Lessons Learnt from Stupid Mistake - Share Yours

(19-02-2014, 03:12 PM)opmi Wrote:

(19-02-2014, 03:02 PM)LionFlyer Wrote:

(19-02-2014, 01:28 PM)smallcaps Wrote: The investment I'm most unhappy with so far should be Eastern Holdings. Bought it cause wanted to try out asset play, versus the usual earnings based or net net approaches. Tis my opinion only but I think it is hard for asset play approach to match the returns from earnings approach.

Lost money on EH also for similar reasons. I think the challenge with asset plays are the reasons why an asset is undervalued and the difficulties in unlocking the value. Lost around 3.6k on EH 3 years ago.

Smallcaps, assets play will lose to earnings. Coz earnings can go for PE 5x to 40x. Assets at most 3x based on 30% disc to RNAV. For asset plays, better if the company
can grow NAV consistently. But NAV easier to predict than EPS.

LF, how to lose money when EHL at 3 years high?

(19-02-2014, 03:13 PM)opmi Wrote:

(19-02-2014, 03:12 PM)opmi Wrote:

(19-02-2014, 03:02 PM)LionFlyer Wrote:

(19-02-2014, 01:28 PM)smallcaps Wrote: The investment I'm most unhappy with so far should be Eastern Holdings. Bought it cause wanted to try out asset play, versus the usual earnings based or net net approaches. Tis my opinion only but I think it is hard for asset play approach to match the returns from earnings approach.

Lost money on EH also for similar reasons. I think the challenge with asset plays are the reasons why an asset is undervalued and the difficulties in unlocking the value. Lost around 3.6k on EH 3 years ago.

Smallcaps, assets play will lose to earnings. Coz earnings can go for PE 5x to 40x. Assets at most 3x based on 30% disc to RNAV. For asset plays, better if the company
can grow NAV consistently. But NAV easier to predict than EPS.

LF, how to lose money when EHL at 3 years high?

Think LF means he sold it 3 years ago... around that time i was still accumulating.

Maybe my expectations too high, actually haven computed the XIRR for Eastern Holdings yet. Maybe it would turn out to be better than I think.

Best is net net turnaround into high earnings growth stock (dreaming ) Nowadays very hard... after thinking for very long, the only stock that bought recently was Baker Tech. Hope it turns out well enough.

(19-02-2014, 05:09 PM)smallcaps Wrote:

(19-02-2014, 03:13 PM)opmi Wrote:

(19-02-2014, 03:12 PM)opmi Wrote:

(19-02-2014, 03:02 PM)LionFlyer Wrote:

(19-02-2014, 01:28 PM)smallcaps Wrote: The investment I'm most unhappy with so far should be Eastern Holdings. Bought it cause wanted to try out asset play, versus the usual earnings based or net net approaches. Tis my opinion only but I think it is hard for asset play approach to match the returns from earnings approach.

Lost money on EH also for similar reasons. I think the challenge with asset plays are the reasons why an asset is undervalued and the difficulties in unlocking the value. Lost around 3.6k on EH 3 years ago.

Smallcaps, assets play will lose to earnings. Coz earnings can go for PE 5x to 40x. Assets at most 3x based on 30% disc to RNAV. For asset plays, better if the company
can grow NAV consistently. But NAV easier to predict than EPS.

LF, how to lose money when EHL at 3 years high?

Think LF means he sold it 3 years ago... around that time i was still accumulating.

Maybe my expectations too high, actually haven computed the XIRR for Eastern Holdings yet. Maybe it would turn out to be better than I think.

Best is net net turnaround into high earnings growth stock (dreaming ) Nowadays very hard... after thinking for very long, the only stock that bought recently was Baker Tech. Hope it turns out well enough.

Hi guys, I dont think you should be too hard on yourselves for a particular loss or so. Assuming you have invested correctly requiring the margin of safety at your assessed value, then it is only the odds of you earning a return is higher than not.

So before you made a decision, you would have figured out the odds of earning/losing/risks involved before purchasing. The fact that it turned out at the worst outcome does not mean you are wrong. It is just that the small percentage event happened and you have had that factored in before your purchase. Therefore you should not reflect on the outcome of the decision because it gives you an inaccurate picture.

Buffett has said it before on one particular occasion (which I remember was his india visit on state television with Ajit and a group of students in that audience} that "You should judge by the outcome by the odds that are going in."

So yeah thats why I thought. Unless of course the mistake you made was analytical then we would just have to learn from it!

Got to admit that I have plenty of stupid mistakes

A few of them are:

1. Bought a producer of sorbitol near the height of commodity bubble. The company has many years of of good profit margin and ROE, the price is also cheap, considering its earnings. A few weeks after I bought the stock, Cargill became a majority shareholder and held a tender offer for the remaining shares. If I sold at that time, my return would be more than double my buying price but I foolishly choose to hold on my stock because I thought as one of the most successful private company in the US, Cargill can surely improve the company's operation hence the share price should be even higher in the future.

Guess what? the share price drifted lower after the close of the tender offer.. not long after that the commodity bubble popped and the sorbitol producer's profit plummeted. The share price became much lower than my buying price, at one point even more than 50% lower

Now, several years later, I sold all the stock for a tiny profit a few weeks ago (not sure if it was a profit considering all the years gone by)

Lesson learnt:
a) when buying a commodity company be careful to watch the economy cycle
b) don't be greedy, taking a good profit after a short holding period is often a wise thing to do

2. Bought a multifinance company stock two years after 2008 financial crisis. The company's business is providing loan for motorcycle and car buyers. The company has long record of excellent margin and ROE, a market share leader of its industry, routinely distributes dividend and Temasek held a majority stake of its parents.... and the dividend yield is mouth watering

A few weeks after I bought the stock the government introduced a rule to increase downpayment for purchasing motorcycles. Motorcycle sales were also tanking as delayed effect of the commodity bubble popping (Most of the buyers are from regions who produces palm oil). So the 'cheap' stock became even cheaper. Luckily the company still distributes dividend.

Now, the company seems to recover. Last year profit is up 20% however the share price is still lower than my buying price. I am still holding on though because I am stubborn as a mule

Lesson learnt:
- When investing in regulated industry (property, finance, etc) be careful since new government rule can change business climate
- (Similar to above) Watch out for economy cycle

I bought Jiutian - the top S-chip (in terms of % decline, published in the papers) near the peak, before the stock split in 2007.
It dropped 90% from the peak. I was worried that selling it wouldn't even cover the brokerage.
But i sold it just to erase it from my cdp holdings.

Lesson learnt:
1) When everyone knows and touts the "story", it's too much hype.
2) Manufacturing raw chemicals is high capex, low margin business. Especially if demand drops.
3) Institution holdings can be wrong too.

Thankfully, i just started work and didn't have much to lose. The GFC happened soon after and
everything else dropped too. Only difference is, the good businesses recovered.

smallcaps, opmi,

Bought 50 lots EasternH at $0.185 June 11
Sold 50 lots EasternH at $0.112 Dec 11

Net loss: $3650 excl. trans cost.

Didn't know what I was doing back then. I still have all my order alerts in my email folder.

I realise as time goes by, I buy more, sell less. When you buy a good company (as oppose to a hot stock), you end up loath to sell unless there is some fundamental reason which you disagree with. I can't say I am doing fantastic, I have some stocks in the red now, but I don't see a reason to sell yet. In fact, it is the other way round.

Just started investing not too long ago..

After doing all the 'research' (e.g. keppel corp vs sembcorp and pe, pb, 10 years financial statments), I bought sembcorp utilities just before it went ex-dividend and I didnt realize what ex-dividend was. It dropped ard 5% within a few days.

(19-02-2014, 07:31 PM)rogerwilco Wrote: Got to admit that I have plenty of stupid mistakes

A few of them are:

1. Bought a producer of sorbitol near the height of commodity bubble. The company has many years of of good profit margin and ROE, the price is also cheap, considering its earnings. A few weeks after I bought the stock, Cargill became a majority shareholder and held a tender offer for the remaining shares. If I sold at that time, my return would be more than double my buying price but I foolishly choose to hold on my stock because I thought as one of the most successful private company in the US, Cargill can surely improve the company's operation hence the share price should be even higher in the future.

Guess what? the share price drifted lower after the close of the tender offer.. not long after that the commodity bubble popped and the sorbitol producer's profit plummeted. The share price became much lower than my buying price, at one point even more than 50% lower

Now, several years later, I sold all the stock for a tiny profit a few weeks ago (not sure if it was a profit considering all the years gone by)

Lesson learnt:
a) when buying a commodity company be careful to watch the economy cycle
b) don't be greedy, taking a good profit after a short holding period is often a wise thing to do

2. Bought a multifinance company stock two years after 2008 financial crisis. The company's business is providing loan for motorcycle and car buyers. The company has long record of excellent margin and ROE, a market share leader of its industry, routinely distributes dividend and Temasek held a majority stake of its parents.... and the dividend yield is mouth watering

A few weeks after I bought the stock the government introduced a rule to increase downpayment for purchasing motorcycles. Motorcycle sales were also tanking as delayed effect of the commodity bubble popping (Most of the buyers are from regions who produces palm oil). So the 'cheap' stock became even cheaper. Luckily the company still distributes dividend.

Now, the company seems to recover. Last year profit is up 20% however the share price is still lower than my buying price. I am still holding on though because I am stubborn as a mule

Lesson learnt:
- When investing in regulated industry (property, finance, etc)

Quote:be careful since new government rule can change business climate

- (Similar to above) Watch out for economy cycle

This why i keep on stressing Money(stocks & shares, investments) and Politics can never be separated.
Now Singapore and Indonesia has some differences over the naming of war ships by Indonesia, we have to watch carefully what's going to happen next?

(19-02-2014, 10:08 PM)Temperament Wrote: This why i keep on stressing Money(stocks & shares, investments) and Politics can never be separated.
Now Singapore and Indonesia has some differences over the naming of war ships by Indonesia, we have to watch carefully what's going to happen next?

well, short term i think there is a possibility that the haze problem has potential to get worse

Long term though, unless some 'negative surprise' happen during the upcoming Indonesia's election it's a bit difficult to imagine the political row to flare up further. As far as i know a lot of Indonesian politician and businessmen go to Singapore for healthcare purpose. Singapore is also currently the homebase for a lot of major multinationals regional head office. Uncle Sam will surely do something to prevent conflict escalation

(19-02-2014, 08:34 PM)LionFlyer Wrote: smallcaps, opmi,

Bought 50 lots EasternH at $0.185 June 11
Sold 50 lots EasternH at $0.112 Dec 11

Net loss: $3650 excl. trans cost.

Didn't know what I was doing back then. I still have all my order alerts in my email folder.

I realise as time goes by, I buy more, sell less. When you buy a good company (as oppose to a hot stock), you end up loath to sell unless there is some fundamental reason which you disagree with. I can't say I am doing fantastic, I have some stocks in the red now, but I don't see a reason to sell yet. In fact, it is the other way round.

Retrospectively my mistake was not buying more when the price dropped, juz before the offer was made. There r always those that goes much into the red, but seems those r opportunities instead.