Why Newbie make profit while losing more than 50% in Barakah stock?



Newbie is a happy person now. He sold Barakah with huge loss, and bought OCK and EG. I think Barakah was his first trade if I remember correctly. It was end of 3rd quarter 2014, oil price was high and then plunged. All oil and gas stocks prices also down a lot.

He made more than 50% loss in Barakah shares. Sold because analysts do not have good forecast on Barakah stock.

Then he bought OCK near 0.8x, now made paper gain a little. At the same stime he bought EG at 0.8x, paper loss a little at current EG stock price.

He sold Barakah at low value, top-up some cash to buy OCK stock. Then bought EG shares, total is more than his monthly budget. No worries because he is not up to date and he missed many months buying stocks.

After about a month he then sold Supermax stock and switched to MFCB stock, Mega First Corporation Bhd. I asked him why, he said Supermax many anaysts said underperform or marketperform. I wanted to explain to him that when the analyst reports were publiched two months ago, Supermax price was RM2.50 and now is RM2.04. With the price dropped 20%, analysts may upgrade from marketperform to outperform (buy). But I didn't got the chance to explain to him.

His loss in Supermax share is more than 30%.

Lessons learned.
Don't be afraid to cut loss if the stock lack prospect or growth. The Barakah stock may rebound because price has dropped so much, but Newbie is investing in fundamental and not predicting the price.

Supermax shares. Always look at the date of the report whether is it still valid. Always look at the price of the report, and the price of the stock now.

OCK PE ratio is high around 20 times, but he said growth can justify the high PE ratio. True, if the growth is really that high and confident, let him learn this.

EG stock because PE ratio is low and with growth potential. The only thing is no dividend. He did not mention this to me. Later we see how it goes.

MFCB because PE ratio low, dividend yield also quite good, with recurring income, and realising project profit within this coming two years. But the issue is what after the two years. Maybe they may get a good project within this two years. See how.

Newbie has been doing well, portfolio is making money although the KLCI has dropped more than 10% since the day he started.

As we can see, there are still a lot of things Newbie need to learn. But that does not stop him from making money. His performance is excellent in view that the market has dropped more than 10%, many stocks he went in at the wrong timing and high price.

He is also not by luck, because he has made many transactions and over the span of two years. He has experienced few of his stocks dropped more than 50% but now he is still profitable.

We do not need to learn all in order to make money from stock market. One of the easy ways is .....
1) using dollar cost averaging DCA. This is about diversify the time.
2) investing fundamental stocks with growth potential
3)diversify into different stock different industry to minimise risk.

We shall see how he grows.

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http://politemarket.blogspot.my/2016/07/why-newbie-make-profit-while-using-more.html