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NeraTel: Trading around an investment.

Tuesday, July 16, 2013

Today, I divested some of my investment in NeraTel. Why? Do I not think that the share price could go higher?

Well, high could go higher. With the MACD and RSI still rising, the positive momentum is strong for price to possibly go higher. We also see a higher high in the CMF.

However, there seems to be an established pattern in the recent meteoric rise of NeraTel's share price. A high volume long white candle day seems to be followed by a short period of low volume pull back.

So, sell some close to the high and buy in again as price pulls back seems to be a good trading strategy. It also seems like a good idea for a long only investor to do this and make some pocket money in the process.

Fundamentally, my main motivation for investing in NeraTel is for a relatively high dividend yield. With its share price having run up so much in so short a time, dividend yield has compressed rapidly. At 84c, we are looking at a yield of 4.76%, far less than the 6.35% to 6.67% just a month or so ago.

With the uptrend intact, I will be looking to add to my long position if a retracement to support should happen. Where is immediate support? Possibly at 79.5c, give or take a bid.

Related post:
NeraTel: Is there no telling how high it could go?


Solace said...

Thats a very good trade. Congrats!

Hi AK, like to seek your opinion on the report that Moody downgraded the outlook of Singapore's three main banks to "negative" from "stable".

Do you more volatile times are approaching?

Cory said...

Actually i am doing the same. Sell some, hold some and long trade when opportunity arises.

AK71 said...

Hi Solace,

I can only provide my best guess and the answer has to be "yes".

If you are wondering what am I going to do in response to this expectation, see Motivations and methods in investing.

Must always have a war chest ready. :)

AK71 said...

Hi Cory,

I have just been called a great speculator for this in FB. LOL.

Ray said...

Good for you AK.
I read your post on Neratel and contemplated for a while but my plate was really full so gave it a miss.
Alas! missed out on a gem!
Thereafter, can only see it climb higher and higher...
im still waiting for it to draw back down for a correction... :)

AK71 said...

Hi Ray,

I think you did the right thing. If our plate is full, it is best to avoid piling on more stuff. Peace of mind is priceless. :)

There were times when I got a bit too greedy and piled on too much. The plate became too heavy to hold especially over a longer period of time. Not fun.

Anonymous said...

Hi AK,

Do you sell your stocks to balance up your portfolio? I mean, how do you do that?

I always know people buy this and that, but seldom people will mention about how and why they sell stocks.

If not, they will just generally say "I sell 'cos no potential, dropped 20%, etc ..." but never really go into as much details as why they buy. Care to share in the future?

AK71 said...

Hi Vanson,

I think there is no paucity of blog posts on portfolio balancing and why we do it.

"For example, say your original target asset allocation was 50% stocks and 50% bonds. If your stocks performed well during the period, it could have increased the stock weighting of your portfolio to 70%. You may then decide to sell some of your stocks and buy bonds to get it back to your original target allocation of 50/50." Investopedia

So, before we can do any portfolio rebalancing, we must have a "balanced" portfolio to begin with. I don't think I have such a thing in mind.

If I am very confident about an investment, I am likely to allocate a lot more resources to it. If I am not as confident about an investment, I allocate less.

I cannot speak for others but I try to share reasons for selling as much as I share reasons for buying. :)

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