Monthly Review- June 2010

Most parts of June was much better than that in May, as stock markets gradually recover from the slumps in May. However, trade volume was thin and that is not exactly an encouraging sign even as markets rose. All was well amidst the volatility, till the economic data were released in the last few days of June.

In the last week of June, economic data from US, namely the home sales, employment rate, jobless claims, comsumer confidence etc were mostly below expectations. To make matters worse, economic data from China were also disappointing. All these created fear amongst investors and traders, who became weary of the slowing recovery.

This month I have sold off Healthway at my predetermined target price, making a realized profit of about 7%. In addition, I added more positions in First Ship Lease Trust. In the current situation, my evaluation for the trust is as long as dividends were given out, I am not too worried about the price fluctuations with the share price staying above $0.30. Since I have an investment horizon of about 5 years, I believe there is more upside potential for this counter.

I believe 10 counters will be the maximum number of counters I will hold at any one time. Thus, with the remaining funds I hold, I will treat it as opportunity fund and use it to average down the average buying price of a few strong counters. Stocks targeted for this averaging are UOB Kayhian, Noble and Suntec Reit.

This month, my total unrealized losses have increased compared to that in May. The bulk of the losses is still contributed by First Ship Lease Trust. The half year earnings reporting season should be around the corner now and hopefully good results can boost the share prices of my counters and possibly increase the total amount of dividends to be collected for the quarter.

My Current Portfolio:

Lessons learnt: It is really hard to be a savvy investor by buying when there is fear and stocks plunge because fear sets in and I don't know how far the drop will be. What I learn is to analyse and set a target buying price. If the trade goes through, hold on to it, but if the trade is not executed, never chase. It is proven that opportunities will always present themselves.

Healthway (16th Apr 10 to 16th Jun 10)

Initially my aim of buying this counter was hoping for a quick gain based on the technical analysis that I did. I first bought this counter at $0.165, since it has been stabilizing at this price for quite some time. However, it seems like things did not go the way I intended. Soon after, under the selling pressure from the pessimistic market sentiments due to the problems from the Eurozone, the share price of Healthway just dropped uncontrollably.

Things worsen with the release of the first quarter earnings report by Healthway. Their revenue and profit took a dip and that worries me a great deal. Emotions came into play and discipline ceased. When the share price dropped to $0.15 on 17th May, I sold part of my holdings to reduce my exposure of this counter, but at the same time, not erasing the entire opportunity to stay vested in this growing healthcare service provider.

Soon, things took a turn for the better. Eurozone concerns eased and news that big buyers are snapping up shares of Healthway boosted and share price and within a month's time, the share price has shot up from a low of $0.14 to $0.21.

As $0.20 was my initial target price of this counter, and from the technical analysis which all pointed to a sell cue, I decided to stick to my initial plan and sell Healthway at $0.205. Due to fear, I sold part of my holdings previously and this decreased my supposed profit from 20% to a mere 7%. This is a lesson learnt for me and made me believe even more that discipline pays. Profit taking at my target price is better than any unforeseeable drop in share price resulting in possible paper loss.

My thoughts at that time: I was filled with greed when the share price shot up to $0.21, thinking that the price may even rise further to boost my profits, but I decided to be firm and discipline and stick to my selling price.

Lessons learnt: Emotions really confuse me. Fear and greed are no doubt an investor's greatest enemy. Stick to the target and be contented.