In October 2014, two months after the birth of my son Gavin, I toyed with the idea of buying a birthyear watch for him. With a budget of 50 Grand, I tried to ask for suggestions from a local online forum. One comment I received was that I need to triple or quadruple my budget if I want a timepiece that can last several decades. 150 to 200 Thousand, you say? I don't want to spend that amount right now for a watch (maybe in the future, I can reconsider the idea). The investor in me then took over, and challenged me to turn my 50 Grand to 200 Grand in a couple of years instead (hopefully, in less than 5 years). I know it is doable, but I don't know how long it will take me to achieve the target through stock trading. I then set up a fund, and called it The Gav Fund.
This page will contain the journal of transactions, lessons, and experiences that I'll encounter along the way. I'll try to keep my posts interesting and educational at the same time. Follow me on my journey, and I hope that you'll learn a thing or two from this. Who knows, this might even become a book in the future. :P
Back-to-back IPOs: You Win Some, You Lose Some
The first two transactions I've made for the Gav Fund involved participation in back-to-back Initial Public Offering (IPO) of Phoenix Semiconductor Philippines Corporation (PSPC) and Xurpas Inc. (X) common shares (i.e., stocks). Eventhough I really don't know the fundamentals of those companies that time, with the public's interest in IPOs, I know something good was bound to happen. On November 20, 2014, I took a gamble and fell in line at the Philippine Stock Exchange Centre in Ortigas for their Local Small Investor Program (LSIP). For LSIP, an investor can invest a maximum amount of 25,000 Pesos per stock only.
Here is how it looked like during the time when I was in line. It took me 2 hours to submit my LSIP application.
IPO Line outside PSE Centre. I'm standing next to the girl in red with shoulder bag.
Line inside the PSE Office
I subscribed to 7.000 shares of PSPC (the maximum number you can buy from LSIP) amounting to 22,050 Pesos. I also subscribed to 6000 shares of X, amounting to 23,820 Pesos. PSPC was listed publicly on December 1, 2014, followed by X on December 2. It was my first time to witness and experience the listing of 2 companies on 2 successive days (perhaps, it was also the first time that the thing happened).
PSPC didn't do well on its first day of listing. With an IPO price of 3.15, it closed the day with the price unchanged. On the succeeding days, its price suddenly dropped and had a low of 2.22. Yes, almost 30% paper loss in 8 days. How I wish I executed my cut loss price earlier for this stock. I held on to PSPC until February 6, 2015, when I was able to sell it at 2.80. It was still a losing trade though, lost 2,605.82 (-11.82%). I just have to move on and accept that I made the wrong call on this one.
X, on the other hand, surprised me on the day it was listed. With an IPO price of 3.97, the price immediately jumped to 5.95 in the first few minutes of trading, and closed the day with 50% gain. On its third day of listing, I felt that the price was already going down so I decided to sell it at 7.89, giving me a gain of 23,143.65 Pesos (96%). The price of X eventually recovered and closed higher. I'm still happy with the profit I made from this trade since it was totally unexpected.
Starting Balance: 50,000.00
Ending Balance: 70,537.83
Feel the Wave, Ride the Wave
For several weeks, like a surfer waiting for a good wave, I've monitored the movement of X and SSI, how their prices get battered, then suddenly go up after a few days. There were several times I've regretted not buying after their prices have gone down, and vowed to enter once another opportunity comes.
Last January 21, 2015, I had the chance to buy 4000 shares of SSI at 10.50 per share. After 2 days, as expected, price went up and I was able to sell it at 10.90 per share, resulting to a profit of 1,129.48 Pesos.
Then on January 26, 2015, I was able to buy 3800 shares of X at 12.04 per share. After 3 days, I was able to sell it at 12.54 per share, giving me a profit of 1,386.18 Pesos.
It must be noted that this technique is not applicable always, especially to penny stocks. Although you can hope that the stock price can recover soon, there's really no certainty that it will happen. Always set a cut loss price, just in case the trade goes sour.
Starting Balance: 70,537.83
Ending Balance: 73,053.49
Learn to cut losses then shift to another stock
On February 2, 2015, I decided to buy 400 shares of PNB at 84 Pesos per share. The decision was based on my technical analysis of the stock. After 2 days, the share price went to a high of 87.4. Good job! Unfortunately, in the next 6 trading days, I saw the price fell to 80.10. Boo! I decided to hold on to this stock for a couple of days more.
On February 9, 2015, I re-entered X by buying 3000 shares at 11.60 Pesos per share. I was hoping to get lucky again on this trade. On the next trading day, share price closed at 12.00, and went as high as 12.30 on February 14. Ayos! But my luck on X didn't last long. In the next 4 days, the price dropped to a low of 10.42 per share.
The drop in the price of X last February 20, 2015 prompted me to sell my PNB shares even at a loss. I was able to sell PNB at 81.90, with a loss of 1199.57 Pesos. Since the "genius" in me told me that X will rebound soon, I used the proceeds to buy 3000 shares of X at 10.52 per share on the same day. My average entry price for X is now down to 11.06 Pesos.
Starting Balance: 73,053.49
Ending Balance: 68,613.92
In a bull market, everyone is a genius
Veterans in the stock market often say that in a bull market, everyone is a genius. And I would like to say that I am indeed a genius! 4 trading days after averaging down on X, price closed at 11.84. Oh yeah! That's around 7% gain already if I sell it.
However, I decided to hold on to my shares thinking that the price will continue going up. There's also a figure I wanted to achieve before selling the shares again. Too bad, luck ran out again and I saw the price of X go down.
On March 20, 2015, price of X dropped to 10 Pesos per share.
Starting Balance: 68,613.92
Ending Balance: 62,253.92
Invest in growth stocks, they might be the next big thing
On March 21,2015, I attended an investor briefing sponsored by COL Financial. It's like a mini-roadshow of up and coming growth companies that are listed in the PSE. The good news is that X is included in the list of growth companies to watch out for. To view my notes for the investor briefing, click here.
It was a good thing that I attended the investor briefing. It somehow gave me confidence on X, based on the growth potential presented. It converted me from an X trader to X investor. But you see, I really had no choice but to hold on since the price of the stock plummetted to 8.40 on April 22. Ouch! Why didn't I cut my losses? It's because I told myself that I'm going medium- to long-term on this one.
Since I already conditioned my mind that I'll stick to X for a year (or more), I never got worried or stressed
when its price went down.
As of June 16, 2015, the price of X is back to 11.10. I'm now looking forward to better things ahead. Just in case you didn't realize, The Gav Fund is almost "all-in" on X. I'll keep my fingers crossed that the price will go higher in the near future.
Starting Balance: 62,253.92
Ending Balance: 71,368.85
What to Expect from the Ghost Month
We just celebrated Gavin's birthday earlier. Man, one year flew by so quickly (I guess, that's what happens when you're busy and having fun). Anyway, have you ever heard about the ghost month? It's a Chinese event that happens on the seventh month of the Chinese calendar. During ghost month, it is said that the gates of hell are opened up and ghosts are set free to roam the earth where they seek food and entertainment. It is also commonly believed to bring more accidents and bad luck compared to the other months of the year. In addition, Chinese businessmen avoid starting a business or sign a contract during the ghost month.
And this extends to the Philippine stock market. Based on my observations in the past few years, daily trading value goes down during the ghost month. Since many traders in the PSE are Chinese, there are lesser trades, and the lesser demand leads to lower prices. Some investors take advantage of the situation to buy more shares at lower prices, especially during the last week of the month. When the ghost month is over, you can expect market trades to start picking up again.
For 2015, the ghost month will start on August 14 and end on September 12. The "Ghost Day", believed as the day when the gates of hell are fully opened, will be on August 28. So before we enter the ghost month, let's have a portfolio check, to see whether the Gav Fund will be affected. As of August 10, 2015, price of X is 12.20 per share.
Trivia: My wife already knew that Gavin will be born during the ghost month. And being a Chinese, she hoped that our son will not be born on the Ghost Day (August 10, 2014). So when is Gavin's birthday? August 10! :P Good thing, Gavin has become my lucky charm (I have IPO shares for SBS in my other portfolio, which got listed in the PSE on August 10, 2015, and it closed 50% up :D).
Starting Balance: 71,368.85
Ending Balance: 77,916.38
Ghost Month and China's Stock Market Crisis
Aside from the expected weaker market due to the ghost month, the drop in the PSE's performance was worsened by China's stock market crisis. It was a bubble waiting to burst, and unfortunately, it coincided with the ghost month. Purely coincidence or is it really expected that something bad is bound to happen during the ghost month? That, we really can't answer. We just have to continue playing the game, and adjust our strategy, when needed.
For The Gav Fund, my decision was to hold, and as of September 12 (i.e., the last day of the ghost month), the price of X was down to 11.06 Pesos per share, a 9% drop based on the August 10 price of 12.20. The ghost month definitely had an affect! But I should still be thankful, because the price returned to the 11 Peso level. It should be noted that on August 25, the price of X dropped to a low of 8.5 Pesos per share before the stock price started to go up.
Starting Balance: 77,916.38
Ending Balance: 71,146.35
To be continued... The Gav Fund Chronicles
No comments:
Post a Comment