Starting the year strong

I am very pleased with my portfolio. My average monthly growth is only 1.4% to date which is below my 3% target but I have learned so many invaluable lessons (aside from that 3%/month is damn difficult to achieve).

I would like to share them:

1. Minimize your trades - my gains were dampened by my constant trades which cost me a lot in terms of commission and taxes. Just last month, I was spooked by online discussion on a possible market correction that I quickly closed about half of my positions including those that had been doing quite well!

Lesson learned: if a trade shows no sign of reversal, you should hold on to it and keep it for the long term. Don't panic.

2. Buy low - although this one sounds so obvious, it is actually very difficult in practice. A nice way of looking at this is that you should aim to make your money when you purchase shares, not when you sell them. I know this sounds mixed up but really, just think about it more. The reason most trades turn out bad is because your timing when you entered them was wrong. I have since learned that I should study the charts and at the very least the support lines diligently for every trade and try to buy on the cheap.

Lesson learned: Don't jump in and buy shares right away just because you recently deposited fresh cash into your account. Be patient and wait for the good trade to come by. Remember that cash is a position.

3. Close losing positions - be unemotional and just do it. Every sensible trader sets up a stop-loss level for every trade entered but not everyone actually follows it, me included. I hope to change that going forward.

Lesson learned: Do the right thing quickly. The pain of losing on a trade should be treated as a reminder for lesson 2. Do more of 2 and you'll need to do less of 3. (I wish it were that simple, hehe)

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I've posted a snapshot of my Road Map as updated at the end of the first trading day of the 2010. In terms of my balance, I've managed to pull ahead of my plan but mainly because of my aggressive investment. My goal this year is to start pushing my growth numbers up. Smarts, discipline and patience will be key. I know I can do it.

The coming quarters are going to be strong ones for the PSE. Aside from the global economy showing stronger signs of recovery, here's an article from today's e-Inquirer that is very encouraging: PSE sees boost in 2010 from key market reforms

Have a good year.