THE CONCEPT OF SELLING YOUR LOSERS AND BUYING YOUR WINNERS
December 7, 2020
We have been running VIA Club since May 2018. For the first year, my portfolio actually declined by 12% at the end of 2018. I am very grateful for members who have been with us since the beginning. And more importantly, you believed in my investing philosophy even though the results were not showing it.
Of course, fast forward 2 years now, I feel that our results are finally showing that my idea of buying and holding wonderful stocks is working. But today, I would like to share the journey of how I came to that conclusion. After all, it is a concept that is not widely held by investors or even among value investors. Until today, my family members, which I managed some portion of their portfolio over the past decade, do not fully understand why there is a need to hold on to a winning stock instead of realising the profit.
I started investing in 2006, during the last stock market bull run. I have just entered the workforce. I was lucky enough to be given a small capital from my parents at the start of my career. Although they did not specify how I should use that money, I ended up choosing the stock market as the parking spot for that capital.
However, in the beginning, I was merely a punter. I was lurking around forums and following tips from random strangers. I would focus more on the valuation of a stock, rather than the quality of the business. I would also be very eager to sell my winners and lock in my profits. I still remember I have a set of criteria every time I screen for new investments. I would look for:
Price-to-Earnings BELOW 6x
Price-to-Book BELOW 1.0x
Return on Equity MORE THAN 10%
As you can imagine, some of the stocks I ended up investing in were highly questionable for the “current me”. I started keeping a proper record of my portfolio around 2011 and here are some of the companies I invested in during that time.
Stocks I Invested in 2011, 2012
You can Google some of these companies if you have not heard of them.
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Stanley Lim has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. He has written close to 2000 articles online, on investment education and market analysis. He is the co-writer of the investment book: “Value Investing In Asia”, published in 2018. Stanley is currently the chief editor of Value Invest Asia.