Monday, 9 November 2015

Our Worst Investment Mistakes

Every quarter, we will receive a statement from one of our brokers showing a lone stock under their custodian holding. The name of the stock is Rekapac, a delisted stock from the over-the-counter Malaysian stock sold on the Singapore exchange.  It serves regularly as a stark reminder of one of the worst investments my husband and I have made in our financial journey.

We had bought into CLOB shares at a time when it was the thing that everyone was doing.  For the knowledge of younger readers who might not know what CLOB is, I have copied this description from an old Asianweek article: "Singapore's Central Limit Order Book (CLOB) was set up to trade Malaysian companies over-the-counter in the Lion City after both exchanges went their separate ways in 1990.  In 1998, when Malaysia impose controls on its currency, some 172,000 CLOB investors - as many as 95% of them Singaporeans - found their shares frozen. "

If my memory serves me right, we had bought the CLOB stocks without really thinking.  Seriously.  It was like "tigam tigam" then.  We had this naive thinking that since they were penny stocks and prices were already quite low, they probably couldn't go any lower.  And so many people were doing it, so how could we be wrong?  How wrong we were!  Rekapac is now worth less than the minimum commission incurred even if we were allowed to sell it!  Not forgetting also how we  had cut to cut losses for our other Malaysian stocks after CLOB was frozen, by accepting steep discounts in value and hefty transfer fees.

Years later, on a whim, I made the mistake of investing in unit trusts during the dot.com boom.  Technology and emerging markets unit trusts were the rage then.  I was looking at our money sitting in the CPF ordinary and special accounts and thinking that I would likely do better than the returns that CPF was giving.  I walked into a bank near my workplace and must have made an investment consultant there very happy that day because I happily bought what he suggested - from technology to special situations funds in emerging Asian countries.  These unit trusts were putting in fantastic returns in the past year or so and there were charts to show so.  I didn't take the small print disclaimer "Past performance is not indicative of future results" very seriously.  Needless to say, the funds sank, halved in value and stayed there for quite a few years.  Luckily, it was money that I was not in urgent need of.

The third major investment boo-boo we made was buying a private property years back at the - mind you- near the height of the property boom.  I blogged quite extensively about it in a previous post.  The long and short of it was we bought at a high, sold at a low and didn't quite made the moolah in rental that a lot of people said they did when they bought property.

If there is one lesson consistent with all these investment mistakes, it was that we were LAZY. We took the easy way out, following "gut feel", "friends", "investment consultants" and of course, "what everyone else was doing".

It was through these mistakes, I suppose, that we are more careful nowadays.  So, all in, the mistakes were worthy lessons.

Do you have any "worthy lessons" to share too?

12 comments:


  1. Is CLOB really personal investment mistakes or foreign market risk?

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    1. Hi Thanks for dropping by. I tend to see it as investment mistake because after all, the "foreign market" or "political" risk was always there. It was just us who were oblivious to the fact that Malaysia was never happy with SES setting up CLOB. We chose to ignore that and coupled with the fact that we didn't do any research on the stocks we bought, yep, it qualifies as "investment mistake".

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  2. It is not easy to share investment mistakes and by doing that, you are helping tons of ppl to avoid such mistakes including myself.

    When I started investing in stocks, I lost a low 5 digit figures when buying into an IPO of a TLC (utility company-Easy guess?).

    My thought was, it is a TLC, must be a "sure win", my colleague echo my sentiment as well. I bought the stock from the open market without any hesitation without even looking at the financials.

    Lessons learnt were, never trust anyone other than yourself (not even our big T) and do your own due diligence before investing. The "school fee" paid wasnt a big sum but it gave me a really big lesson as it "hurt" my EGO big time.

    I became more skeptical, critical and humble when comes to investing and nothing is "sure win" in the stock market. Into my 10th years of investing in 2016 and glad all the early lessons paid off and I am still learning while still on this journey.

    For ppty investment, I am still in my 2 year of MOP for my BTO so nothing much to shout. I think I did ok by getting a 260k BTO while having monthly combined income enough to get a EC. Living below means but not compromising quality of life is always my goal to manage my household as the defacto "CFO" like you.

    Just my 2 cents of sharing. Happy Diwali!

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    1. HI Thanks for dropping by and for your candid sharing. Ouch, low 5-digit loss but when you first started investing must be quite painful still. I am sure a lot of people are still buying based on links to TLC. It's always good to be slow and steady. It is ever so easy to lose money, that's the one lesson I learnt.

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  3. One lesson I learnt was never to believe financial advisors because they sometimes just want to sell you the plan with the highest commission. I bought into unit trusts when i just started working. Similar to your situation, I bought into a fund which invested in industries I have no idea about (mining and metals) in emerging markets (Latin America). Needless to say, the money invested is worth half whatever I have put in thanks to the mad admin costs and prices that continued sinking. I withdrew the plan to cut my losses.
    Lesson of the day, do your homework and do not trust people to manage your money.

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    1. Hello there! So, I was not the only one (phew). I steered clear of most unit trusts, except money market funds, after that. The hefty charges just don't make it worthwhile for me. Thanks for dropping by!

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  4. Hi YP,

    What a coincident that we both talked about CLOB today!

    Cheers,
    Farmer.

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    1. Hello! I read your article on your CLOB investment. We share the same mentality then! We were similarly "lucky" like you in that we didn't have a lot to invest. Can't imagine what it would be like if we had dumped everything in then. Happy harvesting your passive income!

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  5. i was quite fortunate or i always have my doubts about our N. neighbour G's policies. Till today i have my doubts.
    That's why the only Malaysian Companies i invested was Sime Darby. And it was not from CLOB.

    Having saying that i had made very "rookie's" mistakes at least twice.
    Each time a low to medium 5 figures.
    Don't worry too much, it's money i have made from my investments.
    The so called "FOC" money.
    Is it really "FOC?
    Thank GOD.

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    1. Hello temperament, a little curious, what "rookie" mistakes were they? Glad it's money that is so-called FOC :)

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  6. You like to know, i am not afraid or a shame to tell you or anyone.
    We all should learn from our folly and move on.

    Here were my mistakes.

    (1) Try to KK and traded in warrants and average down to the expired date. The amount i lost (so much for the first time) really stunted me like a deer facing an oncoming headlights of a car. i hold the warrants till worthless as if i was holding a stock for a chance of long term recovery.
    Madness or too shock to act?

    (2) i knew it was very dangerous to trade in China stocks when they first listed in SGX. Yet due to KK or greed i did.
    But some of these stocks even our local banks had approved and some equity too.

    Ha! Ha!
    So now you know why WB's Rule No. 1 and Rule No 2 is so much more meaning to me.
    And i think i can not be a good short term trader (Hit & Run like a sniper is not my nature).

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    1. Wow. Thanks for sharing! It takes a lot of guts to tell people what you did wrongly. My husband also bought into some China stocks recently and I am not really sure where they are heading but….well.

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