Tuesday, January 11, 2011

Portfolio Review for 2H 2010 - Pt 1

My losses/gains in 2H 2010 and notes(Click on the pic to enlarge)

I lost money on MYEG, SEGI warrants, Notion Vtec and Rubicon Minerals (an American listed Gold mining company).

Over these few days I shall examine these losses. Two at a time.(if all at one time, too painful!)

MYEG - was one of the first purchases. I was convinced that this was a good buy at that time because I was thinking it was the only E-gov provider providing such services as renewal of road tax, maid licenses, etc.The next few weeks eyeing the stock, it jumped and I got excited and thought I had missed the boat. When it retracted, I jumped! It was RM0.80+ then and I had taken quite big position by my standards.

Next, I waited. A few months later, I was reading about other stocks and grew impatient and MYEG was barely budging and if fact, it was dropping. So, I decided to sell into other stocks at a loss of about a few cent per share. *sigh* I also realised I did not look at the companies fundamentals and fully understand the stock. This was my first loss.

MYEG going forward - But, I still believe MYEG at first glance looks like a good idea with its unique position (only e-gov provider of services) and it was listed in Jan's Personal Finance Money as a pick for 2011 for Kenanga Research.... ****

Notion Vtec -Besides Personal Money, I also read the monthly shares digest aptly called - Shares. One of its picks that month was Notion citing that all the chip producing companies had doubled and were looking strong. Based solely on that, I took a medium position in the stock. Next thing I knew, it dropped by 10% and mentally setting my losses to be capped at 10% I sold.

Why 10%? It was a sell rule I had picked up reading a book called "24 Essential Lessons for Investment Success" by William J. O'Neil and 10% was the biggest lost I was willing to take.

Wow, writing all that makes me feel really dumb right now.

But it would have been dumber if I had held Notion Vtec which now had dropped from the RM2.70 I sold to RM 1.50 or lower! This was down to some problems it had with it factory and the general slump chipmakers were going through in 2010. So, the positive was that the market turned the other way.

NOTION going forward - Last I read in the Edge was Notion was attempting to grow in the Camera Sector but I am generally sceptical as the slump in chipmakers is quite bad with the rise of smartphones and tablets affecting sales of netbooks.

Moving Forward now...

So, peeps, how can I improve? Next time...

1) If you read some stock tip/advise, research, research,research! Does the business outlook support your assumptions? Do the numbers add up? How do the ratios compare to other competitors in the market (locally and regionally)?

2) Sit out and think about it and think whether there are better opportunities out there. Let the 'hot tip' simmer in your head and talk it over. Do others share your enthusiasm? Or are you just wanting to hear what you want to hear?

3) Take a small/moderate position in the stock. Remember to diversify and not to pull all your eggs in one basket!

That's all for now, peeps.. Tomorrow I will talk about my two biggest losses - RBY and Segi Warrants.

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