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Why booking loss is always a tough choice?

Discussion in 'Technical Analysis' started by vjx, Nov 10, 2017.

  1. vjx

    vjx Member

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    I've had gains and losses from my investments, so as others... Sometimes, I get feeling that the market was waiting for me to exit with small profit before break new highs and want to me enter for it to crack... I understand it may be due to lack of knowledge, wrong timing or any other reason ... I've also noticed that accepting to booking loss is more difficult when a stock is falling than to book small profit and see it sky rocket... How do you all deal with this? Is it really possible to see the price as just a number?

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    vjx, Nov 10, 2017
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  2. shabbir

    shabbir Administrator Staff Member

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    If you have tough time booking losses, you should consider going the mutual fund route. Losses are always tough and read https://shabbir.in/book-loss/ to help you able to book losses.

    Never. You can't. its your hard earned money.

    It's market and understand no one can predict it all correct. I will share with you some examples from my open portfolio where some may look at it as wrong predictions.

    1. Britannia Industries

    I was in the stock on the BREXIT day at 2600+ and exited the stock after 1 year at 3700+. Made handsome gains but after my exit stock rallied more on the back of awesome results and I anticipated corrective results.

    2. Tata Steel

    I was in the stock in Jan 2016 at around 200 to 250 levels but on the day of BREXIT, for fundamental reason was out of it at 300 and then it went to 700+

    3. Jubilant Foodworks

    I was in the stock at around 1050+ and was out of it at around 1150 and stock made a high of 1650+ recently.

    4. Ashok Leyland

    Entered at 82 and was out at 92 because I anticipated a market correction and stock is at 120.

    You can find the details of each of the trade either in my blog https://shabbir.in/portfolio/

    Now if you look at the above example you will find that I have missed lot of good opportunities but that isn't the case. When I sold off Tata Steel and moved to Britannia the same day and once I sold Britannia and Jubilant foodworks, I moved to Divis Lab. On absolute terms the returns are better than what I aim for which is CAGR of 20%.

    So don't look at price as only number and look at hitting a CAGR returns. Try to beat the mutual funds and if you can't invest with them.
     
    shabbir, Nov 10, 2017
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  3. vjx

    vjx Member

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    vjx, Nov 10, 2017
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  4. vjx

    vjx Member

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    I just completed reading your ebook... May need to do few times to incorporate technical analysis in entry and exit... I will also go through all your blog posts...

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    vjx, Nov 10, 2017
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  5. bnnarayana

    bnnarayana Contributor

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    Thanks to Shabbir for the excellent book, after reading the book for few times, I learnt techincial analysis, as well booking losses, which I use to carry for a long time.
    Now I am relaxed investor, with out any worry and strictly following stop loss based on my risk profile and booking decent profit.

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    bnnarayana, Nov 10, 2017
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  6. shabbir

    shabbir Administrator Staff Member

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    Glad I could be of help.
     
    shabbir, Nov 11, 2017
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  7. nirajshah

    nirajshah Champion

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    This is so awesome.

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    nirajshah, Nov 11, 2017
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  8. suhel_b

    suhel_b Member

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    I may be late but I appreciate the transparency Shabbir shared to answer the question.
    We can argue about price run today because we already lived the time and now know what happened after sell.

    But who knew where the price will go at that time? What if TATA Steel was at 100 and jubilant at 750?
    In that case if Titan would have been at 300 today, we would have asked: should we invest now or wait for 250?

    Be cautious friends, in 2007 too the situation was that every tom, dick and harry predicted Sensex 40K, 50k , choose your number and you find prediction.

    I ain’t saying it’s 2008,
    I say it takes courage and patience to stick to principles and be sane, especially when noise in the market is all time high and on adrenaline.
    BTW, Theres one good thing that wasn’t in 2008: now we have this blog and many friends to tap on our neck when we aren’t sober


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    suhel_b, Nov 11, 2017
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  9. jignesh_acharya

    jignesh_acharya Active Member

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    Cycle cannot be learnt in one day. You may fall, some other might hit you etc..
    Same with stock mkt.
    You can do post mortem analysis of your mistakes, make notes...
    Everybody has individual personally and method which works for only them in stock mkt.

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    jignesh_acharya, Nov 11, 2017
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  10. shabbir

    shabbir Administrator Staff Member

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    Very well said @jignesh_acharya and @suhel_b
     
    shabbir, Nov 12, 2017
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