Few more days to go before we usher the arrival of 2020, it is good to take a moment to reflect on this journey in 2019. You may hit some goldmines or landmines along the way, but what's matter most is the valuable lessons that you learn from the journey. This year is the most eventful, full of risk volatility due to external political headwinds. From trade war, Brexit to Hong Kong protest, I would said the stock markets braved through with only few pocket of corrections with not more than 5%. The pocket of corrections are where the opportunities you should trade to maximized the gains.
Most people think when the market is falling, the risk is higher to trade and you should exit. I bet to differ. I think when the market goes lower, the risk to trade is lower and that is how I manage my risk. That is why each time the market start falling, I got so excited because I can acquire a excellence business at the lower risk and higher profit margin.
In 2019, US market still in bull ride while the rest of the world trying to find its footing. We are now in the 11 years of bull run since the last recession in 2009. The bull shows no sign of slowing down and it was forecasted to continue into 2020 and beyond. Some businesses had a short corrections in 2019 especially for semiconductors, commodity and car industry but analyst predict recovery is now underway in 2020.
Post mortem 2019
As the year coming to a close, it is a good moment to do a recap of my investment journey in 2019. Overall, this year fare much better that last year. I had make far less trades this year but bigger gains to my portfolio, mainly the gains come from US portfolio.
I make a total of 36 trades this year, 97% of the trades were in US and SG market. I only make 1 trade in KLSE this year.
Out of 36 trades, 21 trades were profitable and 15 were in "Red". So, my success rate of picking the winners is 58% only. Some of my decision to sell at loss was due to fear of market correction. Cut loss to manage my risk which I regret later on as the market recovered every time it dropped from peak. Some trades are due to company's fundamentally had changed, I decided to move my funds to better counters. The rest were sold at loss to rebalance my portfolio.
Even though my success rate was 58%, my profit for each successful trade far outperformed than those bad trades I make. For every $1 value I loss in the market, I make $9 profit gains from my trade. It seem that my entry and exit strategies works well this year. We should let the good trade run its course and fast to act when the tide turns. Stop loss strategies is useful to keep the loss at minimum and maximize profit from the bull's rage.
You may wonder why I didn't mentioned much about my trade losses. It is not because I don't like talk about it, but the magnitude of the trade losses is not significant enough to be mentioned. Just to cure your curiosity, I will make a list of top trade losses below for your reading pleasure.
My top 3 most profitable trades in 2019:
1. Alibaba (NYSE)
2. Facebook (NASDAQ)
3. Capitaland (STI)
My top 3 most UN-profitable trades in 2019:
1. Alibaba (NYSE) - $1900 loss
2. Disney (NYSE) -$1100 loss
3. Dow30 UltraShort (ETF) -$880 loss
**All the records above are based on completed trade, which positions were bought and sold done in 2019. There are few stock holdings in my portfolio currently which I had not decided to sell yet. It is not included in the chart and stock list above.**
Personal notes:
There are few lessons I learnt from managing my portfolio in 2019. I'm sharing some of personal thoughts below:
1. Value Grab vs. Bottom Fishing: . Since I could not predict when is the peak or bottom for stock price's movement, I would never try to time my trade and hope to catch the bottom. I will make the trade based on value investing analysis. This method was popularized by Benjamin Graham. I will start buying in small volume when I see a value emerged. It may dropped below my initial buying price but that is okay. I will add into my position as the price goes cheaper. I called it a "Value Grab" trade, which preferred over "bottom fishing".
2. Patience: One of the biggest lesson I learnt when betting with your hard earned dollars. I learnt to be very patience when making a trade. Patiently wait for sellers to subside and buyers to emerged pushing up when they start to sense the value in the stock. Sometimes if you try to wait for the technical indicators to give you the green light to buy, it may be too late to benefit from "market inefficiency", the share price already gone up so much to reflect the current value. Being late to the game is high risk of being the baits for big white sharks.
3. "Blind Spot Investing"-Market efficiency theory: "Market is Always efficient" when all the information make available to public and it reflected in the share price. "Market inefficiency" theory occurred when the public is unaware the true value and the price is not reflecting the true value of the company. I called it "Blind Spot Investing". This is where you have to make the biggest bets to gain maximum profit before others sniff out the gems. That was how Warren Buffet make his legendary trade on Coke, AMEX, BoA and many more. You can read how those legendary individuals make their trade through books or website.
Into 2020
In the coming year 2020, I would like to make less trade and increase the profitable trade ratio which currently at low 58% success rate. This can only happen if I really planned my trade well and stay faithful to my trading principles. A lot of self control and discipline needed.
To end this milestone 2019, I would like to wish everyone a Merry Christmas and Happy new year!.
Other interesting articles to read; Please Click the links below:
CAPITALAND....... Land of Capital Growth
ALIBABA 2019 ....... Feasting with 40 Thieves (Part-1)
KEPPEL KBS US REIT...... Take the JUMP!
2018 Malaysia Election...... the death star of my WIN-ning steak
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