Mistakes you have made while investing on the NSE

[Apache]

Hi guys,
I was just wondering that if we could share experiences on silly mistakes we have made in the past or even in the present it will be a good learning process for people interesting in learning from other people's experiences.

I will start with myself. i must confess that i have made a lot of silly mistakes and i am still making more. Infact, just the other day after creating a thread on Costain, i bought 10,000 units @ 21.2 and watched it loose 5% constantly from that day. After reading someone's posting on how averaging down doesn't make sense, i sold everything @ a loss at 16.65 hoping to buy @ a lower price. From that day, the stock has been rising 5% and it closed at 20.19 today (can you imagine)) Now, i just dey siddon look hoping that it might fall back to where i want

Guys, over to you

[pumping]

Originally Posted by Apache

Hi guys,
I was just wondering that if we could share experiences on silly mistakes we have made in the past or even in the present it will be a good learning process for people interesting in learning from other people's experiences.

I will start with myself. i must confess that i have made a lot of silly mistakes and i am still making more. Infact, just the other day after creating a thread on Costain, i bought 10,000 units @ 21.2 and watched it loose 5% constantly from that day. After reading someone's posting on how averaging down doesn't make sense, i sold everything @ a loss at 16.65 hoping to buy @ a lower price. From that day, the stock has been rising 5% and it closed at 20.19 today (can you imagine)) Now, i just dey siddon look hoping that it might fall back to where i want

Guys, over to you

Hmm.....is this what you will call a mistake....?? Except the mistake is that your analysis was wrong when you decided to buy @ 21.2 I think you are being too hard on yourself. If a stock is nose diving at 5% a day and you don't have any info to suggest the movement is not justified I think it makes sense to sell it off.

In this case though, Costain is coming to the market so I did not expect the nose-dive would have been sustained. This is my own theory but of course it could be wrong. Costain is increasing share capital to 1.1 billion ordinary shares. If the share price nose dives, they will not raise enough money as this is linked to the offer price so it is in their interest for the price to remain relatively good.

Anyway, without digressing, I will list the errors I recall now that I have commited on the NSE. For me I can only list things I have learnt from and which I will not do again. There are other mistakes I am still making but I do not know they yet...

1. I used to give my broker Sell or Buy instructions without a min and max bid or offer price.

2. Wrongly assuming the year low price of a stock in the movement graphs is really the lowest price for the year in all respect. In many cases, this is not the case due to bonus shares which results in mark downs. So the guy that bought in Jan for 10 Naira is better than you that bought for 7 Naira in September if the guy got 1:1 bonus before September.

3. Calculating the "discount" from a PO without factoring in possible dilution of the shares before certs are issued.

4. Refusing to sell my livestock Feeds even after losing over 20% and without justification that the market got it wrong.

5. Not digesting the rich information and views on stockmarket Nigeria on a daily basis

[easimoni]

My big mistakes have been:

1. Not issuing mins or maxs when I issue orders. Tried it the last couple of weeks while trying to "average down" my Crusader and MBenefits. It's amazing how well you can lower you cost price if you impose a limit for your brokers to chase. No try am for bull market sha!

2. Shooting from the hip: I bought Livestock bcos someone on a forum told us they had turned it around. To my horror, I found out (in less than 2 days) they had done a 21-for-1 (who does that!) rights issue and had not declared any results. Cut my losses and I'm glad I did. Always research a company regardless of what you hear.

3. Chasing the bull: after selling some winners mid-year, I felt left out watching the market climb and began making a series of buys that did not match my self-imposed criteria (60+% growth, Forward PE <20, good profit margin). Needless to say I was hoping to ride the bull. Those stocks have ALL flat-lined (WAPCO, Oando, GTBank) and I had to sell some at a loss to capitalize on the insurance companies.

4. Over-Projecting: using one good quarter to project the FY of company. Projection is always the hardest thing to do especially with little known companies. I tried this with ABC transport; they had good 6- and 9-month results in 2006 only to crash when the FY came out BELOW the 9-months It's easier to sleep at night when your investments have a solid (and predcitable) track record.

[DaInvestor]

Hummm mistakes
many, plenty in fact bountiful
even though i ve not lost more than i ve gained both financially and experience wise, these mistakes can be costly at times

the biggest of them all is being too greedy, not buying today cos i was expecting a lower price the next day thereby losing out totally cos when the price goes up i would want to wait for it to come down to dat of the previous day i didnt buy, same with selling thereby losing a large chunck of money cos of some extra pennies (every penny is key i used to think but i ve come to realise dat its that penny that would cost u ur break thru OR lead to ur downfall)

being sentimental, still havent learnt totally from dat too, but dat has increased a lot.

not being bold i.e taking the bold step when im sure about a particular stock, though this was due to fear. being too careful which is the difference btw the guy that has made it and the guy who should have made it cos if not i for don turn millionaire 2day. though these things work both ways so i no too fit blame myself.

and yes them brokers they cost me a lot of money by buying late and selling late, thereby making me lose plenty money and also discouraging me from trading as often as i would have wished.

and the list goes on and on but i think the first one is still the most painful one, my advise is for u to know ur entry and exit points and try 2 stick with them as much as possible, forget how much u could have made if u waited a day longer cos u never can tell it could be how much u ve lost, sorry 4 the epistole na because e dey pain me

[laman]

Mistakes...... I think I made the biggest mistake 2years ago because I was financially illiterate at dat time.I bought spring bank. 30 million naira worth. Couldnt sleep.Was deceived by one of the directors. Threatened him seriously and was able to get my money back after 14 mths. Happiest day of my life for a long time. Also failure to sell my dangote sugar at 46 naira, sold at 39 .

[hispy99]

1. Giving my broker market orders. This one can kill you. I noticed that all my trades where done at the max price of the day, took me a while to figure out what was going on.
2. Not dedicating a certain portion of my salary monthly for investment. A disciplined approach is the best approach; even if i do not invest the money in the stock market (because I do not find any attractive stocks), I still set the money aside.
3. Believing company hype you come across in the papers. Almost got my hands burnt, but thank God for prayers and fasting.

[c kenneths]

When I remember how I sold my initial portfolio, it makes me want to beat myself up.
The portfolio was well chosen and was rising in value weekly, but then I got stupid, thought I knew it all and sold all the stocks to enter into the reigning stocks of the time.

I sold my bluest of blue chips and bought some penny stocks just because some were making 2000% plus.

Look at me buying first aluminum, John Holts, and other no- value, no- fundamental companies. Can you imagine that type of atrocity?

If I pick up my start up list and calculate it today, factor in all the dividends and bonuses and capital appreciation I had missed, it will be more than 200% of what I have now. Poor me!

Anyway I am rebuilding my portfolio and going strictly blue chip now, learnt my lessons, never to forget the experience.

This thread is very educating. I have picked one or two points to remember.

[chubby]

My own mistake is mainly on ignorance of the stock market itself. I have not really understood what it is all about and my so called stock brokers are not helping matters. I first registered with a broking firm in Lagos through a friend while in Abuja. Up till today, No even a word had been hear from the broking firm. I have written series of mails still no word from them. But that does not mean that they did not acquire stocks for me, they did actually, beacause I kept receiving notice of meetings from companies where I hold shares. But my worry is, I want to know the list of my stock and will like to be in constant contact with them.

I bought May&Baker at 4 naira last year, but could not sell when the price rose to N13 because of lack of guidiance. Could somebody out there put me through? thanks guys

[Apache]

I remember when i bouhgt the GTB public offer in 2004 @ 10.6. Then i had this notion that evry stock will rise when it's about to pay dividends and will fall after paying dividends. So i sold all my units when GTBank @ 12.6 after they had just marked down for the dividend and bonus issue and was waiting for ii to fall like towards N10 or below for me to buy back.
It rose to N13, I was still waiting ...., It fell to N12, I was still waiting..., It fell to about N11, I was still waiting...., It rose to N12, 13, 14, 15, 16..., I was still waiting. By the time i realised that this stock wass never going to reach my target price, it had already risen to N18 (this was in 2006). I then bought like 20,000 units @ 18, then it started falling but i didn't shake bcos i was so sure that i had a veeeeeeeery good stock. It fell to about N15 b4 it began it's ascent to it's current >N25.
You can Imagine if i had just kept on buying or averaging up instead of waiting for the price to fall.

[chubby]

From the look of things, it looks buying through the Po is not the best for staock mkting. Do you think it is better for one to waite and watch a stokc for some time b4 u invest?
Thanks

[Natty]

Thank you mates for your wonderful contributions and experiences.
To say the least, my heart was lifted when I saw some of the mistakes some of us had experience.
Pls don’t laugh at my own scenarios because I have made ALL the mistakes listed above and even more. Bought Oando high, sold it low, bought GTB high sold it half the price, bought etc etc etc.
I am now about to make another mistake. I bought Access @ N2.8 few years back, it became N21.x last week (I refused to dispose) I was waiting that it could go higher, it has now started dropping N19.x. I am still tempted to hold on. Could this be another silly mistake our a simple act of greed?

Let’s keep on sharing experience; it makes one feel good having done bad in some stock decisions

[chidianosike]

Haba Natty access has tried for u now.
2.8 naira - 19naira shuo!!

My mistake... i'm still licking my wounds

early in june, i rushed into my brokers office on my way to the airport to leave nija for work at the end of my vacation. I had a check and was there to sign a mandate for Afribank purchase..
I sat down for a few minutes to catch my breath as my broker easily convinced me to drop my Afribank idea for MBenefits.. I succumed as i had flight to catch in less than 2hrs and little time to reason..

I got back here and was faced with seeing Afribank soar to 33naira within a month..

How did i feel...'MUGU' is an understatement..

My lesson learnt.. ' Rely more on your own research and gutfeelings'

Then came AP.
I have an inlaw that works there who compalins of how urgently they need restructuring..i didnt think i should be puting my money there having heard that complaint.. Then boom..the rally started and i'm not smiling to the bank..

was i pained...very..

Please Guys keep d info flowing, i'm learning alot.

[wanaj0]

Not mistake but lessons that I have learnt

1) All orders must have a price and validity limit. Placed order for a stock at 2.65. Broker did not get it to buy but came back many months after that the stock was finally bought at 4.65
2) Have a strategy and stick to it. As a fundamental investor, I have learnt to stick to that. NASCON is a good example. Wanted to buy hugely intoit at 22.00!!!!!!! Thank God my broker could not get that much to buy. No fundamentals support the decision.
3) Capital market is for the long term. So while I may take short term profits, I must hold a long term view of the market.
4) Never panic. Keep emotions in control. Trust your analysis until a shift in market condition/situation
5) Don't apply theories based on American or European market to the NSE. We are just different!!!!!
6) Always MOVE ON after a perceived loss or GAIN. There are many more opportunities instead of wasting time on 'lost' opportunities.

BYE and large, only made a loss on two inconsequential stocks. Those stocks did not make up to 0.1% of my portfolio

[wanaj0]

Originally Posted by c kenneths

When I remember how I sold my initial portfolio, it makes me want to beat myself up.
The portfolio was well chosen and was rising in value weekly, but then I got stupid, thought I knew it all and sold all the stocks to enter into the reigning stocks of the time.

I sold my bluest of blue chips and bought some penny stocks just because some were making 2000% plus.

Look at me buying first aluminum, John Holts, and other no- value, no- fundamental companies. Can you imagine that type of atrocity?

If I pick up my start up list and calculate it today, factor in all the dividends and bonuses and capital appreciation I had missed, it will be more than 200% of what I have now. Poor me!

Anyway I am rebuilding my portfolio and going strictly blue chip now, learnt my lessons, never to forget the experience.

This thread is very educating. I have picked one or two points to remember.

I think you need to have growth stocks in your portfolio and then the bluechips for stability. Blue Chips hardly outperform the market in a bullish environment. In a bearish environment, they seem to also hold steady. Just check the NSE. See how Flour Mills held staedy even though they had a miserable dividend declaration as compared to the penny stocks.

With a WELL balanced portfolio you should be fine.

[Apache]

Originally Posted by chidianosike

Haba Natty access has tried for u now.
2.8 naira - 19naira shuo!!

My mistake... i'm still licking my wounds

early in june, i rushed into my brokers office on my way to the airport to leave nija for work at the end of my vacation. I had a check and was there to sign a mandate for Afribank purchase..
I sat down for a few minutes to catch my breath as my broker easily convinced me to drop my Afribank idea for MBenefits.. I succumed as i had flight to catch in less than 2hrs and little time to reason..

I got back here and was faced with seeing Afribank soar to 33naira within a month..

How did i feel...'MUGU' is an understatement..

My lesson learnt.. ' Rely more on your own research and gutfeelings'

Then came AP.
I have an inlaw that works there who compalins of how urgently they need restructuring..i didnt think i should be puting my money there having heard that complaint.. Then boom..the rally started and i'm not smiling to the bank..

was i pained...very..

Please Guys keep d info flowing, i'm learning alot.

@ Chidianosike

Aaaah! your experience reminded me of one that happened to me. I had finished my analysis on Nahco during their IPO and also on RT Briscoe (then it was below N5) and my brother's if you see the analysis wey i do eh! Those big guys for Merryl lynch and those top investment firms go shame for themselves; and i had concluded that i was going to buy into these two stocks big time.
Na so i reach my stockbroker's office (then i was still using Mutual Alliance) and told my stockbroker that i wanted to buy these stocks. Ol boy! na im the stockbr