Sunday, July 10, 2016

Sold Genel Energy

Sold on 29th June for SGD 4054.  Total loss was SGD 15,339.

Oil was above $50, close to the $50-60 price where shale producers can ramp up production again.  So use this chance to sell the losers.

The lesson here is not to buy stocks in a downtrend.  Especially for companies where: 1) you have little visibility into their business, 2) are small caps and 3) may go to zero.  The simplest lessons are the easiest to forget.

2 comments:

Hor Ks said...

Luck or lack of it does play a part in our investments sometimes, though I dislike admitting it. The start of this prolong oil downturn might not have been anticipated by many people at about your point of purchase. In a major, prolong downturn, low gets lower and lower gets to unbelievably lower still. And when it gets from unbelievably lower to the lowest, we are just too afraid to act any more and may yet make another mistake of the opposite kind by not acting to buy when we should. Would you believe in your judgement anymore the next time when you try buying an oil stock on the downside? That is the test for all of us. We have gone through all these self doubt as well.

BlackCat said...

Hi Hor Ks,

Thanks for your encouraging words. I think there are always unknowns. For investments with high uncertainty - eg: a small company, which is a price taker, operating in a dangerous area, has luck involved in finding new reserves - for these type of stocks I would allocate less capital and rely on the charts more. For companies I am more certain of - e.g: with a high market share and few competitors, does not compete on price, no substitute products - I'd be more willing to catch a falling knife. Crude oil producers are usually the first type.

Sentiment in the oil market seems to have recovered, not sure abt supply and demand. There may be another leg down?

Oil aside, stock markets are still expensive. Having been through 2 bear markets before, I'm reluctant to buy at these valuations. I guess I have to wait for a few more years of QE till it pops.