from my decision to choose HENGYUAN:
LESSON 1: Choose a stock with strong earnings growth
HENGYUAN fits into this as when I notice this stock, I roughly estimate that its earnings will grow in FY17 way back in May-2017
LESSON 2: Look at PE instead of absolute price
Let’s revisit my wrong decision about a month ago. As share price has almost doubled from RM5.31 to RM11, I decided to sell it. After that, I look at the money and try to find other good investment… and I couldn’t find it as its PE at that time was around 4x with earnings growth exceeding 200% and even 300%!
I have to admit that I failed to find a better stock with such a good valuation !
The last option is to buy back HENGYUAN even as it has gone up to RM11.50.
This is the hardest thing to do as admitting mistake is not human nature, most people who already sold HENGYUAN will stay away from it forever… But these people will regret tremendously now as they stare at the screen and watch HENGYUAN goes UP and UP…
LESSON 3: Ignore the negative noises, focus on fundamental
When I start blogging, I noticed there are some consistently negative people who keep on posting negative comments. After a few rounds, I start to get used to this.
The last lesson is to learn to ignore these noises and stay invested.
My thinking is… I have spent many hours to find this HENGYUAN gem, these noises from the Internet won’t affect my decision to stay invested.
In theory, this is called “Let The Profit Run”.
Should I sell at RM13 with 20% profit? NO
Should I sell at RM15 with 40% profit? NO
Should I sell at RM17 with 60% profit? NO
Even at RM20 will I sell with 90% profit?
NO because by then its PE is still low at about 6x at RM20…
http://klse.i3investor.com/blogs/richDad/142671.jsp
