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I have received notes in various forms from readers on the subject of plunging stock prices recently.
Here is an example:
Reader says...
i think i have been quite depressed over recent market falling.
sighz..
serious, paper loss about 35k. i started to doubt that whether i should
quit investing or not.
what i earned from past few years just enough to cover for my paper losses.
and marco polo alone are suffering 10k paper losses now:(
i have limited cash now.
sometime, or most time, i do feel little dissapointed on myself . feel like i am a failure, as others do investment so successful while i am just a loser.
a bit feel like to sell all and quit investing
AK says...
I have a feeling that you might have over committed to the stock market.
You probably want to relook and decide if you want to re-size your positions, taking some losses in the process, if need be.
If you are losing sleep at night, you have probably over-invested.
It could also be you didn't quite understand what you were buying into and whether you paid prices you could live with even in a downturn (which is when you should be thinking of buying more).
It might be a good idea to cultivate the right mindset before investing again, if you decide to continue the journey as an investor.
I recently replied to another reader in the comments section of my blog as well: here.
I also shared a conversation with a reader on Facebook:
I have a feeling that you might have over committed to the stock market.
You probably want to relook and decide if you want to re-size your positions, taking some losses in the process, if need be.
If you are losing sleep at night, you have probably over-invested.
It could also be you didn't quite understand what you were buying into and whether you paid prices you could live with even in a downturn (which is when you should be thinking of buying more).
It might be a good idea to cultivate the right mindset before investing again, if you decide to continue the journey as an investor.
I recently replied to another reader in the comments section of my blog as well: here.
I also shared a conversation with a reader on Facebook:
 |
| AK has his float. Do you? |
We should invest for a better future and we should invest in a way that gives us peace of mind. What is the way?
Well, it could be quite different from person to person and I have shared mine here in my blog many times before.
Know ourselves, know our motivations and know the right tools to use.
Remember that media headlines should not be what is driving your overall strategy and, instead, thoughtful analysis of your goals (and willingness to absorb pain in market down periods) is what is necessary for a successful investment strategy.
Decide which type of investor you are before you invest and make sure the overall strategy reflects your view of the world as well as the degree to which you can afford to be completely wrong.
From:Michael Yoshikami in Have a plan, our own plan.
Added on 21 Sep 16:
A very important thing is never to enter the stock market thinking that we will only make money.
That is like entering a relationship and thinking that there won't be rough patches or even break ups...
We will be setting ourselves up for disappointment. - AK
Related posts:
1. When to be fully invested in stocks?
2. Passive income: To pursue or be pursued?
3. How to size our more speculative positions?
4. Investing for income and position sizing.
5. How to have peace of mind as an investor?
Bloggy Award
26 comments:
Hi Ak,
For everyone, at some point of time, pain and worry will set in ...
When we begin, we all
初生之犊不怕虎，（fearless）
Then 前怕狼后怕虎，（kiasi )
Finally we know we are ready when we approach investment
马马虎虎 (agar-agar)
Oh, I was wrong. Damn... Go lower, buy somemone. Or oh I am so wrong, cut loss.
What is my annual returns? CAGR ?? Er ... I dun know, I 马马虎虎
You have stopped blogging about your nibbles and vesting. Worry about too many blind investors coat tailing you? ;)
Hi Mike,
Very droll! Haha... Thanks for the weekend humour.
Indeed, this is humour with wisdom. Nothing slapstick about it at all. :)
I am definitely in the 马马虎虎 (agar-agar) camp now. Appreciate the poke. ;)
Whoa AK, your Ang mo got fight with SMOL, I need to look up dictationary what is the meaning of droll. 😭
Hi Ray,
Well, I did mention that I might be changing the direction of my blog before although I have not really set my mind on how to do it. So, mine is a blog in transition now. ;p
Although I do make the effort to blog about motivations, asset allocation, position sizing, emergency funds, war chest and such, I am not sure if all readers have read these and I am definitely not sure if they would consider their own circumstances before taking action.
I bought some SembCorp Industries and SembCorp Marine when their prices fell last year. I recently bought some again and their prices fell again. Alamak. I want to buy into an industry leader when Mr. Market is pessimistic although it is clear now that I got in a bit too early. -.-"
I think they are in the growth/income segment of my pyramid. They pay out less than half of their earnings as dividends. Having said this, I am careful to size my positions so that my exposure to these two companies are together still a single digit percentage of my entire portfolio.
Actually, this reminds me of my investment in Wilmar International. I also got in a bit too early. Similarly, I feel that Wilmar is in the growth/income segment of my pyramid. Wilmar is a market leader in many ways. I have been accumulating on weakness as Wilmar's stock price stayed range bound, moving sideways.
I can be very patient especially if I am confident that the challenges faced by the businesses are temporary. Of course, bear in mind that temporary could mean a few years.
Wilmar is today worth more than a few years ago and its stock price was much higher a few years ago too, for example. That is saying something to the long term investor in me.
Most of my investments have an income angle. It is just a question of more or less. Easily more than half of my portfolio are strong income generators which is important when it comes to sizing some of my more speculative positions now which are only two at the moment: Marco Polo Marine and Yongnam.
Someone who followed some of my moves and plonked all his money into Marco Polo Marine and Yongnam might be very worried (or even cursing me) now. This hypothetical person might be interested to know that I recently added to my long position in Marco Polo Marine. What AK can do does not mean he can do.
Alamak, this has turned out to be a long reply. Should have been a blog post. ;p
No body can predict the share direction accurately. When we enter a position (be in base on FA and/or TA), we must feel comfortable and there is sufficient margin of safety. Most of the time, share price and value is divergent... as Mr. market is irrational and emotional.
I always remind myself that in the short term, market is a voting machine; in the long term it is a weighting machine. We should let Mr. market to serve us rather than controlling us.
Hi Mike,
It is one of my few strong points, the ability to confuse people with words. It is very useful when I want to scold people but don't want them to know I am scolding them, for example. ;p
Hi RayNg,
Very well said. Let me chip in another quotation or two:
"When stocks are attractive, you buy them. Sure, they can go lower. I've bought stocks at $12 and went to $2, but then they later went to $30."
"In this business, if you're good, you're right six times out of ten. You're never going to be right nine times out of ten."
Hats off to Peter Lynch.
"If you can't convince yourself "When I'm down 25%, I'm a buyer" and banish forever the fatal thought "When I'm down 25%, I'm a seller," then you'll never make a decent profit in stocks."
Peter Lynch
What should I do when I am down 25%?
I can definitely understand your concerns. And you're not the only investment blogger that is facing this problem. But blind investors will find someone else to follow if not you. There will always be the friend's neighbour's brother in law who made a killing trading some penny stocks. Your blog helped and is continue to help many who want to learn investing but didn't know how. (ok I don't count paying 4k to hear from some guru abt trading). Good job! Remember 不可能事事顺心，但求无愧于心 。
Hi Ray,
You are right, of course. There are many other bloggers out there to follow. :)
I believe that I have given my best effort to share all that I know as well as my experience investing in stocks (as well as other stuff) with anyone who would care to read. What I chose to do in life gives me what I have today and it is not just about buying the right stocks which is only part of the picture.
I am not suggesting the my blog is a Bible but I do know people who choose to only rely on certain parts or verses of the Bible in their interpretation of the scriptures. This narrow approach could very well take place when reading anything, including blogs.
If the content is not there, then, it cannot be abused.
Charge $4K per person, maybe? Wah! Hmmm... Nah. ;p
HI AK, any suggestion on Singapore technology engineering?
Hi AK,
I'm also very depress that my paper lost is near to 6 figures! Lol
But I'm still buying like no body business, I started to see fear in my friends so I decided to buy more over the pass few days...
I think just don't look at your portfolio then u wouldn't think so much... Lol
Hi Peter,
No suggestion from me. Never. ;)
However, I like ST Engineering and would accumulate on weakness. :)
Hi qinzheng,
Sounds like you have everything thought out. Thumbs up! :)
Hi Ak,
As long as we are buying an income producing asset, I think it is still better than buying a cost inducing 'asset' (like expensive Car or expensive condo for ownstay), right?
To me, I have accumulated substantial paper loss in shares like Wilmar and Sembcorp too, although it is ideal to accumulate these stocks at its lowest price, we might not have the blessing all the time, both counters are making rather consistent profit every year, hence, I am not worry at all. I am not sure if your other reader has invested in income producing stocks. If he does, he might not need to worry too much.
Every investment has its uniqueness and should be positioned correctly in the one's investment strategy exp. if we have vested in reits for income, we might have realized later that we made a costly mistake due to rights issuance related dilution, most ReIts have not been a net income producing entity, it pays you dividend regularly but it will take back even more via rights issue. Standby your cash sufficiently if you are thinking of investing in REITs. To me, unlike Singtel or Sembcorp, I will position it as Growth and Income.
To me, Price goes up, price goes down. It is all about market expectation and emotion. Investment is about growing your income and growing your asset, I am a dumb investor, I don't predict market. Hence, if one is dumb like me, as long as the company is making sustainable profit and the price is good, we should accumulate more. ... and I don't predict market, but I try to predict the company's profit.
It is always difficult to share our opinions correctly, unless AK you can disclose your full portfolio for full references, else I think viewers or readers who did not do their due diligence sufficiently might misinterpret your market action as market strategy.... Do you think so?
Casey
Hi Casey,
Although I might not agree with you on your statement that REITs are not net income producing entities which I feel is too sweeping, I do agree in general with the other stuff you said.
I do not see how disclosing full details of my portfolio is useful. Indeed, people could end up copying my portfolio which is not something I am comfortable with. If we are interested in discouraging people from coat tailing me (or other investors for that matter), then, revealing the full details of my portfolio would not be productive.
I think I have done as much as could be expected from a blogger although I do not think that readers should have any expectations of me. I have shared my methods and my philosophy. I have also shared how I look at potential investments.
Readers must do their own due diligence and not follow me or anyone else blindly. Unfortunately, this could be a tall order for some. Then, I should try to avoid blogging about what I buy and sell. :)
Sharing some comments by readers on my FB wall when asked whether disclosing the full details of my portfolio is the way to go:
Elvin Hayden Liang:
Let market forces decide.. lol..
Asking AK to show his portfolio is like this: a chess grandmaster shows his wins and losses... all his games and moves he took.. how can a novice copy and win against a different player using a different strategy if he doesn't know how to apply?
The market is an amalgamation of all types of players using different strategies and of different level of experience + knowledge.
Focus on the basics, if they want to make money fast, they need to do all their homework and work on building their knowledge before seeing the dollars rolling in.
May the best player win... smile emoticon
May Wong
IMHO AK has been very generous in dishing out infor/strategy/etc...
Asking him to show his portfolio is like asking him to show his bank account statement, which I think is not very right. Every body should his own research and take responsibility for his own action.
Had been enjoying reading AK blog and hope he will continue to do so.
Ivan Phoon
It's like asking Bruce Lee to show you his Jeet Kune Do kung fu. Even if he does its not useful except as an appreciation of what's possible. This is because he works at a different level both physically and mentally.
In the screenplay of the 1973 Warner Brothers film, Enter the Dragon, when Lee is asked, "What's your style?" Lee replied, "My style?...You can call it the art of fighting without fighting."
You have to understand your own nature and develop what suits you.
Hmmmm....
Don't ask what he did. Don't ask how he did it. Instead ask why he did what he did when he did it.
hi ak
do you worry Oil and Gas company as crude oil now drop <40 now.
and with china economy is slowing down. wonder how long can crude oil will continue to remain in low price.
Hi yeh,
Nothing good is going to come out of worrying about something we have no control over. :)
Low crude oil prices have multiple ramifications and for countries which rely heavily on exporting crude oil, the impact on their budgets is definitely very negative. Those which have weaker balance sheets have to worry.
I read in The Business Times that weaker OPEC members are appealing to Saudi Arabia to cut oil production. Let's see what happens next.
Reader:
What do you think of Starhub now? Is it still a good fundamental company worth investing in? or better to cut loss? Prominent platforms were saying it's a good cash cow business n then the table turns all of them run away. Wished I stayed away haha
AK:
Can always take in opinions but it is important to form our own. Then, we won't feel lost. Nobody cares more about our money than we do.
Hi AK,
Actually all 3 telcos are companies with good fundamentals to begin with. It is not like they are losing money or having any structural problems as it is a heavily regulated industry by the government.
They are all still making good net income albeit lesser than before due to saturation of market and a new entrant. Their free cashflow are always positive but of course paying same or more amount of dividends will be a challenge right now.
In my opinion, stock investing is not just what to buy, also when to buy & sell / hold. ;)
Hi Kevin,
Many are worried about their prospects. That is a pertinent worry but I believe in not being overly pessimistic. There is still value in the incumbents, definitely. :)
Solace said...
Been a while AK. Can see that you are still doing very well recently
AK said...
I do have some investments which are rather disappointing but I am lucky that my positions in those are relatively small.
Reader says...
I had keep loading Yangzijiang when I calculate that its intrinsic value is definitely more than $1.10 based on its 10 yrs earning history and possible future earnings.. However now is only 85c so I start to get a bit nervous...
I am wondering I should load more..... Wait for it to drop more then load more.... Or simply cut loss first and wait for a turn up before going in again.... I am quite confused actually now
AK says...
I will say one thing... If you are getting worried, your exposure might be too big. ;)
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