My very first stock

Jes 14 Comments

It's always good to start off bright and fresh for the year.

A new road ahead! Chiong ah!
Being not interested at all in computer technicalities, I really have to thank Coftea for doing this pretty blog for me. There are still some kinks to work out but I really like this vibrant layout.

Anyway, my most popular blog post for last year which is only 3 months worth, is on OCBC. This is quite cool as it means that many are catching on to their OCBC 365 promotion and taking the first proactive step which is to research on it.
Seriously?
This reminds me of my first proactive step in investing. I was talking to my good friend and she recommended to look at the shares of Olam. Yes, a very big company indeed and I opened an account and bought it in 2006. Thanks to my friend's tip and my own luck that it coincides with good market timing, I made my first profit within 6 months. Hooray! Investing is so easy... additional pocket money to spend!

So being easy money, I sold it away and patiently waited for Olam's shares to go lower. It never did... it only went higher and up to the peak at more than $3. Everyone was jumping on this cash cow and market was at a frenzy. Fortunately, I did not buy it in 2010. I was happily studying and not really caring about the stocks market anyway.

In 2011, I bought it back at a $2.50, which is the price I bought in previously. Thinking that it should be the same easy money, no research was made and money was left there. The share price kept falling. I did not know why but I have confidence that it will go up. After all, everyone will need oil and sugar and other commodities right?
Right, but that's not how share price will increase. In 2013, Muddy Waters happened. Share dropped to $1.4. Yeah, I lost money. Being the first foray, it was only 2 lots but it's my entire savings. I was reading up on their reports but I don't really understand much. To be honest, I don't really understand much of its business at all. It's sad that I lost money on paper but I have never considered selling it. For starters, I feel sentimental about it and it's there to remind my mistake where I don't do my research and just buy based on price.

And then, Temasek happened in 2014. Hopes were lifted. My losses were not so bad after all! Why did I not buy more at the rock bottom price... haha. This month, they sold away their wool unit in Australia. Last month, they acquired some cocoa and peanut sheller (Didn't know such things existed) businesses, and so on and so forth.

How complicated.

This is Olam's businesses... cocoa, rice, peanut, wool, cotton...

I would not recommend it to newbie investors like me because their business is really not so straightforward. The oil price, commodities prices, exchange rate losses... it's really too much to handle. Go for a company that you can see what they are selling, how the crowds like their product and how visible their marketing is.. that will be a good start.

Of course, looking up on the annual reports helps. A lot, in fact. It's the first step before investing although it doesn't guarantee success, but it gives me confidence to hold on to a stock or sell it away. Anyway, who am I to judge and advise seeing my first foray into stocks is based on some good friend's tips?! It is not good to invest blindly but at least I jumped right in!

What's your first stock?

Jes

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14 comments:

  1. Hi Jes! Nice of you to share your story, I think it keeps things real. Behind every blog is a real person although you hardly see the faces behind blogs.

    My first stock was Apple. At the height of pessimism, the price dropped to US$400+ per share. I was overjoyed and bought my first shares. Happy ending.

    That was in the past though. Funny how I'm a firm believer in index investing now. Not that it stops me from an occasional thrill or two when I spot a market anomaly.

    Cheers!

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    Replies
    1. Hi Turtle investor,

      Yeah, sometimes I will imagine the faces behind all the commenters and bloggers including you, but they never really look the way I think.... haha! It's my learning process and I hope that everyone can share their account and others can avoid making the same mistakes.

      Apple is not a bad stock, at least the price always go up when there are new launches and it's visible. Glad that it's a happy ending! But your first stock already in USD.. you sure learn fast!

      Index investing is also needed for a stable and constant investing... I think when you spot a true gem and is confident about it, nothing will stop you. Thanks for reading and happy investing!

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  2. Incidentally, one of my first stocks was Olam too since I bought the STI ETF. I also invested blindly, haha. After that, invested in some other stocks but did read the annual reports, etc. It's not easy to dissect those reports man. x.x

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    Replies
    1. Hi Wei Qi,

      Hi 5! STI ETF is much safer than buying the stock itself so you are better than me. Yeah I agree, the reports are meant to bore us so we wouldn't look too closely... hahaha. But as you read, you will pick out a few key factors to look out for as they will affect your decision.

      You can consider following Peter Lynch's straight forward approach to read the report:
      Percentage of Sales, PEG Ratio and Favor companies with a strong cash position and below-average debt-to-equity ratios.

      Thanks for dropping by!

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  3. Hi,

    May I know is there any shortcut way of reading the annual report?
    Since I am not from School Of Business, I totally can't tell is it a good buy or is time to sell.
    Thanks in advance.

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    Replies
    1. Hi MSA,

      The shortcut way I heard before is to read from the back. I do not know how true it is though and I am also not from Business school. I think many of the good financial bloggers are not from Business either so don't be disheartened!

      I would suggest that you read Peter Lynch- Beating the Street. The shortcut version is here: https://www.csulb.edu/~pammerma/fin382/screener/lynch.htm and go straight to the Criteria for initial consideration. It's not easy to find stocks (share with us if you can!) that satisfy all the criteria but it's a good guide. Just remember not to lose money! =P

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    2. I think if you're serious, you should read up more about the language of business, which is accounting. We're not trying to balance books here, so knowing enough to read a financial statement is good enough.

      I wrote a guide here for those starting out. If i may, here's a link to it: http://bullythebear.blogspot.sg/2014/11/how-to-begin-learning-stocks-from.html?m=1#.VLdC4yWwrqA

      If it's too intrusive, feel free to delete the link :)

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    3. Hi la papillion,

      Oh it's good that you referred us to this link and let us learn from it. It will be helpful to everyone so there is no need to delete it :)

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  4. Ah my first stock was LMA, a global provider of laryngeal mask. I thought that since it is a niche industry, competitors are few and business should prosper. I can't really recall what happen but the price was flat for sometime, I got impatient and sold the stock. The last I heard was that it was bought over from another company and was de-listed from SGX.

    Cheers!

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    Replies
    1. Hi Derek,

      Glad to hear from you again! Woah, that is indeed a niche industry with few competitors and I would expect niche customers too. It should be able to sell at exorbitant prices but since it's delisted, can't really know how it turned out. Anyway, maybe your impatience is good and you cut your losses!

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  5. My first stock was Nera Telecommunications. Bought it when I was still studying in the university.

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    1. Hi SRSI,

      Oh that's surprising considering that you are a S-Reit fan. But good choice, Neratel is doing very well and giving excellent dividends so hope you are still holding it! I would be keen to read up on your research on it... *hint hint* haha.

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  6. Replies
    1. Hi Felix,

      Thanks for the compliment! I was thinking the same things as you about ST Engineering but trading at the lowest in 2 years warrants further monitoring since it could go lower. Their earnings have also dropped which accounted for the drop in price. Anyway, nice to meet you!

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