Found a stock that meet all the criterias you were looking for, nice valuation, good business prospects and etc.. but, you were not sure when to call your broker to make the Buy order... you waited and waited for the "feeling" to call on you as you watched the stock kept its upward push, slow and steady.. and one fine morning, you suddenly saw one hell of a good news about this particular stock in the newspaper and the projections is that its profit is going to double (for whatever reasons..) in the next financial year (or whatever good news you can imagine).. "oh my god.. this thing is gonna shoot up today.. I am gonna miss the boat!!" you told yourself.. as the market opened, the stock suddenly gaped up for like 5% and it never look back since then.. you can wait no more and you know that you just NEED to call the broker RIGHT AWAY!! ...
"Hey, Tom, buy me 5 lots of SOB Holding Limited, whatever price it is selling, quick quick, don't let it runs away.." (you might even called the wrong name, whatever, who cares!!) all you know is that you need to buy that SOB or else you will be kicking yourself if it hits limit up.. as you waited for ages to get the order confirmation from your broker, your mind were thinking, "what the hell!! does he even know how to use a computer? My grandma could have keyed in the order faster than he does! if he don't get it done in the next minute, I swear I am going to change a remisier"... "bloody hell, is he done yet?"... "ok, Done!!" as Tom (or Harry, whatever) confirmed the execution of the order, you heaved s sigh of relief *phew*, "oh yeah! I am on the boat now.. c'mon, let's ride, show papa what you can do"..
eh? suddenly, you saw the buying discontinued, and all the sell orders started to pile up.. 1 cents lower, 2 cents lower.. 5 cents lower.. and as the buy orders disappeared, the fall started to gather momentum.. 10 cents lower, 15 cents, and in just a few minutes, 20 cents off the peak which you've just bought.. "what the hell?".. and without long, it was back to where it closed yesterday, and stayed there for the whole day.. you were shocked, you were disappointed.. but yet, things didn't improve over the next few days.. 1 cent up, 2 cents down, 3 cents up, 4 cents down.. as it went side-ways for the next few weeks, you suddenly let your anger took control of you and you've decided to cut loses and sold it off at whatever price it was.. you thought that's the end of the story eh? heh.. the nice part had just begun.. the stock started to climb... (I leave the rest for your imagination..)
Does this all or any part of it sounds familiar? And you thought that you are the most unlucky stock picker in the world? and you are born to be a loser?
Don't be. Honestly, I have been through that too.. made some hasty decision when my emotions took control of me. I've learnt some painful lessons, luckily I didn't have much capital to invest in back then, or else I would have hurt myself even worse. And, I realised there are many others who have had the similar experiences.
What triggered me to write out this blog? I read something interesting from a book called "Hedgehogging", written by Barton Biggs (finally, something else away from Warren Buffett eh?). The book is about his life being a fund manager, worth your time if you are thinking of becoming one.. Anyway, since you've been reading until here, I don't mind to share with you here.. below is an ad, printed in the "Bawl Street Journal" in 1980 which Biggs had shared in the book, and it goes like this:
PROFIT FROM OUR MISTAKES!!
Investing money is a zero sum game. For every winner, there is a loser. We've been losers! If you had sold what we bought, and if you had bought what we sold, you would be rich!
In 1968, we went heavily into stocks and by 1974, we're down almost 50%! In 1973-1975, we invested over $150 million in real estate, and not just any real estate -- we concentrated in Atlanta; We lost our ass! In 1978, we hired a bright theoretical consultant from Harvard who had a "yield tilt" model which told us that energy stocks were overpriced and auto stocks cheap. This seemed to make sense, so we sold Texas Oil and Gas at $8 and bought General Motors at $60. We lost 33% of our money. If you had gone the other way, you'd be up 430%!
All investors make some bad decisions. But we make a lot -- and with consistency. Now for the first time, you can profit from our mistakes. For $10,000 a year, you can receive copies of the minutes of our quarterly Finance Committee meetings in which we establish our investment philosophy. For an additional $25,000 a year, we will give you a monthly update over the telephone of our current market outlook. And for only $100,000 a year you will receive copies of our trade confirmations so you will know on a daily basis what not to do. It's part of our Contrarian Theory.
This may seem like a very unusual offer, but look at it this way: we can't seem to get on the right side of markets, so if we let you pay to profit from our mistakes, we will have finally found a way to profit from our mistakes as well.
Subscribe now. Time is limited. We are about to undertake a major restructuring of the portfolio, and we'd hate to see you get caught going the SAME way.
- THE FORD FOUNDATION
Feel better? See, I am (or, we are) not alone. Even the professionals and experts did have their bad times. So? should we blame it on luck? or should we just give up investing totally? Well, I have chosen my path long ago. I have chosen to stick to Value Investing. If there are already so many successful investors out there, there must be a way that works! Learn from them! Learn from Mistakes! Have a little Faith and move on!
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