Stock retaining decision
I retain my stock BUMI which I bought for average price of 5967. Soon after I bought the stock, the price raises to 8600. I did not sell it when the price tops at 8600 instead I retain it. Nowadays the price drops back to 5900. I could have made a huge profit if I sell it at 8600. This has made people wondered about my retaining stocks decision.
Starting May 2008 I've decided to buy BUMI stock. The stock price increases from 5967 to 8600, and some people I know advice me to sell it. When the price drops to 7500, people also advice me to sell it as well. I have not sell it until today, when the price drops to 5900. Why don't I sell it when the price is high like BNGA-W and PNBN-W? BUMI is stock, different compared to BNGA-W and PNBN-W which is warrant.
BNGA-W and PNBN-W are sold after I receive profit of 30% to 40% because it is a warrant. It was explained on my value investing page that warrants are not a value investment which will expire after a period of time. That is why I sell it after I got a good enough profit. After I've sold my warrants however, the warrant price jumps higher. Some people sorry me that I sold the warrant too quickly. However they've never asked whether I regret my decision? The answer is not even the slightest regret. I've got a good enough profit that is more than what I'm aiming.
Moreover I don't know whether the warrant price will tumble or soar by tomorrow. Therefore when I got the targeted profit, I sell the warrant. Some people would argue that I should use technical analysis to determine tomorrow's price movement. As I know, technical analysis helps to determine, but can't correctly predict tomorrow's stock movement, and again: only God could predict the stock price movement. If technical analysis can predict the stock movement, I believe all the university professor who master technical analysis will be a billionaire.
Back to BUMI stock, when the price soars to 8600, people told me to sell the stock. I don't know whether the price will increase or decrease, therefore I decide to retain the stock. The reason behind retaining BUMI stock is thinking what if the price increases to 10000, of course I'll loose a good chance of profit. Moreover I have no plan to sell BUMI stock in foreseeable future.
Back in reality, the BUMI stock price dipped to 5900. If I know the stock price will drops to 5900, I'll of course sell BUMI at 8600 and then buy 50% more BUMI lots at 5900 or lower price. Therefore I could generate more profits when the price increases to 8600. However this lost of profits is not the end of the day, I still don't know whether this is advantageous or not and the game still continues.
I don't know what will BUMI stock do in the future. What I do know is BUMI is a professionally managed company in a good business. Their business is coal mining, and coal price always increase over time. Given that fact - as long as BUMI had enough coal deposits in their mine - I'm confident that BUMI will grow in the future and its stock price will increase.
What I believe is that BUMI price drops to 5900 is only a temporary setback that delay investor's profit, not a sign that BUMI went bankrupt.
How about my decision on this July stock market crash? I'm buying stocks right now, I only buy a little at a time while just in case the price go downwards. My buying style is as usual averaging down style. I'll keep to use this style until I find a more efficient and fail proof buying style, that of course I'll share it with you.
I've decide to streamline my portfolio by keeping only 5 or 6 stocks, the stock that I feel good to be kept for long term. I might someday widen my portfolio again when I found another company that is interesting for me, and I've find some stock are quite interesting for me. I'm sorry that I can't tell you what stock I wanted to sell and what stock I wanted to buy. All I can tell you is I wanted to buy or retain mining, energy, banking, transportation and infrastructure and retail sector.