Total Portfolio Return: US +75.69% SG +42.24%

Japfa Japfa, My Lucky Star turned into a Meteorite




Japfa (SGX:UD2) was one of the stocks in my portfolio recently that I deemed to have quite a lot of upside potential. (Check out the post SGX:UD2 Japfa, Japfa, will you be my lucky star?). Being a defensive stock, it has been moving in inverse of STI. It has been in a strong uptrend from April till July 2018 while the SG market has been battered by the global trade war and emerging market rout. I was having an unrealised profit of 30% at the highest point (lucky star). I was hoping it became like one of my recent US stock Nevsun that made me 61%.



I was disappointed. Starting from August the trend appeared to have reversed. It tried to make a rebound in late August but failed and the stock continues to plummet till today (like a meteorite). So the system gave a sell signal on 11th Sept (coincidentally 911) and I was out at 0.605 with a small profit of +10.35%. Not too bad but I was expecting more upside from a defensive stock in this bad market. The reason for the downtrend is the currency risk arising from the continued sliding of the Indonesia rupiah.







Lesson learnt from Japfa.


You can't sell at the top. This is simply the characteristics of Trend Following
The fact about trend following is, you are not supposed to sell at high. Rather, you sell when the trend  has reversed and that is usually the point where the price has fallen a while from the top. Avoid pinning your hopes of selling at the highest price.

Once sold, don't look back.
Today the price has rebounded to close at about 2.5% from the price I sold 2 days ago. It went as high as 5% intraday. Sometimes we have the tendency to look back at the stock that we've sold and tell ourselves "Gosh, I should have held it longer to get back more profit". But trender's rule number 1, cut loss when the trend is against you. Do not fight with the trend. Move on and never look back to avoid short term disappointment.

Never let a stock become your pet.
Sometimes blogging about a stock makes you develop affection towards it especially if the stock once brought you a huge amount of profit (AEM was once my favourite. Check out the post Let profit run: The awesome case of multibagger AEM Holdings Ltd (AWX.SI) 247.18% return). This is not ideal given the human tendency to put more attention on their pets and potentially missed out on other better stocks in the wilderness. Good thing about having a quant system is that the system does not form a bias or affection towards a particular stock.

Profile
Japfa Ltd., an industrial agri-food company, produces and sells dairy products, protein staples, and packaged food products in Singapore, Indonesia, Vietnam, China, India, Myanmar, and internationally.

Sector: Consumer Defensive
Industry: Farm Products

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