A bit on cloud nine on Tuesday

K this post was meant for yesterday but not wanting to spoil the 25 me me's air time, I kept the thoughts inside brewing longer. Plus talking with Tab about stuff and also more stock market, hence a thicker soup emerged, just some insights by a newbie investor

There are really many facets to stock investment, I think for every investment, cos it involves real money. That's a fact. Also the sums involved would very much be a substantial part of your pay / savings compared to a purchase of a camera. Hence if you want to make an investment, the 'homework' and 'effort' aspects are important. Think no point investing if you dun even have an idea of the nature of the instrument you are using. Though please remember, I am still a noob. Still forming my own opinions about certain issues. What I can do, is present some of the issues, I faced.
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Tuesday, yesterday, I was a bit on cloud nine. Why? I had managed to realized gains from 3 transactions, 1 in Jan, 2 in Feb and the cumulative profits earned about match my NET PAY in a month. The effect is 'I had a month's bonus' though it hasnt reached my GROSS PAY yet. Well, its measley compared to my Dad who earned maybe 8-9k using his grossly larger capital and buying many lots of the shares for Volume effect. (In case, those who are reading and expecting a treat, err wait until the end of the year first, I am reinvesting some, and keeping capital for buffer for upcoming Rights Issue)

So it really got me thinking about work and the feasibility of making an alternative income source that rivals it. BUT its still too early to say now. Its less than 2 months, and there might be dry months and more shocks ahead?
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Cos I had been buying and buying more since Nov and Dec especially, it has helped me form a somewhat early version of a BUY-STRATEGY and routine. Eg look at historic price, look at biz, look at NTA, look at prices, look for good counters NOT something that your friends said is good or you heard analyst recommend cos if they are really that good, they would be multi-millionaires already. Also different risk appetites and expectations for returns also affect choice. Seriously no free lunch, things are too good to be true many a times.

Then now after gaining profits and wanting to realize them, I am still very GREEN in terms of selling off. Need to work at the SELLING-STRATEGY and routine. Important questions like

'When is it time to sell?', 'How much is it enough to sell?'

But besides that I've realized that on some days, seriously just cos you want 1-2 cents more, then didnt manage to sell off at that good price, and the following day, prices fell quite a bit and then gradually make it up to near that price.

Are you going to

(1) Wait and see and see if prices go even higher?
(2) Sell at that initial price you decided and see if reach and sold?
(3) Sell at 1-2 cents lower than that price that you had missed earlier so that there is higher chance of getting through soon?

These are questions plaguing me. Sometimes I second-guess myself. I sold off at a gain then a few days later, the price went higher a bit. Then the age-old "Aiya, IF ONLY I had waited...." appears and that affects the next sell transaction.
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Though things are not ALWAYS ROSEY. I have counters making gains, sold off some, meant left with fewer making gains. ALSO have those making losses, ONLY that losses are not realized and on paper PLUS I have the financial means to wait it out for recovery but that meant locking up capital inside until then. Losses range from 1.5% to 25%. Gains range from 1.7% to 27%.

Some may ask, then sell off lor, 27% gains quite alot compared to 1% interest. The thing stopping me is my own other targets. Cos I only own a few lots of the shares, so the sum involved is not as large and the gains not large. Hence would have to go for higher gains to realize a greater sum.
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THIS leads to another very important aspect, I am still realizing.

VOLUME MATTERS

This refers to the number of lots of shares you have. Assuming, bought into a worthy company. To illustrate, lemme offer an example

A has 5 lots of shares at $1 each. That is $5000 capital plus brokerage of $30. Prices went up 30% to $1.30 and A sold the shares. Receive $6500 less brokerage. Net profits of roughly ($1.30-$1) x 5000 x 0.98 (cos brokerage cost both ways) = $1470 That amount seems rather small, but remember its already almost 1.5k outside of work. Also (1470 / 5000) x 100% = 29.4%, which is way way higher than bank interest rate.

VS

B has 30 lots of same share and also sell off at $1.30 too. The profits ($1.30 - $1) x 30,000 x 0.98 = $8820, also at a 29.4% gain.

The difference is the absolute amount of the profits. One would be very envious of B but remember B has to put in $30k of capital vs $5k. That is one fruit for thought.
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Was talking with my dad on tuesday evening over dinner. He mentioned that he learnt in his own initial trading of stocks that VOLUME is an important aspect to magnify the gains so he concentrated his investment in max 5 counters.

Looking through my own portfolios, I have 13 counters, spread over my 3 portfolios of Cash SG, CPF SG and Cash MSIA, having a loosely defined 'diversified' but not really so cos many are in various aspects of Property. So why the difference? Cos for some, I am taking a bet, some I want to hold longer, some I bo bian, bad judgement especially the first 2 stocks bought. So its a complicated mix. Also capital levels nowhere near the deep levels of my dad. His is accumulated from doing trading for near 20 years with a job to earn an income too. I wanna aim for being a bum with my money earning money for me, with no work. So that leads to different sets of considerations.

Think for now, many things remains to be seen and experienced. With Rights Issue on the horizon, will offer more after I have gone through with it and seen the different sets of considerations it brings.