Seed, retreat, harvest, in-and-out, push, take, reentry, prune, harvest again

Writing a quick entry on trading moves since December--

After I wrote this post back in December, I was alarmingly back to 10% cash in both nimbler and main ports from all the buy points that have been hit. Some were fresh buys, others additions to existing positions. But almost ALL these buys turned out hugely profitable, overall.

MBT buys at 82, 81, 80.3, 78.5, 79, at one tranche each were all sold at 93.

Adds in FLI, where I suddenly found my position ballooning to 16 tranches were sold at 1.69, 1.73 and 1.75. Im holding only 4 tranches now, still showing 5%+ positive as of today.

Earned in TEL at +9%, GLO at 6% (yes, I sold wrongly/very_early here).

The biggest winner is in LRI at close to +30% on 4a  tranches bet.

UBP at a quick entry in 70.5, then sell at 72 (placed ahead as usual) in a few days were also profitable. I knew there was a swing up happening in banks.

Three tranches in perennial favorite TA bought at 2.25, 2.23, 2.22 were all sold at 2.44.

Four tranches in PGOLD were also profitable--accumulated at 37.8 - 39 range, then sold at 42.

All the buy and sell points were placed ahead (GTM), usually evenings. I did not have the time to trade and observe daily given the hell demands of day job. Save for a quick cursory look in forums when meetings at the office became boring, I was not opening my two brokerage accounts at all, but apparently I was trading actively.

Among the winners who were showing a strong upward trend, I was only able to buy up in MBT at 86 and PGOLD at 39. Buying up is a discipline that I need to improve on.

I did not participate in any bazura like CAL and IS, although the forums are teeming with praises and potential bonanzas on them. Obviously, they were not needed.

Since reaping profits, I bought again (one or two tranches) in AGI, TA, LRI, FLI, when they went down. These reentries are now showing green. Old MWC is also still showing green, but Im not selling it until disclosure on the recent application for water rates increase comes out. I also still trust the management of Ablaza.

Everything should have been hunky-dory, and I surely should be beating the index year-to-date; there should have been vacation money again, if not for the huge sell-down in BEL and MCP. I cut-loss at MCP at -12.5% on three tranches, and still holding a big 22 tranches of BEL (averaged down here; did not cutloss). The bets on these two are based on
1) the opening of the City of Dreams Manila, which I also checked out, and seems to be showing promise given all the sugarols inside (90% of them Filipinos, disheartening to know... more on this in a later blogpost).
2) My man, Scorsese's commercial (one of my top 3 Directors of all time!)

3) BEL's high dividend yield
4) BEL's disclosure that they are going to buy back shares.
5) MCP's media blitz with Stanley Ho's son and Packer leading the charge no less.
But all the positive things were thwarted obviously by the Chinese government.

And so, the index year to date is showing 7.55%, while Im barely making 5%. Im also back to 50% cash position in both ports.

+2.55% is a lot of catching up to do, but Im not willing to bet all-in in just one stock or dabble in bazura to beat it. Better to be conservative since P/E of the index is already at a very expensive 22, and bazuras, well, they are still bazuras. If youre still holding index issues, I'll be leaning towards unloading all as PCOMP nears 8000. If you have a bazura showing more than 10%, sell already for goodness's sake!

Affinity and Biases

"We feel an affinity with a certain thinker because we agree with him; or because he shows us what we were already thinking; or because he shows us in a more articulate form what we were already thinking; or because he shows us what we were on the point of thinking; or what we would sooner or later have thought; or what we would have thought much later if we hadn’t read it now; or what we would have liked to think but never would have thought if we hadn’t read it now."

— Lydia Davis

SIDE COMMENT: This is actually one whole short story by Lydia. If you loved it and its length, you should buy The Collected Stories of Lydia Davis. That book will give you tons of reading pleasure.

For Newbies--

There are 'predators' (out to get your money) scattered in forums that are presenting themselves as oh-so experts. And they are experts indeed in phrasing their recommendations according to what appeal to your biases. Usually an issue that is lightly-traded (bazura) will be recommended for an upcoming big jump up, because the item is ultra-solid fundamentally, and that management have something up their sleeve, that good news is coming soon, and that this issue will yield 30 - 100 % in few short weeks. And that you should enter now before the increase starts, etc. These persons will also add something about earning big bucks recently from this issue, or compare the upcoming jump to another stock that made a similar leap, and where before they rode and where they gained hundreds and thousands of profit a few months ago--implicitly saying that you should join them on the bonanza this round.

Be careful taking advise. You should know yourself. Before acting on a recommendation, stop and reflect/self-introspect--what personal bias (greediness, tolerance for risk, for example) is being strummed in you? Sometimes they even dare--are you brave enough? You can double your money in one month if you are brave enough! (And who wouldnt answer yes, I want! Im brave! I want money! Money!)

When an honest reco should be asking--do you have time to do research yourself and read disclosures first?

In general, be suspicious if they are recommending bazurs (very lightly traded). If you decide you want to get in anyway with PHA, MACAY, TUGS, and other obscure issues, do it by all means for the adventure. (There are also manipulators' favorites like CAL, BHI, MED). Just make sure you have the stomach to cutloss--accept defeat--when the fall is impending deep and apparent. And again, only get in in Bazura when you have the time to monitor.

Pick of the week for Wk9: LRI (buy a bit also of AGI)

First a word of warning: my own style prevents me from buying up already expensive stocks, so Im wary in endorsing DNL, for example, or buying up DNL if you already have one. Those methods could suit perfectly these times when the PSE is on a tear to attempt to breach 8000, but that is not in my personal disposition to pursue.  

And so my pick this week is LRI 

LRI will open their new cement processing plant soon. This will immediately add to the top and bottom lines of the company. It's also heartening to see foreigners maintaining buying interest here last week, and that the trading volume in this issue is still high. 

For medium term, construction in the Philippines is still booming (a big contributor to the GDP good news). And Cement should be one of the main beneficiary of this continuing boom. When a bubble is detected, then LRI and MEG and the rest will go down, down. down. But so far, no indication of a bubble yet.

Disclosure though,
1) I already profited here. I sold all my position (four tranches) in this stock at a hefty +29% gain just a few days back, and reentered one tranche at 10. Im waiting to add at 9.8 and 9.5.
2) Im also waiting and personally, secretly, pining for a bubble so those condos would be priced right, so I can buy one near office.

***

I will also probably buy back the chunk of position (5 tranches) of AGI that I sold at 25.25. Re-entry price shall be near 24 or 24.5. This is on the belief that this conglomerate should catch up soon to its peers.

When Seeing Green, When To Sell?

(I always advocate enjoying your profits NOW! If you have a day job, all that you 'earn' from the PSE should be extra money. Use it to take a vacation now! You wont be able to enjoy trips as much when you compound compound compound and then by the time youre willing to shell-out money, you're rickety old! You cant walk 500 meters any more out of the hotel!) 

I need to re-start this blog, because several people are asking me specific questions through email.

Im certainly not an expert and my profit from the PSE will not be enough, on its own, to raise a family. But I got both my two kids' tuition fee + a trip to El Nido - Miniloc for 3 from the surge in the market last year. Im not [yet] the swashbuckler who can resign from a dayjob to trade full time in the comfort of home, BUT expert or not, still, I'd like to attempt to answer specific questions.

One perennial question is something along this line... Im already in GREEN (profiting), but how do I know WHEN TO SELL?

If you'll follow CANSLIM, the recommendation is to sell when you see +20%. They say that even in an upsurge (and CANSLIM does not recommend that you enter a market without seeing a general market upturn), the stock will take a breather (go down) after achieving +20%. And so it is recommended to sell at +20%. If the stock that you sold is a favorite and you truly believe it is still cheap, follow the stock and buy again when you think it's done taking a breather. I usually buy back if the stock has gone by -5%, -8%, or -10%. Those buy-again points are not based on any scientific or statistical analysis, I just like to buy at those level.

One exception to the +20% rule though: if the 20% was achieved in a few short weeks, CANSLIM recommends that you hold the stock and study more, to check if there's probably some more juice left. Why is it jumping so high? Is a big fund hell bent on buying it up? Is there news of a potential big, big change? If yes, continue to hold. BUT for me, I'll sell any stock that I have +50% on.


Investopedia also has particular suggestions. The two theses that apply to our case in that article:
2) sell when the price appreciation is rapid ("The best investors are the most humble investors")
3) the price is too expensive (valuation is no longer justified by earnings). In short, too high a P/E.

Sets of experts (or believing themselves experts) in local forums will strongly object to these two proposals. For #2, many believe that you should ride the stock until the upside is over. BUT how do you know when the runup is done until the following day you see the stock breaks down 3-5%?

And then for #2, JFC and DNL are seemingly clear exceptions. Both now at astounding 40-50 P/E's but still are showing strength. How do you know when the limit is really the limit?

As usual, the final method will be according to what suits your personality and poise (you have to know yourself!) I for one sell when I think Im already comfortable with the profit on one stock. When you reach that 'satisfaction,' it wont be too much of a heartbreak if you see the stock surge further. (There will still be that bite, but not that much any more). You trade stocks one at a time after all. If PGOLD already gave you 5000 PhP on a 30000 PhP accumulated position, wouldnt you be happy with 5000 PhP already even if it still goes up in the next few days? Only greedy lizards wouldnt say theyre already happy. And would you want to be tagged a greedy lizard?

These rules by the way don't apply to bazura stocks.

Bazura stocks you only ride on an apparent swing, and when you have the time to closely follow the trades (by-the-minute, daily). I sell a bazur when see +15%, and then thank heavens I was there when the manipulators selected that specific bazur to push up.