Why So Many Lose Back Profits

observer2
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13 years 1 month ago #5569 by observer2

Replied by observer2 on topic Re:Why So Many Lose Back Profits

Thanks, Joes,
When I said “met expectation”, I meant the stock met my expectation of at least a doubling in its share price and attaining a PE of close to 10x in the current poor market sentiments for S-chips. All my stockpicks attained a PE of not less than 15x during the period from 2003 to 2007 as sentiments for S-chips were not as bad as in the last 2 years. Below are some interesting facts on Oceanus, Sinotel & China Gaoxian.
OCEANUS: Stock considered grossly undervalued & out-of-favour with Investors at under 15 cts. Share price hit a high of 47 cts on 30 Dec 2009. PE of 10x at 40 cts. Company had failed to boost the number of abalone tanks to 40,000. Its entry into restaurant business was clearly a bad move.
SINOTEL: Stock considered grossly undervalued with no investors’ interest at under 20 cts. Share price hit an intra-day high of 74 cts on 23 Sep 2009. PE of 10x at 76 cts.
CHINA GAOXIAN: Stock considered undervalued with no investors’ interest at under 20 cts. Share price hit a high of 47 cts on 12 Jan 2011. PE of 10x at 40 cts [after dual listing & earnings dilution].

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MacGyver
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13 years 1 month ago #5578 by MacGyver

Replied by MacGyver on topic Re:Re:Why So Many Lose Back Profits

Our dear friend, Observer2 is guiding for Situational Play. This is also a strategy to play the market. But you have to be fast to know when the situation may change. Take Sinotel for instance, to me, this is a dead stock. I checked with my friends in Hong Kong and they said that the other 2 industry peers downplay this SG comparable as an "unworthy competitor" Nevertheless, the Company has performed well, making a couple of fund raising. The monies should see them surviving the next 24 months.

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Dongdaemun
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13 years 1 month ago #5606 by Dongdaemun

Replied by Dongdaemun on topic Re:Why So Many Lose Back Profits

7 timeless pitfalls of investing
Regardless of institutional or retail investors, chances are, they would have committed these sins at one point or another.

1) Placing forecasting at the very heart of the investment process.
An enormous amount of evidence suggests that investors are generally hopeless at forecasting. So using forecasts as an integral part of the investment process is like tying one hand behind your back before you start.

2) Investors seem to be obsessed with information.
Instead of focusing on a few important factors (such as valuations and earnings quality), many investors spend countless hours trying to become experts about almost everything. The evidence suggests that in general more information just makes us increasingly over-confident rather than better at making decisions.

3) The insistence of spending hours meeting company managements
We arent good at looking for information that will prove us to be wrong. So most of the time, these meetings are likely to be mutual love ins. Our ability to spot deception is also very poor, so we wont even spot who is lying.

4) Fourthly, many investors spend their time trying to ‘beat the gun’ as Keynes put it.
Effectively, everyone thinks they can get in at the bottom and out at the top. However, this seems to be remarkably hubristic.

5) Many investors seem to end up trying to perform on very short time horizons and overtrade as a consequence.
The average holding period for a stock on the NYSE is 11 months! This has nothing to do with investment, it is speculation, pure and simple.

6) We all appear to be hardwired to accept stories.
However, stories can be very misleading. Investors would be better served by looking at the facts, rather than getting sucked into a great (but often hollow) tale.

7) Many of the decisions taken by investors are the result of group interaction.
Unfortunately groups are far more a behavioural panacea. In general, they amplify rather
than alleviate the problems of decision making.
Posted by level13 at 12:24 PM

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observer2
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12 years 3 months ago #8124 by observer2

Replied by observer2 on topic Re:Winning The War

The market slide over the past year has brought down the prices of numerous stocks, in particular – the small caps & S-chips, to an incredibly low level – virtually bear market bottom prices. However, the fall in prices of blue chips & stocks with good dividend yields were relatively less severe probably because of the ultra low interest rates causing many people to park their funds in safer stocks offering considerable returns than fixed deposit accounts. These investors were also less likely to sell off their investments because of the lack of better alternative places to park their funds.
As in every bear market, most investors were known to always give back a sizeable portion of their gains that they made during the Bull Run at the end of the day. This time round, all buy-and-hold investors of small caps stocks (especially s-chips) would have been hit particularly hard as they suffered the most severe sell down. Those who had quitted early can congratulate themselves for running away smartly to fight another day. Since the small caps got hit the hardest, some of them could be expected to give fantastic returns in the next bull market – history repeats itself.
On reflection, it appears that making money in the stock market is just half of the battle for every investor. The other half of the battle is safeguarding the gains that many of us pay little heed to until it is too late. The current bear market, regardless of its duration and severity, would sooner or later come to an end and a new bull market would then begin.
Is the current rally the start of a new bull market? No one can be certain until the bottom of the bear market has been positively established.
Below are 2 common challenges confronting every investor:

Making big profits in the next bull-bear round and to avoid making many of the silly blunders made in the past. Possible? [A tough challenge - How many of us have ended up saying more than once – “Lo & behold, I goofed up again.” or “Alamak, kena unwanted babies again”?]
Avoid losing back much of the realized gains and paper profits when the next bear market sets in.

The reasons for many of us losing back our profits had already been highlighted in detail at the start of this thread.
What makes investment in stocks so challenging and interesting is that the market is irrational and will fool everyone sooner or later. Too many investors have already been fooled into believing that the market would continue to be very bearish, at least for the first half of 2012, (more Euro bad news & Greece certain to default) when along came the current strong market rally.
“Stock Market Is The Name
Deception Is The Game
When What You See Is Not What You Get
You’ve been Fooled, Once Again”

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Joes
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12 years 3 months ago #8125 by Joes

Replied by Joes on topic Re:Why So Many Lose Back Profits

As usual, yr postings are interesting to read, observer2. My 2cents worth is that people lose the other half of the war (at least in the past 2-3 years) becos of the sudden nuclear attack from unexpected sources.

I believe bear markets of 2008 and 2011 aren't quite like the 'normal' bear markets, especially in terms of the severity.

If not for the bungling Euro leaders and the over-indebtedness of the USA, stock markets would have been more benign. The Euro and USA are in long-term declines and the rest of the world, incl the stock markets, have to adjust to the insipid consumer power in those regions.

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observer2
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12 years 2 months ago #8254 by observer2

Replied by observer2 on topic Losing Money In Bull Market

Once again, many investors have missed out on the latest market rally because of fear of more bad news and a further drop in stock prices. An outstanding feature of the current rally is the very early and strong participation of small caps or penny stocks as they had been savagely sold down last year. Those brave ones, who bought into such stocks in December in anticipation of a New Year Rally, would likely have made very handsome gains; even if they had bought blindly – no need to have special skill or knowledge!
One group of people, who lose money in the current rally, would be those non-professional short sellers (likely to have made much money in 2011) who were still very bearish of the market. It is pay back time for them, with many losing at least a portion of their gains.
What makes the stock market so interesting is that –
BULLS MAKE MONEY
BEARS MAKE MONEY
THE PIGS ALWAYS GET SLAUGHTERED

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