2018 Worst Trades

I lost money in quite a number of trades in 2018. Here are my top three.

LBS Bina Group

When the new government took over, there were talks of a "National Housing Policy", set to be announced in September. Newspapers and media was abuzz about it. Finally, the housing conundrum for the people might be over. Companies with the highest likelihood to profit from this government initiative might be property companies that build affordable housing, and one of them was LBS.

Or at least that's what the business media said.

I entered LBS on two days at RM0.885 and RM0.900. The counter traded sideways for about three weeks, until started to plunge in September. The month came and gone, no word on the policy except more speculation in the media. October saw the counter dropped even further to a low of almost RM0.60, before climbing back to about RM0.70.

November came, everyone was excited about the first national budget from the new government. Lim Guan Eng announced the Budget. No "national housing policy".

I exited everything at RM0.719 for a loss of -19.7%.

Lesson: Don't buy the news. Don't buy the speculation. Don't believe anything before something concrete. Even then, it's already too late so forget it.

Invest, not speculate. Invest for the long run.

Turn off the financial porn. Definitely don't masturbate on it ha ha.

 

CAB Cakaran Corporation

I was interested in CAB Cakaran because I wanted to diversify into the consumer sector. Poultry sounded like a good subsector. I mean, who doesn't eat chicken? Yeah, I was insensitive to vegetarians out there!

CAB Cakaran is also a nice name for a poultry company, if you haven't notice.

I did a cursory read on the consumer sector and found out CAB had ventured into Indonesia. Sounded like it's not confined in Malaysia, so potentially, the company has room to grow. Plus, look at the chart. It does look like a good growth stock for me at that time (at that time the dip at the right end hasn't appear).

Look, it's a growth stock!

I didn't read through their financials (not that it mattered since I didn't really know how to anyways), and quickly acquired quite a handful CAB at RM0.855. Couple days later the price fell, and the Warren Buffet in me told me that I should acquire some more. I bought more at RM0.78.

Then the Sales & Services Tax kicked off, and the consumer stock prices was also affected.































The price slide further and further, and it breached more than 10% loss that I set (I sometimes have
loss cutoffs, that I sometimes follow. Sometimes not...).

I finally decided enough is enough and exited at RM0.76. In total, I lost -11.7% including fees.

In a way I was glad that I exited, as the price slid further and further. Given my lack of experience and knowledge at that time, I would say this is a rather good exit (or not a good trade to begin with).

Lesson: find industries that you really understand, not something that you think you understand.

Foundpac Group

This is the silliest trade that I've entered. The silliest way to lose money. Probably I should create a meme that says, the silliest way to lose money be like....

To start off, the reason for Foundpac Group (FPGroup) was faulty: 1) it's a tech counter, and I'd like to trade tech counter since it sounded cool, 2) it's less than RM1.00, so potentially I could make huge gains if I buy lots of shares, 3) I was disappointed with myself for exiting prior losing trades in Protasco and Sime Property, which losses in total are minor to the one that I were about to do here. So I felt that I needed to make up for those, so sure, a cheap and tech stock, here I come.

With such a strong conviction and desperation to win, I jumped into FP Group and bought at RM0.45, despite that its being traded too steep upwards. You can see the chart for how steep it is.






























Just as I saw the my order was matched, the counter quickly dropped the same day. The next day it plunged even further, followed by a slight nudge upwards for one day. It resume its free fall the following days.


I exited some of my holdings at RM0.365, and some more at RM0.355 in the same day. I was still not willing to concede I was wrong. Well, fuck it. The next day I sold off everything at RM0.355.

I lost -21.5% on this counter.

Lesson: If you made a mistake, better to stop and reflect before making more mistakes. Take your time (but don't take years before deciding to invest).

Conclusions

Some people say in the very beginning of investing you bound to lose some money – consider that as your tuition fees. You will especially learn about yourself and how much you didn't know. During my journey, I didn't lose that much. I got off light: I lost much less than a month expense in total, including those that I don't list here. So it's not that bad.

The worst enemy is yourself. The next worst enemy is the news.

Of course, I prefer not to lose anything. The milk has been spilled, and I don't have a cat to ask him/her to lick it. Not that I'm allowed to have a cat in my place anyways.

Just remember the lesson and move forward from here on out.