Absolute Conviction

I think it's always very easy for outsiders to say "buy low, sell high", etc...

You don't get to experience how tough it is until you put your money on the line.

Do you really dare to buy when you see the stock keep skydiving?

This is based on my true story: 

1) When Stock X dropped from $2+ to $1.7, I thought it is a good price so I went in.
2) Then it drop to $1.5. I held on.
3) Then it keeps dropping and dropping. $1.4, $1.3, $1.2...!!!
4) By then I have 'lost' nearly 40% of my money.

Imagine you put in $10K and 'lost' $4k in less than 3 months. You don't know the pain until you experienced it.

To continue buying, you have to have the ABSOLUTE CONVICTION in the company you have brought. I didn't back then. I didn't do enough research or understand the company enough. I brought it simply because I thought it wouldn't go down any further.

I did not have the ultimate trust and belief that the company will rebound back. This usually happens when you don't understand the company enough or you brought based on 'hearsay'.

5) The stock eventually drops to nearly $1 and I didn't dare to average down.
6) 3 months onwards, it has rebounded to hit the $1.5 again. Alas, how much I would have made if I have the absolute conviction to buy more.

It's weird.

- I knew the company had an amazing management and track record (20 years of consistent dividends)
- I knew the problems faced are probably temporary (i.e Crisis in Thailand)

And yet I am afraid of putting in more money.

Thankfully though, I have enough conviction to hold on. For those speculators, they would likely have 'panic sell' and really lost the 40%.


Lesson learn: Invest in a company you understand inside out and absolutely believe in. When the stock plummets, understand why. Is the crisis temporary or permanent? Learn what is the management doing to recover from the crisis.


Lastly, whatever you do, no regrets.