For this series, I am borrowing the term “confessions” from St. Augustine and his famous book, or more recently KYY who wrote an article with the same term. I know there are many of you who want to read another of my stock analysis (okay maybe not after Canone) but dude, those articles take many hours of research so I thought I’d write a second type of series: The dude’s confessions for fun.

There are many people who boast of their excellent picks, and others who shoot down other people’s picks. It’s an ego battle out there. So I thought, instead of waiting for someone to shoot me down, why don’t I beat them to it and shoot myself down first (teehee). Be patient, I will shoot myself for Canone in due time. However, the objective of these confessions is not only to bring me down to earth. I want others to learn from my mistakes so that overall, everyone will benefit from my pain.

Throughout these first two months of 2016, my personal portfolio has performed terribly. Some of my picks have released good results while others are garbage but overall I have suffered significant losses. I have an investment partner (let’s call him Jason) who I often bounce ideas around with and he suggested that I start writing a diary of my lessons so that I won’t forget them. I’ve always been terrible at writing diaries but I thought, heck if I could pen my lessons publically, not only will it remind my future self of the lessons, but it may be able to help other people in their investment journey as well.

So this is my first lesson: don’t waste Mr. Market’s lesson for you. Mr. Market wears many hats, one of them being your very own private tutor. Of course, he doesn’t teach you for free, but charges you a tuition fee (heck investment gurus’ charge as well right?). The difference is that Mr. Market doesn’t ask for payments. He takes them from you by force. You have no say in it.

One of my biggest mistakes earlier on (and still now sometimes) is that I run away from the pain of the tuition fee. It hurts me, it stings to see my portfolio shrink but worst of all, it humiliates me. It tells me that I am not as smart as I think I am, that I am wrong. So naturally, like most people do, I bury the pain. I look away from it, imagining that it will go away if I ignore it long enough. I deny the truth and tell myself “maybe Amedia’s missing TVs from all Rapid KL buses is due to an upgrade.” Yes, I was too, a victim of Amedia in 2012, buying at RM0.15 and selling at RM0.075 in 2014. I too am one of those idiots. Jason tried to tell me to sell, and that Amedia is a scam, but I wouldn’t listen. I kept holding on to it thinking that paper loss is not a real loss. I was wrong.

What was my lesson from Amedia? Don’t be an idiot. Actually, that’s the lesson for all my mistakes, but for Amedia, I learnt that I shouldn’t look away from the facts and the truth. Investigate and make the decision. Cut and walk away, don’t be emotional.

Coming back to the larger lesson, don’t waste Mr. Market’s lesson for you. My problem was that I took too long to cut and learn from Amedia. It was rotting & festering away in my portfolio for more than a year before I finally took a good look at the facts, swallowed the pain, and killed Amedia. What did I do right? I am thankful that I looked at the pain, embraced it, felt the anguish and hurt so that I will remember to not make the same mistake again. Have I continued to make the same mistake? Of course, I have, however, I strive to reduce the mistakes every time I make it.

Imagine you’re 40 years old. You went into the market in the high of 2008 for the first time with your life savings of RM100k. You don’t know better so you buy blue chips. You lose RM50k over the next year with the US subprime crisis. The worst thing you can do here is to sell all your stocks, crystalize your RM50k loss and conclude that the stock market is evil and vow never to invest in stocks again. Of course, there’s nothing wrong with cutting loss. However if you run away from the pain without reflecting/ learning, you would’ve lost RM50k for nothing.

The worst thing you can do is to throw away the lessons that Mr. Market tries to teach you after you pay him a hefty sum. For some people, the fee is a few thousand, and to others, hundreds of thousands or millions. Imagine if you paid RM5k for an investment seminar, and the whole time while you were in that seminar, you kept closing your eyes and ears because you didn’t want to think about the cost of the RM5k that you paid. Open your eyes, embrace your mistakes and the pain it brings, and more than that, learn from it. You owe yourself at least that after the loss you incurred. Don’t waste your lesson, grow from it.

Happy investing/ trading ya'll.

Cephas