Thursday, December 29, 2005

My Investing Journey-My Virgin Trade 0 comments

(P.S: Sorry for any disturbances the advertisements above may have caused you)
They say that one never forgets his first trade / investment, just like he doesn't forget his first love. Ha well to a certain extent it is true: the stirring of the loins is still there when you see her several years later. When I read on news reports of CWT in the papers (which are usually few and far between) I will think back of my initiation onto the investing journey through the stock.

My first trade was done in early April 2000, in one lot of CWT, priced at $1.01 per share. The sum total of my research was the personal view that Singapore was a logistics hub, and CWT, being one of the largest port logistics groups around, should be a pretty safe bet. Actually, thinking about it today, that was pretty good reasoning. The valuation was a tad bit high, at 25 times trailing PE for a group earning ~S$11M the past few years: that was the part I missed. Yet I had set my mind on it, and so that was the price I paid.

I am a procrastinator by nature, always have been, and that led to me being (semi-)force-sold four days later. I had heard that payment had to be effected within the T+3 period (in fact, it had just been cut down from the T+5 to curb excessive speculation) and was determined to test the limits. I have heard stories of first-time investors monitoring their first purchases assiduously but I had no such compulsion then following the filling of my online buy order. Maybe it was because the investing bug had not yet bit me hard, maybe because the sum involved was inconsequential. Nevertheless, I was moved to check its price in the papers every morning, and then forget about it for the rest of the day (work was busy). And so it was that paying up completely slipped my mind until the fourth day's morning when the broker from Phillip Securities paged me (no handphone then) in the middle of a meeting, and I realised immediately what I had forgotten to do. Payment was demanded by lunchtime: the T+3 period was already up. I was in the midst of a meeting with no means of escape. I checked the price (not that big a loss), and told the broker I was not going to make the payment, and he force-sold me on the market at 1.00.

So effectively, I had done my first contra in my first trade. Ten dollars lost in share price drop, plus round trip broker's commission of $20 (believe commission structure had not yet changed to fixed rate yet). My first experience with the stock market, short and sweet, just like first loves. It seemed like an inauspicious start because I had lost money, but years later I would look at the falling/stagnant share price of CWT (which went down to 50-odd cents in 2000-01, and is now at 80 cents) and marvel at my luck at such an exit. And of course, I had my first brush with frictional costs of buying and selling, which accounted for the bulk of my losses in my first round-trip trade.

(to be continued...)




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