Stock Market experience — After one year
Its been almost a year for my stock market investment experience, here in this post I am gonna list my experiences, my mistakes during last year in CSE. I am just a small retail investor, who invest a portion of monthly salary.
This is not a buy or sell recommendation for any particular stock in Colombo Stock Exchange.
My stock market investment started April-2021, I had this idea from a child, but somehow I couldnt start. I got this new feeling after wife suggested it. First thing I did was study a bit more about stocks, market behaviors from SL Biz channel. This channel has basic theory about how stock work, their basic principles etc.
Then comes a bit advanced stuff from SL Equity Guide, this explains about basic market behaviors, ratio analyses etc, mostly describe trading opportunities, how to identify them with technical charts etc. Also current affairs in market and macro-economics, how smart investors work. Then comes SLEquity Watch , these two channel similar in content base, but this channel more focus on long term investment opportunities.
After getting basic idea regarding the market, I moved to self study about annual report , technical chart analysis using investing.com . Still I am having issues understanding cash-flows etc. But overall idea is covered from these studies. Its very important to understand technical charts to identify good buying points.
Mistake made :
- Buying stocks from broker suggested price.
This is the first mistake I made soon after getting my online trading, broker suggested a cable company and I bought them to suggested price in chat. Later I found stock price can go down significantly than those suggested prices.
- Sell too early
I couldn't hold stocks when they got 10%+ gain, I sold all stocks for lower profits (10–20%) as I coudnt control my emotional . Soon some of them went for 75–100% gains.
- Buy/sell all at once
As a retail investor I dont have a lots of money or stocks to deal at once. But mistake I made was, when I have money I bought a lots of stock at once or when I see selling opportunity sold all at once. But after few days, prices went down or up significantly, but I had no money or shares.
- Buying soon as I get money
This is an issue I had in earlier months, when I deposit money to my CDS account, next thing place buy orders to the whole amount. Money is gone within day or two. For most of the days, I didnt have money to buy stocks, even when good stocks with lower prices.
- Not following social media for investment decisions.
I joined many facebook CES related groups and followed many in twitter. Most of them were suggesting stocks and giving expert (like) options to buy/sell. One such example was junk share promoted as a huge opportunity, it has hidden value which is 3–4 times greater. After this I checked their annual report and found people even with 1000s shares are in top 20 list. That was enough me to understand how crapy its. Somehow that share went from 200 to 700+ within day or two then back to 100s within day or two.
- Buy only blue-chip companies.
This is a decision I made before starting investments, at least for few years, invest only in well reputed companies. This helped me a lot with recent crashes. If those companies had to close , even holding those invested cash in hand will be useless.
- Invest saved money, not loans
All money I had invested in CSE are from our savings, I havent got loans (banks/broker etc) to invest. This gives a lots of relaxed mind in market crash.
My advice for new investors.
First of all, I am not an expert to give advices to new investors in CSE, but I think these would be helpful to anyone.
- Do not invest all the money in your hand. If you have 100K to invest, first invest 30–50K and watch how it moves, without thinking its your money. After understanding market basics, invest rest.
- Buy/sell in pyramid pattern.This video will give a basic idea. It helped a lot in recent buying in CSE.
- Do not start trading soon after enter market. I still dont do trading, which gives me a lots of relaxed feeling. I do not want to keep an eye on market always. Specially with borrowed money.
- Study about basics of accounting, financial reporting etc and technical charts.
- Do not follow anyone blindly to buy and sell recommendations , it may be a social media guru or even your stock broker advisor.
- Before I started investing, I was using money for many useless things. Like buying gadgets etc. But after starting investments, I get a feeling, if I invest these money, I could get more benefit in future than this gadget.
- Invest in dividend paying , stable stocks.
With current financial crisis in SL, keeping money in bank is sort of useless with higher inflation rates. Good stocks are going down rapidly with uncertainty in the country. If you collect them patiently, they would be a good opportunity in future (long term)