What stocks did you get wrong?

[GreatPig]

Just wondering what are some of the stocks you got wrong, where you perhaps sold at a loss thinking it was sinking only to have it zoom up straight after, or vice-versa.

Here are a few of my recent ones.

After the big drop in JHX I thought it would bounce back. However, it continued to fall and on the news of potential asbestos payouts I decided to sell. Almost immediately afterwards it bounced back up to $5.60.

Similar story with RMD. I waited for the bounce back but on the fall to almost $6.00 decided to sell out. The very next day it started to rise.

Likewise VRL. There was one lower day after I sold and then the recovery I was waiting for - even bigger than expected.

With MAP I did make a gain, but it looked like a head and shoulders top forming so I decided to jump the gun on the right shoulder and sell out. A day or two later it gapped up and is still rising.

I know you can't win them all, but these were so close. Of course if I had held them for that extra day or two, they would have done the same thing in the other direction .

Cheers,
GP

 

[Joe Blow]

I got UCL wrong big time back in 2000.

Boy, did I ever!

 

[Bingo]

GreatPig,

One that makes me laugh each time I remember it, and I just did thanks to you. This will give my age away.

On doing my research I became keen on a company called Poseidon and I bought 2000 at $1.98. This was when the ASX did not exist and I had to get my Sydney broker to deal through an Adelaide broker as they were only listed in the Adelaide Stack Exchange. I held for about nine months when they made a 2 for 5 issue at 60 cents. I salvaged a little by selling the rights.

I held for around another 3 months and noticed that they were trading between 60c and 40 cents. Being as sharp as a tack I decided that I would double my holding next time they got to 40c. Put the order on and missed out (probably went to more favoured clients). Never mind I was not detered and decided to sell at 60c and buy double the quantity back at 40c back.

You can guess what happened, after holding for around 15 months, I got out at 60c to see them at $4 within a week and eventually top out at $250.

I have not one to top this since. Mind you AMP is close enen though I am now about square.

Bingo

 

[tarnor]

recent one for me was selling 3/4 of my IMU holding on its way up at 24c for a break even trade, sold the rest at 36c but really dodged that one up

 

[GreatPig]

Bingo,

eventually top out at $250

Wow. Shares went that high without splitting?

Yeah, if you could've bought at 40 cents, selling at $250 wouldn't have been a bad gain

GP

 

[GreatPig]

selling 3/4 of my IMU holding on its way up at 24c for a break even trade

It's interesting you say that. I've just been reading an old copy (1984) of the Edwards & Magee book "Technical Analysis of Stock Trends", and in one section they give an explanation of why some resistance levels can exist over long periods (possibly a number of years).

Their reasoning was that a pile of people bought at what was a peak back then, only to see the price fall away never to return, so they decided to just hold them for the eventual day when the price might rise again. So when it does eventually rise back to that price, totally disillusioned with the stock, these people decide to just get out for what they paid for it, thinking themselves lucky that they finally managed to get their money back. Consequently a resistance level forms at around that same price as all these people sell out.

Of course that's not the only reason resistance levels form, but I thought it gave a good explanation of how price movement now could be affected by prices possibly years before. It's quite uncanny when I draw a resistance line on a chart and sometimes see that it would have also been a resistance line some years earlier.

Looking back further at IMU's chart, 24 cents has been a support level for about a year, so a lot of people must have bought at around that price. Consequently, once it broke down and then headed back up, it formed a resistance level at that same price (albeit a relatively small one). Presumably, like you, a number of concerned people decided it better to just get out and get their money back - to their eventual loss in this case.

Of course I could have this all totally wrong, but it does make sense to me .

Cheers,
GP

 

[ghotib]

T2 <groan>

Before that, round about the time Bingo was holding his breath for Poseidon, I asked my father to buy $200 of a long-gone company called UPL, but only if he'd guarantee to make up any loss. I still maintain he gave me the guarantee, but I never got my money back.

 

[tarnor]

GP thats a pretty good summation of whats happened to me in the past, i bought uni in a down trend at 70c, when it got back to 70 I got out then watched it go quickly to 2$+, wouldnt touch it now tho

IMU was a similiar sell even tho i fully believe in the future of this company i was frustrated with it not going anywhere in the short term, so i jumped out at the next rise to top up on EMS (will see how that pans out tommorow) I was keen to get onto EMS and didn't want to miss the coming announcement. Unfortunately if I had of waited 2 weeks I would have made a killing and still have been able to buy into EMS, but thats the way it goes.

I'm very new on the TA side of things but here's some awesome advice someone gave on another forum recently which highlights a lot of my trading mistakes in the past. Tis about LUM and a good read i'll copy and paste,

great topic by the way GP, one i'm fully qualified to reply 2

 

[tarnor]

Subject who is to blame...yourself!!
Posted by blueballs HC 29/02/04 20:12


What are these posts about blaming people...whether people are promoting a stock up or down is what this forum is for.
If you cant make up your own mind then you shouldnt be trading.
This is just typical of people nowadays always looking to put the responsibility on someone else.

Anyway I shall repost this old post and hope some think a bit harder about it and they wont find themselves in the blame game again.

You can put whatever spin you like on the stock,eg the director leaving was a positive,the forthcoming deals are positive etc etc...at the end of the day all that matters is the share price.


Seems plenty of people here are holding onto sunstantial losses via holdings in LUM.

Now Im not going to pick on LUM but am going to use it as an example of how not to get yourself into a losing position and why.

The first rule of trading(and beit a cliche)is that the trend is your friend...we've all heard this one over and over but it seems so difficult for people to apply it.
Why is it so difficult...I think because people dont actually understand the rule.
The problem a lot of traders have is that they dont like to buy stocks when they are going up as they are scared they are buying too high.
Sure none of us want to buy a stock that is too high...but you never know where the high is until the game is over.
Its not like buying a car ...for example a new BMW worth 50k for 70k...you are buying a completely different asset..its not made up of nuts and bolts but speculation.
If the 50k car is for sale for 30k you automatically think its a bargain...people use this same mistake when buying a stock..eg lum was 90 odd cents and when it fell back to 70cents people thought it was a deal.
The difference is that the car selling for 30k is selling for 30k because there is rust(cancer) in the car which is killing it.On the outside it may seem no different but on the inside is completely different.

Second point with buying with the trend is that if you buy a stock in an uptrend the odds are in your favour the stock will keep rising because of momentum...and there are more buyers keen to buy the stock than sell.
Along with this goes the fact that people arent excercising stop losses in a stock thats rising(unless they are short),this reduces selling pressure.
Also the psychology of people in the stock is bullish because they are in profit..this may not seem to be important but it is.

Now a trend is easiest to see on a chart..one quick glance and you will more than often know if a stock is going up down or sideways.
You can trade very proftibaly not even knowing what a stock does but just from looking at the chart.
Crap you say...well think about it...people in the know (directors accountants brokers)will know good news is coming so they start buying...this gets the trend going..they tell their family and friends and then the brokers start telling clients and the trend gets stronger.
Others hear rumours and see the price is going up and think what a great story (usually a story a broker has basically created)..the trend goes up on a sharper angle.

Where most punters sit in this list is at the end..the last to hear about it.
All they hear is the good news that was already known by those in the know...the stock doubles or triples and those in the know decide to take profits because they dont know of any more good news to come in the short term.
The stock consolidates for a bit...the uptrend stops so technical traders stop buying as hard.
All the punters are in and so basically you have nobody left to buy...the old supply demand comes into place and the stock begins to fall.
The good traders exit due to stop losses quickly..then the punters begin to panic and down she comes and the majority are left sitting on a losing stock.

What has changed with the story...nothing.

Value has little place imo for a trader in the market...Sheesh you can take the biggest stock in the asx NCP...how in earth did NCP go from $10 to $30 then back to $10?
How much changed in that time...almost nothing and still you are talking of a chnage in market cap of 10s of billions.

Same story goes for bucket loads of stocks and even indexes...look at what the nasdaq did 2k to 5k back to 2k in a 3 or 4 years.

Take an old stock like pasminco...was worth a couple of billion with a share price of a couple of dollars...one of the worlds best zinc deposits.
The stock falls from a few $ to 50c...everyone thinks what a bargain..the 50k bmw is now selling for 30k.
But its full of rust and the stock eventually turns to nothing.
How would you know how bad pasmico's position was unless you were an expert on hedging...brokers were still putting out buy recomendations.
The answer was in the trend...the trend was down.

You do not buy a stock in a downtrend ...simple!!

Trading is a game of odds...very similar to life in general...every decision you make you weigh up the pro's and cons..the odds.
if the odds are in your favour you play and you have to come out on top...the odds say you have to.

If you buy a stock in a downtrend the odds are automatically not in your favour and vice versa.
As much as you want to beleive your information is good you really dont know...even the directors quite often dont know the future of their companies..how do you expect to know them.

 

[tarnor]

To understand how to trade you must find the best oppurtunities in the market...where the smart money is going
How do you do this you ask...there is only on way...from the use of charts imo.
Who could possibly understand hedging commitments...the worth of weight loss drug..the value of 5g/t of gold in a pit that has to go down 300m..interest rate factors on a companies debt..the value of a tree plantation..what a gun that shoots 10 thousand rounds a minute is worth.
Its impossible imo for the common joe to understand the intricates of even a couple of stocks in the market.
Even if you do understand them what is to say that you are being told the truth by the company/directors.

Lets get back to LUM.

Lum listed at 20c in 2000 and did little for a while...the company then built its first sign at the aberdeen in Perth and before you knew it the stock was trading at 60c. The market cap tripled on one sign...why did the stock rise so fast...because of speculation LUM was going to takeover the world in the sector of neon signage.
What happened..the company talked about its rosy future and signed a couple of parteners and deals not long after only to see the stock evtually fall back to 5c as people got bored about the potential...once again most the punters lost out.

Now if you didnt even know what LUM did and you were a pure technical trader you prolly would have looked at an entry around the 40-50c mark...much higher then lum had recently been trading at.
If you were this same trader you would have seena clear break in the uptrend around the 80 or 90c level and then got out...beit through a stop loss or trend break etc..whatever method a good trader users.
You would not have entere lum since because the trend was down.

You dont need to even know what the co does...you dont need to have listened to friends or directors or anything to have made these profits and to have exited out.

Anyways back to the situation most here seem to have gotten themselves into.
its obvious that you have made a paper loss if you bought lum recently..this hurts but its not the main damage.
The damge lies in the effect this has on your psychology...you lose confidence.

Think of a sporting team...when it gets on a roll it seems unstoppable...it can win 20 games in a row...this is the team you should be betting on to win again.
Why bet on this team...because its oozing confidence and not self doubt...it wants to make moves that are winning moves not defensive.
Eventually it will lose 1 then 2 then 3 games and the confidence falls away.
Relate this to winning and losing trades and holding onto those positions.
If you drew a trend of these teams you could clearly see uptrends etc...and the same team that was a winning team and in an uptrend can become a losing team in a downtrend even though its the exact same team on the field...its because those in the team have lost their confidence imo.

What happens is people will barrack for the team usually nomatter what.
If they have the worst team with the worst losing streak they will still go for it to win(apart from the fact of loyalty).
Its because they are in love with their team like people fall in love with their stocks.
You know what they say love is blind and its so easy to block out things and pretend your losing team is still the same team it was when it won the grand final last year....or the same stock that was at $1 and is now 50c.

Most often people will go for their team because that is the team they picked for whatever reason (quite often because it was succesful when they started following that sport) and when it wins they see it as a reflection of themselves as a winner.
They will defend that time no matter what because they feel they are defending themselves..their judgement/ego etc.
The same reason people here defend their losing stocks.

Sure you may support a team but you really have little bearing on how well that team will do no matter how much you love them,the main thing i think people are supporting is their own ego to prove they are right and thye are on the winning team.
face it if your team is a losing team its a losing team..you may have loyalty to it so will have to grin and bear it but it really has no reflection of your character.

The same goes for trading...if your on a losing stock your on a losing stock...there is no need for loyalty...no need to defend why you bought them...get off the bandwagon and move onto the winning team.

We are here to make money are we not...not too bost our egos.
Those who put their ego's before their trading will ultimately lose.

You get on a winning team...you ride that team for as long as its going strong...once it begins to lose you dump it and move onto the next winner.

You cant trade saying to yourself...I shoulda done this...if only I bought then...if only i sold then.
There is nobody to blame for your trading mistakes than yourself...be humble.

If you bought LUM at 80c and are holding the stock now you are in a very bad situation.
Why...firstly youve lost your confidence...your winning run will not be there and you will be concentrating on defence not attack.
You are also sitting on a very large loss...experieced traders never sit on a loss of that size because it is too hard to take.
The loss should have been taken roughly within 10% of your buy price maximum.
Now you just sit there hoping it will at least get back to your buy price(so is everyone else so it means more selling pressure)...your funds are tied up..your on hotcopper all day writing posts that really mean nothing except defending your losing team.You agree with everybody that has the same opinion as you as it makes you feel better and disagree with everyone with an alternative.

Remember the best lessons are learnt from mistakes you have made...learn from this one.


Anyway I could ramble on but I reckon thatll do for tonight...hope some people get something out of it...think outside the square a little with your trading ideas...I can personally tell you it helps a bundle.

Good luck and dont forget the trend is your friend and keep those stops tight.

Hooroo





Bit lengthy hope it helps someone, made me thinks about a few things
cheers

 

[kooka1956]

Blueballs obviously didn,t realise NCP had a three for one share split, thats why it went from $30 TO $10. I had some shares back in the 1980,s called APR (Australian Pacific Resources) ,they invented a clear paint you could paint on windows so that you never need to clean them again. It worked!!!!!
and was on the towards 2000 television program . Like LUM they had a product that no one seemed interested in. Eventualy delisted and its shell taken over by IXLA and refloated . after selling the new relisted company at around .15cents recouping some of my stale money ,it continued rising to around $3.60. It has now gone the same way as the original APR. Regards, KOOKA.

 

[RichKid]

Have to say I agree with Blueballs in the main, basically because I follow the same technical approach to trading.
It's so very difficult to keep our emotions out of trading. That's why setting stops before entering a trade and sticking to 'em, for example, is important- wish I could do it properly!
I guess I should check out the LUM thread...

RichKid

 

[deadone]

i have found through experience is to fall in love with a stock, and watch it fall from from grace and hope that the market will come to it's sense and bring it up to what in your opinion it should be is as stupid as you can get.
.if you havn't got a stop loss before you trade, save your money and put it in term deposits.

 

[RichKid]

I got Hardman wrong in that I didn't expect it to fall this far (see the thread:
https://www.aussiestockforums.com/forums/showthread.php?t=427 )

Fortunately I'm still in profit but I didn't have a proper exit strategy when I entered. It's been a good experience overall though as I'm more disciplined now. Longterm HDR will do well but my time frame was shorter, I lost site of my goal, I have had to adjust strategy now to handle the added risk.

The biggest cost for me re HDR is opportunity cost- ie the money I could have made had I taken profits sooner and invested it elsewhere.

Live and learn I guess.

 

[kpgduras]

For me it was AVN (now CUO) - I bought for .046c on 10/10/03 and sold 10 days later for 0.016c :goodnight

I never had a chance as "the announcement" was made after close on the Friday (17/10 - closing price 0.048c) and Monday morning they opened at 0.016c. :swear:

kpgduras

 

[Smurf1976]

Crest Magnesium. Bought at 7.7c, eventually sold at 0.2c. Now they're trading at 20c after two name changes and a change of industry to ethanol production. Was pretty much pointless selling anyway since they were basically worthless. To make matters worse, I knew that the ethanol business was viable but ignored my own advice.

Worst thing I ever did though was losing about 50% of my net worth thanks to a financial adviser and a very big name managed fund. That's when I became interested in direct ownership of shares, trading, currencies etc following that loss. Six figure loss - not happy. :swear: Do not place blind faith in others ever. Do your own research and keep a watch on things.

Thankfully the list of successes is somewhat longer

 

[krisbarry]

FMG - Bought 15,000 @ 64 cents ($9,627), on this annoucement "China Signs to Build Railway" -Aug 2004.

I watched it slip for the next two weeks then I sold out @ 58 cents ($8,673)
lost $954.

Silly me....just after I sold out it sky-rocketed...been as high as $5.55. I would have been sitting on over $83,000.

FMG, not looking good at the moment though,slipped over 25% and in trading halt.

 

[el_ninj0]

Lost 18% on MUL, wont make that mistake again....
Although I think they are a company with a future, because of the technology they run. Their directors let them down, from lack of guidence and knowledge in the area.

 

[Fleeta]

MPI - Mark Sensing

Don't know if I have got it wrong yet. When I was 16, I put my first thousand into it at 11.5c - I still have them and they are 7.1c now!!

9 years is a long time to hang on to a loss - think about the opportunity cost! This actually makes it worse than my ION loss.

The scary thing is that they hit 25c in 2000...why didn't I sell

I am still holding, and have participated in rights issues at 7c. I have a good feeling they will hit 20c again at some point in the next 2 years and will sell then. All they need is stable management.

 

[DTM]

BSL for me last month. Initially made a profit with call options and then bought back in two weeks ago when the price again dropped. Then it kept dropping and dropping and my call options expired worthless.

Then there was BHP. I knew that I should have sold on monday last week because the price movement indicated a huge weakness. It was over $19 and thought to myself, it can't drop that much and I was way deep in the money. It dropped 50 cents and I sold out on the last day with no profit. 20k of profit down the drain and would have had a bumper month but ended just having a normal one. Worse was that I held on too long and didn't catch the wave down which would have meant humungous profits. Hopefully will catch the next wave.

Bought CCL and NWS put options earlier this morning because I think the price has peaked and will start to drop soon(hopefully).

Overall I'm still bearish about the market and will look for buying opportunities later this week, specifically looking at NAB, CBA, MBL, RIO and BHP.