Noble has always been a strong commodity counter, and it has been consistently expanding its business in the region. However, the share price of Noble was way above my financial ability to purchase any meaningful number of shares previously. It was until the announcement of both bonus share issue and dividend payment which brought my attention to this strong counter, as any possible dilutive effects in the share price may present an affordable buying opportunity for me.
Indeed, after the bonus issue and dividend payout, the share price dropped to about $1.80 per share. With this opportunity presenting itself, I immediately snapped up some of Noble's shares. However, things were not in my favour after the purchase. After the dilution effect sets in, the share price of Noble undergone a period of high volatility. The share price was in the positive territory for a short period, then it plunged to a low of $1.54.
This period of volatility was a cause of worry as my investment in this counter has been in the red all this while. However, with my belief in the management and the business of Noble, I took this opportunity to add on my positions in this counter. Indeed, my efforts paid off as the price bottomed out and reverse into the positive territory. From then on, the share price of Noble climbed up gradually and steadily. It was further boosted by the good news of acquisitions of profitable businesses in the commodities and energy sectors.
With the continuous run up in the share price, I decided to sell off part of my holdings in Noble to reduce my holdings in the counter and average down my buying price. Initially my plan was to hold on the remaining lots for the long term. However as time passes and STI reached the 2 year high of 3,190 in the overbought situation, the worry of a substantial correction sets in. This is aggravated by the presence of a price gap between $1.80 and $1.84. There may be a possibility that the magnitude of the correction may extend to close this price gap. With this in mind, I decided to realized my gains after comparing the risk-reward ratio and the factor of time in this run up.
With the continuous run up in the share price, I decided to sell off part of my holdings in Noble to reduce my holdings in the counter and average down my buying price. Initially my plan was to hold on the remaining lots for the long term. However as time passes and STI reached the 2 year high of 3,190 in the overbought situation, the worry of a substantial correction sets in. This is aggravated by the presence of a price gap between $1.80 and $1.84. There may be a possibility that the magnitude of the correction may extend to close this price gap. With this in mind, I decided to realized my gains after comparing the risk-reward ratio and the factor of time in this run up.
My thoughts at that time: I was rather reluctant to sell as I believe Noble still has room for growth and its fundamentals have not changed. However after comparing the risk-reward ratio, I decided to cash in the profits and not let greed take charge. In the event that my analysis of the closure of the price gap during correction comes true, I will definitely buy back this strong commodity counter for investment and portfolio diversification.
Lessons learnt: The differentiation between discipline and emotions of fear and greed is fuzzy. Setting unrealistic price targets due to greed and sticking to that "plan" is not being disciplined. Being disciplined or not, depends on the how the analysis was done and what was the buy and sell strategy.
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