How I Deal With 16% (Smallest) Loss Of My Legacy Stock + Sharing Beginner’s Mistakes

For the first 8 years of my investing journey, I seek refuge in the safe haven of the Straits Times Index (STI), thinking that it is absolutely safe to buy Singapore stocks as they are not as volatile as the US stocks.

However, while some stocks may have the backing of the Singapore government, the STI market is relatively small and is easily shaken by the happenings around the world. If US stock market takes a hit, STI is likely to be in the red. If Chinese stock market is in bearish mood, then the fears spread to STI and cause investors to dump their stocks.

During that period of time, I committed some of the most painful beginner’s mistakes that I hope to share with you today, especially to the newbie investors who are excited to start your investing journey. I hope this article helps to manage your expectation and remind you that there is always risk involved when it comes to investing. If you cannot stomach the risk or afford to lose your capital, it is still better to invest your money in bonds or let it sit in the bank.

Read this article on how bonds beat your savings account interest by 30x

Over the years, my oil and gas stocks have plunged like nobody’s business, in particular Keppel Corp and Sembcorp Marine. My losing investments, which till date is still a huge paper loss of 6 figures, consists of previously hot favourite and good dividend stocks such as SPH, SIA Engineering, Sembcorp Industries, Neratel and many more stocks that I bought based on friends’ recommendation or hearsay tips read from the forums.

I have failed to 1) study the stocks carefully before buying and 2) closely monitor and withdraw when crisis hit these stocks and thus, I am now at a point of no return. Even if I choose to cut loss now, there is nothing much of a capital left. All I can hope is for a miracle to happen and for these stocks to revive but that is unlikely.

Moving Forward …

In today’s article, I wish to share with you on my smallest loss in my portfolio, Old Chang Kee. It used to pay good dividend but not anymore, probably due to business being affected by the pandemic. As liquidity is low, it is difficult to get buyer even if I tried to sell my stocks on the exchange.

My Old Chang Kee (OCK) shares are currently my smallest loser at 16%. That loss is further reduced as I have been collecting dividends from the company over the years. Thus, recently I decided to do a cut loss and invest the redeemed capital elsewhere.

My Strategy

Using the exact amount I get from selling OCK shares, I sold a PUT option contract that expires in 35 days and collected a premium that is worth 11% of the invested capital.

If this contract does not get exercised after 35 days due to stock price rising higher than my strike price on expiration date, I will use the same capital to sell another PUT contract that is around 5 to 8%.

In doing so, I would have recouped the loss that I suffered in just 2 months of options trading, the loss that I have held on for years, hoping for a revival that may never come.

I hope this post gives some hope and encouragements to friends who are in the same situation as what I have been through, feeling so helpless over the major losses and investment mistakes. One of my favourite investing guru, Adam Khoo, also spent around 10 years making lots of investing mistakes before becoming a millionaire investor. So, don’t give up, take good care of yourself so you are in the right frame of mind to rebound from your losses and keeping winning after that.

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