Tuesday, December 23, 2014

I'm My Own Worst Enemy in Investment Plan

The hardest part of my investment plan can be learning when to get out of my own way. As human, we tend to be susceptible to emotions like greed and fear, even when we are aware and try to avoid it somehow. If repeated frequently enough, it can hurt our portfolios, or worst upset our long-term goal.

I decide to pen down my mistakes to remind myself and hopefully to minimise reoccurrence.

Recently, I made some losing trades on Keppel Corp. The current fall in oil prices triggered by OPEC decision not to cut oil production has resulted in large decline to Keppel Corp share price, as there are valid concerns that there might may possibilities of rig order cancellation due to oil exploration profitability in view of the dropping oil prices. But fundamentally, I know that Keppel is one of the World's largest offshore oil rig builders. I do not foresee that the oil prices can be suppressed permenantly low as there is real demand for oil. 

I decided to do some "bargain-hunting" when the historical yield exceeded 5%. But I failed to realise my capital was stretched as there was planned expenditures for my newborn second child. Psychologically, I was unprepared to bear possibility of short-term paper loss.




As a result, I realised losses for the trades which I knew I should not have opened. If the position was executed with the plan to align to my long-term goal, I think Keppel Corp would have been added to my long-term portfolio for income. From here, I do not know if Keppel Corp will continue to recover, consolidate near the current price range or reverse back to its down trend. But one thing is for sure. Only a sufficient war chest can allow us to take advantage of market weaknesses.

 


Hopefully, with my year-end bonus from my earned income, I can increase my cash to deploy when there is opportunities in the market. At the current price, I don't think I will be initiating a position.

No comments:

Post a Comment