Improving Trading Mindset

Hi Mooers, Happy New Year! Hope everyone has a good start in 2022 so far! Well for this discussion, I always like to start with some fundamentals I truly believe in then followed by some real trading case studies and experiences so it is easier to connect. Hopefully, the things that I share will be useful to everybody. Here are some of my key learnings that I gather over the years for sharing:

1. Knowing yourself. Many of us agree that we are our own enemy, but how to we conquer ourselves?
Step 1 would be to know your own risk appetite, limitations and situation. There is a saying that if you can't sleep every night and are constantly worried about your investment status, then you have adopted a wrong investment strategy. Some form of investment may suit others, e.g your friends but not you. There are primarily the high risk takers, these kind of investors are more inclined towards trading, while others are more comfortable with taking on lower risks and to have the long term investment mindset. There is no right or wrong to the various strategies but you need to find the one that suits you best, allowing you to still focus on your daily work and life. You may wish to have a hybrid strategy of the two as you gained more experience along the way. Knowing your limitations mean understanding what is the amount of money you could afford to invest and probably not likely needing them in the near future. Thus, it is only prudent that we invest our Spare cash such that in times of a severe dip, we can still hold on to our shares and ride through the storm, and not be compelled to sell off at an unfavourable price resulting in a loss. Holding Power is everything. To manage the dip better, it would be good if you have more spare cash to buy more shares to increase your portfolio for better dividend returns through dollar averaging. If not, just hang in there if you strongly believe that the stock you have invested in is good and no doubt it will recover on time.

2. Managing your own expectations. As we have identified what kind of risk level that you are comfortable with, next you would need to manage your own expectations. It is normal that higher risk takers would have the opportunity to have higher gains, but we need to be cognisant that it would also come with greater losses. So never be overly envious of other people's gains that affect your plans, forcing yourself to take on a higher risk stock that you are not prepared and unable to manage the situation in an event of a dip. The high volatility and risk investment would include crypto, therapeutics stocks, US and HK stocks. Let's talk about some case studies now on this topic. $BABA-SW(09988.HK)$ as we all know is very undervalued at the moment. With Alibaba strong business performance, it is expected that their stock price should easily be 2 or 3 times the current value. Well, I personally feel so but I am not ready to put a huge portion of my money into it. Like wise for $NIO Inc(NIO.US)$. So in time, when the stock really soar, I should never regret not buying more at this point though I do own some stocks for the both of them. $Longeveron(LGVN.US)$ and $iSpecimen(ISPC.US)$ stocks also spike up very rapidly as well in this period of the pandemic, but recently they are settling down low. I have seen some profited while others got burned through trading them.

3. Review your stocks periodically. The company's business strategy changes with time and with the replacement of the management team. Reading financial reports and news would constitute as prudency that would allow you to make good decisions. Earlier, we observed that $CapLand IntCom T(C38U.SG)$ stock price took a severe plunge from $2.26 to $1.9x, it is concerning and worried all investors. But if one has been following the news, the organisation is performing fund raising offering a lower share price to exclusive investors for business expansion. They expanded their foothold into Sydney, Australia. This is actually a good business approach, and there is no doubt that the stock price would rise and become even stronger than before over time. For me, I leverage on the dip to buy more $CapLand IntCom T(C38U.SG)$ shares, to dollar average my previous holdings instead of selling. I believe that Reits would do well in the long run.

4. Patience. Take some time to observe the market trends on a particular stock, you would observe the support value (where the company will prevent the amount to fall below this value - perhaps through shares buyback etc) and that would be the best market entry point. Never be too eager to enter the market.

Here are some of my personal experiences:
Well, I would consider myself as a moderate low risk taker in my course of investment as I focused on long term gains through dividends returns with SG's reits, bank stocks and etfs.
and only investing about 10% or less of my money into slightly higher risk stocks.
$Apple(AAPL.US)$, $NIO Inc(NIO.US)$, $BABA-SW(09988.HK)$
When I first started investing, I was looking for stocks that are very stable and would provide higher returns that leaving my money in the bank, but at the same time takes extremely low risk. After performing my due diligence, I discovered that $ST Engineering(S63.SG)$ is such a stock. If you study the trend of the company, year on year for the last few years this stock is very stable in events of rain and shine with their value hovering between 3.6x to 4.1x. So one would unlikely expect to benefit much from capital gains. Holding onto $ST Engineering(S63.SG)$ would would render steady dividend returns. This would also be likewise for ETFs $Nikko AM STI ETF(G3B.SG)$ These stocks are suited for anyone with no threshold of risk or have no time to monitor the market. On the other hand, when I looked deeper, I realised Reits, $Keppel DC Reit(AJBU.SG)$ $CapLand Ascendas REIT(A17U.SG)$ $CapLand IntCom T(C38U.SG)$ would give higher dividends at a much lower investment cost. While bank stocks $DBS Group Holdings(D05.SG)$, $OCBC Bank(O39.SG)$, $UOB(U11.SG)$ and $SGX(S68.SG)$ are at a slightly higher level of risk providing both good dividend returns with substantial capital gains. So over time, I refined my investment strategy over the years to hold 50% worth of bank stocks, 40% of Reits and 10% as mentioned venturing into the US, HK markets for stocks I assessed to be good but riskier. Also, I am never faltered by a market dip and will never sell any stock in RED. I would hold onto them until eventually it recovers (for instance $NIO Inc(NIO.US)$ which I bought at $42 as I believe the EV industry is up and coming.)

These are all my precious and valuable experiences, hope everyone enjoys the read and I wish all Success in your investment! Cheers.