This may come as a shock or surprise to some of you, but I sold all of my holdings in Thai Beverage yesterday. I realized I made two mistakes I have mentioned myself in the post Investing: What to do when your stock registers an unrealized loss on my purchase on this stock on last month Jan. Here are the two mistakes I made:
My risk appetite isn’t strong enough to withstand a sustained fall in prices
My counter in Thai Beverage registered a loss of 10% (excluding dividend received) for yesterday. It was a painful loss and while I was tempted to hold the stock and wait for it to recover, I realized it could be that I bought the stock at the wrong time. While some people may say that it would recover, I would rather not take that risk in case the counter declined further (and resulting in an even more painful loss). I realized that I overestimated myself in my ability to handle risk and would learn from this lesson. In the meantime, I would hold the remaining funds in cash and possibly buy less risker asset classes like government bonds or Singapore Savings Bonds. They may not give very handsome returns but at least it fits my risk tolerance.
I bought the stock when its valuations are at 52-week high
I was impatient with the excess funds I put in my brokerage account and wish to deploy them as soon as possible to earn dividend income. I bought the stock at an all-time high in last month Jan before a correction in this month Feb. The stock price also fell due to the fall in net profit of the company when they announced their financial results on 14 Feb 2018. I could have saved myself from this loss if I had been patient to wait for a suitable opportunity to invest, instead of rushing to buy as soon as I had the funds. This is a lesson to learn to be patient so that I can buy low and sell high and not vice versa.
I hope I would become a better investor after this mistake. Fortunately, I didn’t put a lot of my funds into this stock, so the loss is limited. Hope you guys would also learn from my mistakes and not make the same ones as I do. Thanks for reading.