The Amateur Investor Ep.12: Peace, quiet, and a little out ahead

At the writing of this article, I’ve been in the stock market for a bit now. My first buying order was executed in March, my first steps into the market. Since then I’ve made a total of three sales, which have seen a decent profit. My most recent was a sale of half my position in WZR, an Australian non-bank lender I got into after some decent discussions with people who knew better than me about this whole stock trading situation. 

Well about three months later, this would turn out to be my most successful trade yet. I put a small percentage of my capital into it at about $0.095 per share and admittedly didn’t pay much attention to it, being tied up in meetings over what new content we would be rolling out and trying to nail down our content pipeline. In some ways we’re still nutting it out. I’ve got a bunch of ideas for the site but it’ll have to wait. Around the end of June/start of July, I had a peak at all the holdings in my portfolio that were sitting on positive positions and noticed that my WZR stock was holding something insane relative to the initial price I paid for it; $0.230 per share. Which represented a gain of just a little over 130%, more than twice the price I originally paid for it. The first thing I did was to double check and make sure that I was looking at the right columns. I had, in the past, gotten super excited over something before realising that I’d been looking at the wrong columns, which can be quite embarrassing, let me tell you. The second thing I did was to check the math and make sure that CommSec wasn’t giving me a bum steer. 

Before this, I’d executed two previous sales for a modest profit, but nothing like this. To reference Heath Ledger’s Joker, I was a dog with a Buick in its chops and no clue what I was going to do now other than hold on. I punched out an excited message to Hsuan, my erstwhile mentor, basically asking what I should do about the Buick in my mouth, or rather the bull in my portfolio. His answer wasn’t particularly helpful. In true Mr Miyagi fashion, he basically said I should do whatever I wanted to. Unhelpful right? But then I started thinking. I adhere, at least in some part to the adage that nothing lasts. Good times or bad. Things change, and the only ways that this position could change were positive or negative. On the one hand, the stocks could skyrocket, resulting in some insane gain. But I’d heard nothing about an impending spike in the fintech sector. On the other hand, the company could take a nose-dive and I’d be waving goodbye to the best position I’d ever held. So I decided to hedge out and sold half the position at-market to crystallize the profit in some respect. Then, just as I was preparing to settle in for the long haul and watch the stock positions, I learned about conditional orders.

Admittedly, I was a little slow to the game on conditional orders, otherwise known as trailing orders, and if you’re a veteran investor looking for a laugh, here it is, lap it up. But for those of you who are newcomers, it’s a pretty useful feature. The concept itself is not too hard, though I may be oversimplifying it somewhat. Essentially, you’d set an order based on a price and a quantity and if the stock hits that price, the order will execute. Much like any conventional order you might make. The beauty of it though, is that this order can lay in wait for a whole year. A lot of markets tend to be cyclical, governed by any number of things. The trick lies in knowing how long those cycles go for, which can go over a year if you’re lucky, or over 5 if you’re not. The trick lies in doing your homework to understand where the rise and fall lies. Then there’s the choice of company you buy shares in, a company trading really low might represent a good opportunity to implement a buy low, sell high strategy, but then the company could go bankrupt. The whole thing is a hodge podge on a normal day, let alone in the current upside-down situation we’re sitting in.   

So what did I do with this newfound knowledge? I took a quarter of my shares with WZR, hem and hawed and threw down an admittedly optimistic trailing sell, hoping it’ll trigger over the next 12 months and put my portfolio in a better position. I’ve got a few other investment plays I’m working on that will likely be made easier by my discovery of conditional orders, so that’s an exciting time ahead. For right now, I’m working up a spreadsheet and qualitative protocol for valuations that will help me to better scope out potential future investments. 

I realise the last two issues have been late by a few days. The course I’m taking at university ramped up recently and I had to handle a bunch of projects at home too. Hopefully we won’t see too many more delays in posting, fingers crossed.

Today’s post is just a short one, not a tonne happening in the market and I haven’t done that much in my portfolio.

Till next time, 

Go slow, play small, learn the process