My Experience with Target Profit

Good Morning,

There was a question on whether should I take profit as AZRB price went up by more than 7% since posting on 14-Jan-2019 and then came down on 16-Jan-2019. Still holding a 3% gain. My take on this is every individual has different investment targets and different required rate of returns. 

I will start off with my own experience and it goes back to end of Feb'18 whereby I have entered a position for LEESK (8079). Upon entry, the price continued to go up and holding more than 30% running profit by mid of Mar'18. I did not exit the position as I was hoping that it will go up to RM1.00; meaning I am aiming for higher gains. Unfortunately, market sentiment turns negative and my running profit was totally wiped off. I was devastated though LEESK was a good counter and investment at that price. I am a human after all and I have emotions too. 

Green Arrow - Entry/Add Position; Red Arrow - Gain Wiped Off; Grey Vertical Line - Exited Position

I spoke to my wife about it as she is my biggest supporter in what I am doing all these years (in corporate life and investment). She gave me a simple advice; if your investment is giving returns more than the fixed deposit (FD) interest rates, that is really good. Bear in mind that FD rates is per annum and we are talking about similar percentage for each trade. I pondered for a while and she was right. And I asked her again on what if I have a losing position? She responded; treat it like a business and there will be ups and downs. As long as you know why you entered the trade, stick to it. If you made a mistake, get out of it and take it as a loss. With that, I added positions again beginning of Apr'18 and exited the position by mid of Apr'18 with a 22% gain. And another trade in Jun'18 which yielded a 17% returns. Looking at the chart, one may say I should have hold it longer or exited much earlier and etc. Again, this is my experience and how about your own experience?

Closer to stock markets - reflecting what she meant was really ignore the volatility driven by news and market sentiment for good counters. As for trading counters, any returns which is more than the FD rates, it is a good trade; yet to mention compounding the gains over time. Since then, I have been adopting these approach for trading counters. As for counters that I am investing for longer period of time, its fundamentals, valuations and technicals plays an important part in identifying entry and exit strategy. 

At times, traders / investors may make mistake as analysis done are based on available information and pricing. Be bold enough to cut loss. Ability to identify the support and resistance for the particular counter will be an added advantage. There are many methods out there to determine support and resistance namely moving averages, pivot points, Fibonacci Retracement and etc. 

Another fact that we all need to know is that women tends to do better than men based on the study conducted by Warwick Business School over a period of 3 years. Congratulations to the women readers / investors out there!!!

The study was conducted by Neil Stewart, Professor of Behavioural Science, which compared male and female investors through Barclays and their trading behaviour over a 36-month period. This looked at a range of criteria, including the type of investments held, age, trading frequency and the amount of money invested. The study concluded that:

• Men more likely to pick more speculative stocks
• Female investors have a more long-term perspective

Men tends to invest in more speculative stocks (lottery style investing), not wanting to let go of shares showing a loss and attracted to thrill of investing. The Warwick Business School analysis defines "lottery style" investing as a tendency to invest in more speculative, lower priced shares that might increase in value substantially, along with a desire to keep to shares that show a loss while selling off their winners – the ones that have actually increased in value.

In laymen terms: Are we (Men) taking too much risk? Being too emotional and possible some ego at play when it comes to losing position in the hope that it will recover?

With that, I hope this piece of writing will help all my friends and family members in their trading/investing journey and serves as a good reflection towards the long weekends. 

Good luck and all the best.