Investing

How to improve your trading technique

(This post was originally published at klse.i3investor.com)

Although I said that I would not post any more articles because of the few senseless and abusive commentaries, but by popular request, I will share my knowledge and experience with those who are interested to improve their technique.

The stock market is a zero sum gain play which means that in a long term, some will win and some will lose. It is like 4 people playing mahjong throughout the night where the total wins will equal total losses. If you have been losing in the stock market or on a mahjong table, you must examine your own track record to see your mistakes and change your mind set. Be humble and willing to learn from investors who have been constantly showing successful track record.

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A few readers of my previous posting complained that I sold R Sawit and made profit while they have bought and were still holding it. You will recall I always said that if you buy you are buying it at your own risk. When I recommended R Sawit, it was selling 83 sen in Nov 2011 and within a few months, it went above RM 1.20, a 50% profit as shown on the price chart. Why didn’t they sell to make 50% profit within a few months? Fortunately a few readers said that they were grateful because they made so much profit within such a short time.

You must bear in mind that no share will continue to go up in price for whatever reasons and no share will continue to come down for whatever reason. That is why I sold R Sawit, SOP, Ta Ann and others to buy Jaya Tiasa and also to reduce my margin loan. Please refer to my previous article on ‘How to use margin finance to increase profit’

I have openly said that my family has bought more than 40 million Jaya Tiasa and other shares and we have more than one hundred million ringgit margin loan. I have clearly explained why we bought so much JT. The most important reason is that JT has a very promising profit growth prospect. For the same reason, I bought R Sawit, SOP and Ta Ann before when they were cheap which I have sold when their prices went up.

As we all know, all share prices fluctuate. It will be foolish if I do not sell some JT when the price goes up. Now I tell you openly that I will sell some to reduce our margin loan when JT price goes up by say 20% or more per cent so that we have money to buy when JT comes down or to buy some other shares. When I sell some JT, it does not mean that JT will not go up again on a long term. I believe JT will continue to go up for the next few years but its price movement, like many other shares will not move up in a straight line and you must learn how to take advantage of this phenomenon.

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Please remember as was the case with R Sawit, if you buy JT when I sell and you lose money, you cannot say that I have misled or cheated you. Just like anyone who has bought a property at a cheap price and sold it to you, you cannot say that he has cheated you. He did not point a gun at you to force you to buy.

I have a few more other shares beside JT. All of them do not move up or down in tendon or move together at the same time. I will sell those that have moved up too rapidly to reduce my margin loan so that I have financial capacity to buy those that have come down or buy a newly discovered good one.

I believe I have the knowledge and experience to share with people who are genuinely interested. I am preaching the same investment philosophy that I had used in the following cases which may seem that I am boasting:

1.     In 1983/4 when Hong Kong market crashed, I made so much money that I bought 46% of a stock broking company in H.K.

2.     In 2008/9 I was the largest holder of Kulim warrants which shot up from 50sen to Rm 10.50 within 2 years. That was the first time I met Alvin Tai CFA of RHB Research who can vouch my performance.

3.     In 2010/11 when I bought 20 million Supermax which shot like a rocket from Rm 1.00 to Rm 6.50 within 18 months. Supermax CEO Dato Sri Stanley Thai can verify what I said.

4.     As I described in my previous posting “Why I sold R Sawit and SOP to buy JT”, I bought 15 million SOP and 50 million R Sawit and I made phenomenal profit.

5.     As I described in my previous posting of Tradewinds Plantation, I also made a large sum in early 2013 when my large holding forced the controlling shareholder to offer a higher price to privatize the company and many people have made more money.

Although what I said seems boastful, my intention is noble as shown in my track record in doing charity. I advice all investors especially those who have not been winning in this game, should study all my articles carefully to improve their technique in share trading. To win you need knowledge and willingness to take some calculated risk.

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