I had been a very active trader and based a lot of my decisions on technical analysis and gut feel. I had successes early on but I couldn’t sustain it. I needed to reexamine my strategy. I seriously had to redraw my trading system.
And I did.
Over the course of the next 3 weeks after my losses, I made drastic changes to my portfolio. I sold all my stocks starting with my speculative buys which included Agrinurture (ANI) and Paxys (PAX), both of which were stocks that may have seemed promising but were actually weak in terms of fundamentals. My biggest loss then had come from my buying into Integrated Micro-Electronics (IMI) a newly listed stock and suddenly seeing the price drop hugely in a few hours. I had bought into it at the worst possible time. Only later did I research its fundamentals and found out that its yearend EPS was a negative value. It was purely market speculation that had moved the price up quickly on the first few days it had listed. That too I dropped and just absorbed the painful losses.
But I smarted-up.
What I did was reread reports and analyses from ATR Kim Eng which is one of the brokers I use. I found their analyses to be very well-researched and impressive. I just didn’t follow their recommendations too seriously before. But I had learned much since. Real losses have that effect on you.
Based on their high conviction buy recommendations, I started rebuilding my portfolio from zero and bought only ATR Kim Eng recommended stocks. Below is a snapshot then of my online portfolio. Note the date on the upper right corner – February 19, 2010.
If you notice, I still suffered a loss of 1.79%. This happened because after I had bought my new stocks, the prices were still consolidating and there was some downward movement. For those unfamiliar with stock codes, here’s a breakdown: AP is Aboitiz Power, FLI is Filinvest Land, HLCM is Holcim the cement manufacturer, SECB is Security Bank, and URC is Universal Robina Corporation.
(Click the image for full view)After roughly just 2 months, below is another snapshot of my current portfolio. Again, notice the date on the upper right corner – April 13, 2010. I held on to the exact same stocks. The only trades I made between then and now was that I deposited more money in my trading account and I bought more shares but of the same stocks. You can see that in the total shares column where I added positions to. The big difference from then and now is in the gain/loss field. Instead of a negative 1.79%, I now enjoyed a positive 18.06% which translates to P25,162.05. And it’s still creeping up as the overall market sentiment has been improving lately.
(Click the image for full view)My holdings with my other broker have performed similarly but since it isn’t an online based brokerage, I cannot post portfolio snapshots. I do keep a general record of overall performance on an excel sheet though.
I plan to hold on to these positions until the target prices have been met but more on that and my developing trading system on my next post.
The lesson I wish to drive here is this: I am not making a case that fundamental analysis is superior to technical analysis though it may appear that way. I can only say that it has worked for me here (in this instance). Technical analysis for sure also works for other traders (it did for me in the past). We all have our unique styles that suit our unique trading personalities. The biggest lesson from this episode in my trading experience though is that you become a better trader only by recognizing failure and learning from it. Only by constantly learning, failing and relearning – as a constant and never-ending cycle – can you expect to develop yourself into a stronger and better investor.
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