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My First Love

Given that Friday was Valentine's day, I thought I would write something related to love.

However, I'm putting a different spin on this. I'm not talking about my first love (to a person), rather, my first love for investing.

I vividly remember my dad got me started on this wonderful journey. I was very grateful to him because he showed me, my first love.

I was still in secondary 2 back then. One day he came up to me and asked if I had some spare cash. Initially, I thought it was for his business. My dad used to run a family own grocery store.

Weeks later, he came back with a cheque. He had doubled my money.

I was surprised. The business was as usual. Additionally, my dad is conventional. He believes his children should work hard for money.

So I asked him what he did. Initially, he wasn't very open to telling me what he had done, but after persistent asking, he gave in.

He had invested my money in the stock market based on a tip a broker gave him and he wanted to rope me in.

Given that the first experience was a very encouraging one, I asked him if he had other tips from the broker.

He shared with me a couple and I was eager to jump in. I asked him the usual questions any beginner would ask,

  • How do you determine when to buy and sell?

  • Why these stocks?

  • How many stocks are there in the market?

  • Where and how do I track the changes in the stock price?

He was a simple man who didn't study the market much. As such, he showed me a route map of a punter. He told me if the stock price used to be a dollar, and now it is fifty cents, there is a chance that the stock will bounce back.

I asked him how does he know that it will definitely bounce back. He told me this,

What goes down, will come up. And what goes down, have to come back up, someday.

With his sage advice and a very positive first experience, I took the leap of faith and plowed most of my savings into this stock called "Eagle".

The price back then was around fifty cents. The historical high of the stock was around a dollar. I piggybacked on his account to buy some shares.

I monitored the teletext every day for the price change (yes, this was prior to the internet era). I even had a notebook and would monitor the changes diligently.

There was this sense of euphoria when the price ticks up, even if it's a couple of cents. And there was also huge dismal when the price come down.

A couple of weeks went by and the stock price was still around my purchase price.

I asked my dad if the stock had something wrong or I may have missed something.

He said that the market works in ways we don't quite understand and it takes time for the prices to move in our preferred direction.

And true enough, after his reassuring words, the stock price shot up the following week.

After the stock popped, my dad told me it's time to exit. We had made some profits and we needed to sell to lock in our gains.

I was greedy and wanted the stock to rise even more before I exit.

He explained that the prices I saw today were fleeting. We could be making some profits now but if we don't sell, we could be back to square one.

Reluctantly, I agreed. And I'm glad I did in retrospect because, after the sale of the stocks, the prices plunge again.

And it was that period I hatched a notion that I could be doing this full time. I don't need to study and I could make money off the market without any academic qualifications.

So I asked him to set me up for another trade of the same company with a similar purchase price I had bought previously.

The second attempt, well, instead of turning fifty cents to a dollar, it turned the opposite.

A couple of months down the road, the company went bankrupt and was delisted.

I was devastated. Both my previous gains and capital were lost in that downfall. However, it was also then that I learned a valuable lesson. I have a lot about Mr Market that I didn't know.

Buy low, sell high was much easier said than done. No one would ring a bell when the market is at its peak or bottom.

I was curious why some poeple succeeded in investing while some don't. I went on a knowledge hunt subsequently.

My strategies had since pivoted towards a more fundamental and long term approach after many years of research and trial and errors.

Currently, I prefer investing long term in fundamentally sound companies that are riding on big trends and lean towards companies with visionary leadership.

A complete opposite of how I got started, but it's this first love of trading that got me started and hooked to investing.

So far, this long term strategy has served me well and my overall portfolio had been doing well.

I still hold what my dad said very close to heart about the market going up and down. However, given that I'm investing in strong fundamental companies and unit trusts, I no longer worry as much as I used to.

It is true that the Covid-19 virus could be the black swan that will cause the market to crash.

It is also true that the market is already slowing down before the virus outbreak.

In my opinion, it is true that fundamentally strong companies will weather this storm, should there be a market crash and come out the other side even stronger.

I may not always be right, but I truly believe given sufficient time and patience, companies that are fundamentally sound and unit trusts that use a bottom-up approach would make their investors very happy down the road.

My first love had taught me valuable lessons and I'm always grateful for the very special first love.

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