For any conservative investor who wishes to earn some profits from the market to beat inflation, this outcome has to be the worst nightmare come true. Until recently, I have never thought that I would make a decision to lose $80,504 in a single day. So, what happened? Did I take a very big risk and lose everything after all-in? Or is this trading gone wrong?
The answer is that this outcome has been planned for and is not unexpected. So, why would I choose to lose $80,000 in a single day and what have I lost? Previously, I have been sharing about my 6-figure paper loss as a result of the many legacy stocks that I bought in the early days of my investing journey 9 years ago. Some of these stocks were very popular back then and paid good dividends. Let’s examine the stocks that I sold at a loss today.
Old Chang Kee
Total Investment: $5,124, Sold for $4,119, Loss of $1,005 (19.61%)
SIA Engineering
Total Investment: $13,890, Sold for $7,290, Loss of $6,600 (47.52%)
Neratel
Total Investment: $25,633, Sold for $7,500, Loss of $18,133 (70.74%)
Dairy Farm
Total Investment: $10,880, Sold for $4,455, Loss of $6,425 (59.05%)
Singapore Press Holding (SPH)
Total Investment: $13,204, Sold at $7,080, Loss of $6,124 (46.38%)
Keppel Corp
Total Investment: $86,808, Sold for $52,852, Loss of $33,956 (39.12%)
Sembcorp Industries
Total Investment: $16,350, Sold for $8,089, Loss of $8,261 (50.53%)
Keppel Corp and Sembcorp Industries were powerhouses back in early 2010s, dominating the oil and gas sector and utility sector respectively. Dairy Farm was also in a fantastic supermarket niche and owns the likes of Giant and Cold Storage. The share price then was 4x the current price and there was little competition from online grocery stores such as Redmart. SPH was the media giant and many households subscribed to their hardcopy newspapers. SPH was also a stable blue-chip company and paid good dividends to shareholders. Neratel was a great telecoms company giving out fantastic dividend yields of up to 8% when business was great. SIA engineering was a rock-solid stock when the travel industry and tourism were booming. Old Chang Kee was opening stores islandwide and was profitable and expanding overseas.
Unfortunately, through the years, the oil price crash, rise of social media, online shopping, pandemic and many other factors contributed to the downfall of these stocks that I hold. The total loss from today’s sale adds up to $80.504, which is an accumulation of many years of savings. And this is not the end of the investing nightmare as I still have another $56,000 worth of unrealized paper loss. Some stocks have dropped more than 90% in value and there is hardly any capital left.
From this episode, I want to share a few learning lessons for everyone, especially new investors who are entering the stock market.
Lesson 1: Always do your own research and not buy based on hearsay or recommendation
I started my investing journey in a very cautious way because I have heard horror stories of people losing all their money in the stock market. However, after a while, complacency and greed took over and I started buying based on the recommendation of friends and strangers sharing in the investing forums and blogs, hoping to profit more when these stocks rose in prices. That style of following others was extremely dangerous as I was often caught off-guard when these investment gurus exited the trades without informing their followers.
Lesson 2: Not cutting loss and trying to catch a falling knife
My faith in those blue chips companies was so strong that I took every opportunity to average down, hoping that they will one day bounce back to their glory days. It never happened as the more I averaged down, the more loss I accumulated over the years. Eventually, I gave up averaging down and yet, did not have the courage to sell the shares as “cutting loss” was never part of my investing philosophy. I ended up losing more as time passes and these stocks drop in value.
Lesson 3: Staying in my comfort zone for too long
The comfort zone of investing in Singapore stocks, many of which backed by our government, provided me with a false sense of security that everything will be alright eventually. While it was true to a certain extent that companies like Sembcorp Marine have not gone bankrupt and delisted after losing so much money, their share price has fallen by so much that their shares are almost worthless. The comforting thought of having a good dividend payout from these companies also adds to the inertia of leaving the Singapore stock market. However, as businesses suffer, the dividend payout also drops and some companies have stopped paying dividends altogether. The moral of the story is, sometimes choosing the safest way out is the riskiest decision that we have ever made.
Moving Forward
While it was a painful $80,000 tuition fee that I paid to Mr. Market, the future now looks brighter because I have finally snipped off some of the weeds (bad investment) that are clinging onto my plants (main portfolio) and continuing to compete for nutrients and sunlight (funds). I choose to look at the new door that is now open for me, instead of feeling sorry for myself because the old door has shut on me. It is like finally letting go of the person whom you know will never be a part of your future but you are holding on because you fear the pain of a breakup. That feeling is liberating to a certain extent.
Lastly, I had the courage to make this crazy decision because my option trading strategies in the past year have given me great returns to cover all of the losses that I have made in the first 8 years of my investing journey. I could have held onto these stocks until many years from now, which most likely have a very low chance of recovery and I may risk losing more capital in the longer term. Most importantly, in doing so, I missed out on the opportunities to invest the capital that I could still salvage now.
I hope this sharing has been useful to you, whether you are a new investor or someone who has suffered great losses in the stock market. As long as you don’t give up and keep learning and improving, you will one day get back what you have lost, and so much more. All the best!
Related Article:
How Options Trading Help Me Deal With My 6-Figure Investment Loss?
Learning Investment With Jason Cai 
Thanks Jason for your authentic sharing . In the journey of investments, we normally hear the wins, not often the losses. Like your analogy of the Tree and trimming the branches. Need to be more intentional to keep the tree healthy. In other aspects of life, seems so much easier to let go of things that no longer serve us. However, I noticed for my own investment journey, it seems much harder to let go, as it involves money and clingy on to the hope that things will get better 😛 Have yet to read up all your sharings. Just wanted to say Thank you for doing this 🙂
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You are most welcome, Tricia. I am glad it helps in some ways. You are right, money is always sensitive. After all, we work so hard just to earn this amount, only to lose them through our own bad judgement and decisions. It is a bitter pill to swallow, especially if we have been frugal in other aspects of life. I never thought I would make this decision until recently, and there were 2 reasons to do so. One is that I have earned that amount through options trading. So, it is a matter of having lesser overall profit. The second and most important decision is that I can free up more capital and put them into something that generates a much better return. Probably, that would be the best decision I have made when I looked back 10 years later. Lastly, don’t be discouraged by your loss, it is sometimes in these painful lessons that we grow to be wiser and stronger. All the best!
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