My most memorable investment for this first quarter really has to be $TENCENT(00700)$. I am bullish on this and has been eyeing to buy it.
I already had Tencent since last year. I made the first mistake when I bought it when it was already rallying up for a few sessions. Although it was a discount from its all-time high, it was no way considered a value buy if one considers the price range of that period.
Moving into this year, I seized the opportunity to average down when the share price dropped in late February due to the Covid-19 outbreak in Hong Kong, news of the war and increased regulatory risks. I gave myself a pat on the back when I realised that ‘Chinese Buffett’ Duan Yongping bought too, because I think alike as the guru! The main difference though, is our pockets are not of the same depth…I do not have sufficient cash to average down at his rate.
However, as the saying goes, it never rains but it pours. That was not the bottom! The threat of Chinese ADRs delisting from the US and the comment by somebody that Chinese stocks are ‘not investable’ sent the share price free falling and broke its support of HK$400. As each lot requires a bit of cash outlay, I decided to switch strategy. May be technical analysis will help and I should stop catching a falling knife. I thought it would be wiser to watch for a clear reversal before my next buy.
Alas, the Chinese vice-premier Liu He commits that the Chinese would work on solutions to tackle the regulatory issues and this sent a rapid rebound across the Chinese technology stocks. The rebound was so fast and furious that I scrambled to buy.
Currently still in the red for this counter…
Learning points:
Technical analysis can be useful in determining entry points even for long term investors who have done fundamental analysis. However, big news can throw all these plans and techniques out of the window. If one is deeply convicted, perhaps the better strategy is to buy at target price point. If one can buy at the bottom, that would be great but it should not be the aim for each trade.
Never buy because of the fear of missing out on potential profits.
If Tencent rebounds strongly this year, I think I might be overweight in my exposure and might have to sell to rebalance my risk exposure.
If anyone can offer me great advice on how to execute my trades better, happy to hear and learn!
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Nice