After the market crashed, KLCI went down by almost 50% in January and February 2009 and hit the bottom. Since then, bargain hunting took place and since then stock price never stopped going up, although some time the stock price went up and down for a week or two because of price correction as a result of over bullish sentiment, in the end it resumed the uptrend for another month or two.
My investment portfolio was up by nearly 30% since March, a decent gain for a after-crash rebound, but not a great one, just ordinary. I could have done much better if certain mistakes were not done repetitively. Yes, i mean repetitively, knowingly and unknowingly.
There were a few times i bought the stock during the price consolidation, and the price went down immediately. It stayed down for a while. Seeing there was no progress on price after a week like that, i sold it. Then it started to go up again. This is not unlucky but the work of emotion – fear of losing further and i realized that all the time. When the stock price stay in red for a long time, fear emotion takes place – the same fear that could cause a major sell down and causes a falling price. However at that very same time, deep down i know that the stock price will break the resistance point very soon and i just need to hold on a while more, because i know we were in a long term bull run and the stock price is still cheap (This is only gut feeling, you should do your homework). My definition of resistance point is the highest price a stock could go during a consolidation period before go down again. When stock price break out from resistance point, the price move higher than the previous highest point.
In the end i sold those stock. Emotion clouded my judgement, and that caused mistake, and i could have been earning more than 60% since the rebound. Even though i gain a total of 30% from my stock investment, i also loss the 20% possibly higher gain if i see the stock breaks through the consolidation.
RK’s rich dad says; investment is very easy, you just need to stick to the plan, but sticking to the plan is boring. Human get bore easily, thus they always don’t follow the plan till the end. So they lose money.
That also explained my case, during the price consolidation, i was looking at the other market sector that keep going up and up while my stock price stayed in red for a long time. Bored at staying stagnant, i started to look for other more excited opportunity to jump in. Sometime i was lucky that i didn’t catch the latest bus, i made some gain but most of the time, i lose money.