My Investment Journal - Part 1

My Investment Journal - Part 1

Do you still remember how did you get into stock market? I always believe that the way you get into the market and your first few successful transactions especially using real fund will affect your investment style and attitude towards the stock market for very very long time. I am writing this just to share some of my mistakes I made in my early years. 

I came to know about the stock market since I was grade 8-9. I was studying in Shanghai that time as my parents worked in Shanghai since I was young. When I was in grade 8-9, almost all of my friends were using Kaixin Wang (China's Facebook), and there was a demo stock trading app. Some of my friends started to use the app so I join them, and I doubled my demo portfolio's value in about a year. 

The demo stock trading app got very basic functions only. You can't see any chart or financial data of the stock, you can't see day high or low or market depth of the stock. You can only see the price of the stock, volume of the day, buy / sell the stock, record down your transactions and create a list of your portfolio. However, the demo app is a very important door to the investment field for me, that was my first time to learn about other ways to earn income beside basic salary. 

Since I don't have access to the charts and financial data of the stocks, how do I doubled my demo portfolio's value in about a year? Basically what I do was 'trading', or you can call it speculation or gamble. I don't know anything about TA or FA during that time, I don't even know such term exists. Normally I will use about 5-10% of my portfolio per counter to buy some famous counters such as Vanke A, Bank of China, China Eastern Airline, Shanghai Airport, etc. I will sell the share if the price raises 3-5%, or average down if the price drops 3-5%. Do take note that the demo app will not charge any commission. Usually I won't hold on to any counter more than 1 week. I quickly doubled my portfolio's value by frequent trading, and I was so proud of that. I thought I found an 'ATM' and I won't have to worry about my future and my career anymore. I even did some calculation: if I can doubled my funds in a year, what I have to do is just put some money into the market and I will get rich quick, I can earned about 1 million in approximately 6 years if I put 30k into the market in the first year. That sounds fantastic, and very attractive for a secondary school kid. 

In fact I was too lucky that time. I couldn't have such performance if I have to pay commission, and during that period SSE index increased from 1.7k to 3k. So my performance should be considered as quite normal during that period. However during that year those successful 'trades' affected my attitude towards the stock market and my investment style for at least 3 years after I putted my funds into it, and I wasted so much money and time before I realised that I couldn't repeat that performance on my real account. 

Due to that 'wrong' attitude, after I opened my account with Philips few days after I turned 18, I quickly bought my first stock without any prior research. Guess which counter I bought that time... Noble Group (N21)!! I bought it for the following reasons: 1. It is always in top 30 vol list, 2. I tried to google Noble group and found that it was one of the biggest commodity trader listed on SGX. In fact I don't even know that it was part of the STI index, too be honest even I knew about it I don't understand the meaning behind it too. I remember that I bought it around 1.1 dollars (take note that this price is not adjusted for recent 10 into 1 share consolidation). After a few days the share price raised around 10%, so I sit on 4 digit profits (around 4k i think)! Wow that was fast and easy money. I don't have to do much just sit in an air-con room and earn easy big fast money. After years when I look back I realised I was actually very unfortunately to earn such profit during that time. Yes I earned such impressive profit (at least to a 18 years old guy who just graduated from high school and waiting for NS), but my trade was based on luck only, PURE LUCKY ONLY. I was lucky to earn that profit, and such luck pushed my attitude further away from the right track. I didn't know anything about TA or FA and I don't know anything about the stock market. The reason behind the price movement,  the news or announcement from the company or industry, ect. I don't know anything about these, and I don't care. Why should I care about those if I can earn fast and easy money?  If I lose 10% on that 'trade', I might be able to save more money and time as I can realised that my attitude was wrong earlier. 

After that 'trade', I was so confident that I am a genius in stock market. In the next few months I continued my 'trading' activity before I finally get caught into Noble. I bought Noble again at 1.07 dollars and I strongly believed that I could earn more than 10% from it. Why? Because there is a 10% gap between my purchase price and the price I sold before (1.2+ I think). I strongly believe that the share price will eventually recovered that level and I am able to repeat my first 'successful trade' again. Well, things don't work in that way. The share price was in a downtrend, and slowly dropped to 80 cents. OUCH! When I saw a 5 digits paper loss from my statement I stunned. Why the price will drop so much? Isn't it supposed to recover to the level I sold before? How am I able to cover such huge loss? Guess what did I do after that? I closed my webpage and didn't look back into it for about a year! I didn't cut my loss or do further research about the company and I chose to ignore current price and pray for it to go up.  

Well after a year the price slowly back to 1 dollar again, and I finally able to sell them away with small loss (in fact the price slowly went up to 1.4+ after I sold). And finally I realised that I should study more relevant theories and skills, which is another long journey.. 

Conclusion:

I don't against for using demo account before putting your money into your account. Demo account is one of the very useful way to open the door of the stock market. Alternatively putting very small amount of fund into the account and give it a try is another way to open the door too. However, I found that if there is a senpai who is willing to share his experience and guide you is also very important. What I am saying here is not trying to suggest juniors to find tips from other experienced traders or investors, but learn from their mistakes will save you alot of time and money. Why need to pay tuition fee to Mr. Market when you can learn from others for free? For me, if there was any senior who can point out my wrong attitude, I won't waste so much time and money during my early days. We should learn from others, get the right attitude and found our own style, and always respect the market, just like a sailor should always respect the sea.