Few days ago, I read the article about value investing.
To put it simple, value investing means buying an asset for a price that is lower than its value. Got that! Price is what you pay and value is what you get. Value investing is paying a lower price than the value you receive.
It said, value investing is simple but that does not mean it is easy. Patience is a requirement and waiting for obvious opportunities is necessary. Warren Buffett once quipped that the share market is a transfer mechanism, transferring wealth from those that have no patience to those that do.
Okay, now I have read the theory, and this is my experience in the real life:
I bought CSM about two weeks ago. I believed that it was a good buy. I checked the value of the company on the Aspect Huntley valuation, and it turned out to be highest value. Price is about half of the value.
Somehow, at the same time, I received a one week free trial for "stock tips" from one of the stock and finance website. Their recommendation for CSM is "strong buy".
So, you will know or expect what an inexperience investor like me would do. I bought it, both of them ; the recommendation and the shares. The recommendation is free, and the shares cost me real money!
CSM's share price went down 15% in about a week, and seems to go down further.
Now this is my other mistake: I'm impatient! Fearing of losing my hard earned money, I cut my loss, and call it quit (by the way, the tipper also advise people to sell this time).
CSM's share price went up again, just a day after I sold all mine. Expensive way to learn!
Lesson to remember:
- Do your own research!! Don't trust anybody, because it is YOUR money!
- There should be no excuse for buying something that you didn’t know the value of.
- Patience, sit and wait for the ideal opportunities.
Have a good day investing!
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