We know that statistically, there are about 80% of retail investors which did not make money. After all, the market is a "zero sum game" where if you sell your shares at a higher price, someone has to buy it.
I have been fortunate to start learning about stock investing early on in my career life and made a decent returns over the past 12 years. As I never actually did calculate the returns (due to the fact that I was adding money in over the years into the same share trading accounts), I am unable to quantify the returns per year etc. However, from the records of my trade in CIMB iTrade account, it can be seen that 85% of my trades/investments made money. What I observe is as below:
1. 85% of my trades were positive
a. 15% of my trades made very good returns (i.e. >50%).
b. 20% of my trade made <10% returns
2. 15% of my trades end up losing money.
a. 2/3 of the losing trades lost <15%
b. 1/3 of the losing trade lost >15%
Separately, I have also managed 3 separate accounts for very closed friends and they enjoyed very good returns at 180% over the duration of 8 years (i.e. grew RM50k to RM140k). I will not share further details due to the agreement with them.
These are the things I have done over the past 12 years, which I hope that I have done the right thing.
1. I have started investing 'real money' after I got my first month's salary
2. I really had no idea how to properly select a stock so I read up books and stumble upon the theory of Value Investing, which is used by famous investors like Warren Buffet. I utilized valuation methods like P/E ratio, PEG, ROE, P/NTA to try to assess a company.
3. To enable me to properly assess a company, I learn how to read company's accounts. Also, I try to understand the nature of different business and how it connects to different market dynamics.
4. I read daily financial news, market information and company announcements.
5. While I got better in trying to value a company via the valuation methods, I realized that I am unable to tell market sentiments. Hence, I started to learn about Technical Analysis.
6. Technical Analysis is an exciting tool as it is 'a study about humans' response in stock market'. By only looking at Fundamental Analysis, one will not be able to pick up stocks at its lows and sells at certain peaks and leverage on 'price disparity' to gain some good profit. I picked up a few tools in Technical Analysis like MACD, Bollinger Bands, RSI, Moving Averages, Candle Sticks, Support/Resistant, Stochastic etc.
7. In order to gain access to books on both Fundamental and Technical Analysis, I went down to libraries and sometimes stand at the bookstores reading. This saves me a lot of money. What I realized is most of the stories shared, tools and methodologies used are very similar.
8. To further strengthen my Technical Analysis, I attended a few free seminars organized by Chart Nexus and at one point spent an entire year subscribing to the back end tester of Chart Nexus software (to simulate buy/sell decisions based on a specific algorithm/combination of Technical Analysis). The results proved that it's not very useful to utilize only Technical Analysis in trading without the support of Fundamental Analysis as they are a lot of 'blind spots'
9. I also came to realization that Share prices are normally forward looking (i.e. 3 - 9 months ahead). Neither Fundamental nor Technical Analysis alone is useful in picking and selecting the next market champion. Hence, I decided to utilize Fundamental, Technical Analysis together with business projections (I call it the "trio" factor) a particular company to decide if the price is right to buy in, the target price over the next 12-24 months and is it worth taking the risk?
10. The "trio" factor did quite well for me and I was able to generate decent returns by just investing in Bursa Malaysia. Every year, I beat the market (i.e. Index) with the formulas which I adapted over the years of investment.
11. It was the years between 2015 to 2018 that I realized that by investing in Malaysian market, I am restricted to returns in Malaysia. I am unable to take advantage of the positive business sentiments in other parts of the world. I had my Unit Trust and PRS license and started serving a small group of investors.
12. Through the agency, I managed to gain access to some working insights of Fund Managers and of course the fundamentals of Unit Trust. As my fund size grew, I realized that I need to diversify (not only sectoral but also geographical). The important lessons that I learnt from Unit Trust is "Risk Management". All financial products including shares have associated risks which also fluctuate according to market, economic and political changes.
13. I got attracted to Futures trading in 2018 and started trading FKLI, FCPO and Mini-Hang Seng. This trading section of mine got mixed returns where I had made very good bets on certain time and products which gave me extremely good returns but some made some glaring losses.
14. I started to manage my stocks like a portfolio. The views changed as I have >RM1mil in just Bursa Malaysia alone. The understanding of Risk Management and realization that none of us can afford to lose all our hard earned money and stock markets should not be treated as "casino". Having a portfolio will probably not yields you 300% return over a single year but it certainly helps to manage risks. I am still able to enjoy returns way above the KLCI and KLSE Small Cap index's returns. I would strongly discourage someone to put >20% of the investible in a single company to avoid tremendous losses.
15. In the same year, I started venturing out in investing in US Equities. This came in realization as well that as our wealth increases, we also cannot put all our 'eggs' in Malaysian currency only. Also, there is a need for me to build skillsets and expand my investment horizons.
By sharing what I have done, I hope that it will inspire young aspiring investors to learn investment and not speculate the markets. Yes, speculation does make money but at the end, fundamental will still prevail (i.e. a company which made better profits year over year will see a rise in share price and vice-versa). I humbly say that we all made mistakes and the spirit is that we must always learn from mistakes, not to give up and keep pursuing until we succeed again.
