I always use this case to remind myself that don't be over-confident that it can't get worst, especially during this uncertain time.
Esprit, is a international fashion brand (in case some of us do not pay attention to Fashion brand) as well as a bluechip on HKEX that was doing so well in the past. Its share price has gone up from less than HK12 in 2002 to about HK120 in 2007 (about 5 years to be ten bagger). Then when GFC hits in 2008, it had dropped to about HK50.
When the company performance further deteriorated subsequently, it has dropped to around HK20 and that has caught my attention where a bluechip on HKEX fell close to 80% from its peak. "How much more can it fall" I whispered to myself. Looking at its balance sheet, it still had healthy cash balance and asset backing even though the business was facing very challenging time then. So...I bought on the basis of share price already fell so much for a bluechip, healthy financial position and fashion is cyclical (I thought) at around HK20 in 2010.
One year later it went down ti around HK13 and it started to register loss, and I told myself I must have made a mistake and did not have good knowledge about fashion, so with great pain, I cut loss.
Looking at the current price now (HK1.56), it has dropped more than 80% again. While this may be an exception or unusual event, we have to continue reviewing and assessing the companies we invested. I do agree with the strategy of buy and hold long term, but that does not mean we can just sit back and forget about it. "Do not be over confident" - I keep reminding myself.
For me, new year marks a new beginnings with hope and wishes, it is also a time for me to review, rethink and refocus... opportunities and threat need to be assessed, not left entirely to "luck" factor. Investing is not gambling though it has the luck factor too.
Wishing all of us a great year in 2019!!
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thx for sharing such a great experience. i use to be over confident from the day i starts to earn until now. i told myself to limit a max 3 stocks in my portfolio. and i use to end up 2 stocks most of the time. i enjoy greater return during bull time and of coz i face greater loss too when it is bear.
ReplyDeletehow long hav u been in stock market? i love to listen to ur investment story & experience
Hi ithp26,
Deletethx for sharing your story and experience too.
I bought my first stock back in 1991 when I was in Uni. It is not the length of our investing journey that matters but the depth - how much we have learnt and getting better and better at it. Great investors made mistake too even after they are regarded the master of stock investing, but they contain the damage, so overall, they still do very well in the long run.
I would say your highly concentrated portfolio requires a very strong investing skills - from financial analysis to business acumen, industry knowledge/trend, etc as any major oversight or mistake could cause major damage. Of course, you will win real big when you are right.
I have been listening to Howards Mark's "Mastering the Market Cycle" lately, you may find it helps in your investing approach. Investing is a life long learning to me. Hope to listen and learn more from others - like you too.
How about you? Average how many counter would you hold at a time? And what is the longest time you have hold on a counter?
DeleteP/s: I just finished listening to "Mastering the market cycle". Thx for recommending. It is such a great interview with Howards Mark. I have ordered the book and i cant wait to start reading.
On average I have 5 to 8 in my portfolio. Longest probably about 8 years, but it was a REIT.
DeleteGlad to hear that you find "Mastering the market cycle" interesting too.
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