We have a small portfolio in Australia consisting of 2 individual stocks listed on the ASX. One of them is WorleyParsons Limited (ASX: WOR). It is an Australian engineering company that provides project delivery & consulting services to the resources & energy sectors, and complex process industries. Did you understand what this company is doing from the short introduction? Because I didn’t initially and still invested in WOR.
Subsequently after doing some research & analysis, I only acquired a basic level of understanding of what WOR does but wanted to get some indirect exposure to the Australian resources & energy sector. Over the course of a few years while working in Australia and Singapore, the size of the position and unrealised losses in WOR grew as I averaged down blindly with the worsening oil prices. At the lowest point, my unrealised loss position in WOR was A$6,500.
This was my biggest investing mistake and I had basically written it off as my worst investment. I considered selling WOR just to get rid of it and accept the loss. But I held on thinking that the cycle might turn in my favour and the stock price might climb again. Foolish thoughts but it worked. The stock price recently went above my average cost price by a decent margin for me to sell and realise the newly found gains from the upswing. Even an investing idiot like me can be correct at least once over the “long term”.
Name: WorleyParsons Limited (ASX:WOR)
Number of shares sold: 905 (Entire amount)
Sale price: A$15
Net proceeds: A$13,575
Realised profit including dividends collected: A$3,500 or 33%
I’m relieved more than anything else because I had the opportunity to escape the dumbest investing move I made. I’m hoping I will have more opportunities to get out of those next biggest loss making positions I made in the Singapore Oil & Gas and Telecommunications industries. I keep thinking if I hold them long enough for the cycle to turn in my favour, I might still be able to make profits.
This is why I make a terrible individual stock investor. I keep selling my winners early and holding on to my losers. I have a tendency to do the same thing with ETFs when I don’t have enough self-discipline. Which is why I have just shifted into a slow ETF accumulation phase using the Dollar Cost Averaging (DCA) and Value Cost Averaging (VCA) methods. This allows me to avoid having to make the buy/sell decisions that I’m so bad at. I’m just going to keep buying ETFs and vary the purchase level depending on whether I’m in a bull, stagnant, or bear market.
It is a clumsy solution to a fundamental problem that I have. My inability to control my temperament and insufficient self-discipline. It’s a work in progress that I hope to improve on by the time the next bear market comes along. Just so that I don’t panic and start selling my ETFs & stocks or worse, stop the DCA and VCA buying of ETFs. Let’s hope I make it in time!
I tried many things, checklist, self-signed agreements, ignore, make a pact with a friend to talk me out in case i become silly. The only solution was to holdmore cash. That was the only way I could stay calm and not do anything, i keep 50-50 stocks to cash on average. Not recommending you try, but it’s a possible solution. I just have to put the cash in SSB and the higher yield savings accounts (those jump many hoops kind) and worst case CIMB 1%, spread a bit everywhere.
That’s true for me too. The most effective way for me to keep calm and not deviate from my strategy is by holding more cash. Yup, I reckon our cash position (in higher interest bank accounts) might be too high but it helps to keep me prepared for a bear market!