Come to think of it, investing and trading in the stock market is like a battle between being wrong and being right. More incredibly, you have to be wrong first before you get it right, in that order.
That is just like how it has been for me all these years, and so for our players in the virtual stock trading challenge: the choice is beyond us. We don’t actually try to get things wrong first to get things right the next time.
This is rather dictated by the very nature of the game in stock plays – your first best trading move becomes the “wrong” move to get your trading moves right.
The closest analogy I could think of is target shooting. Your first best shot turns to be the “wrong” shot to get the “perfect” shot.
Pixiu, our only female and most active contestant in the game, has even improved on it. Dondee Prime has also been using it to his advantage.
Especially now in Week 12 (May 21 – 25, 2018) of the game, the technique has evidently become part of their entry and exit strategy to capture the “perfect” buying or selling prices.
On May 21,after the unsuccessful attempts of Pixiu in the last two weeks to sell her stock position in Asiabest Group International (Philippines) Corporation (ABG), she decided to submit the “sell” price of P21.35 per share.
Technically, the price was within the possible, but lower, range of ABG’s trading band. The strategy here is to make sure it gets sold, at the same time, have the opportunity to be sold at the stock’s highest possible opening price.
ABG opened at P21.90 apiece. This made her make an additional 2.57 percent spread. The strategy likewise worked to her advantage in buying shares of Philippine Seven Corporation (SEVN) and Shang Properties, Inc. (SHNG). Pixiu was able to get SEVN at the opening price of P132.40, instead of her “Bid” price of P133.00, along with SHNG at the opening price of P3.30, instead of her submitted price of P3.32.
Dondee Prime has also caught wind of this trick. He used it in angling for a higher price when he sold his shares in Melco Resorts and Entertainment (Philippines) Corporation (MRP).
Knowing that all lower selling prices will be given priority to be sold at a stock’s higher opening price, Dondee Prime actually realized a higher selling price than his submitted “Asked” price of P6.20, when MRP opened at P6.43 apiece.
The strategy again proved handy for Pixiu to “buy” shares of East West Banking Corporation (EW) and “sell” of her Oriental Petroleum & Minerals Corporation (OPM) shareholdings the following day, May 23.
Inventory of stock positions
For the purpose of reconciling the records of everyone in the game, below is the inventory of stocks held by each of the players as of the end of May 23 of Week 12:
Table 1: Individual inventory of stock positions held as of May 23, 2018 of Week 12
Notice that on May 22, Dondee Prime was able to sell his stock position in MRP. The proceeds from the sale increased his cash position to P205,232.23, equivalent to 41.05 percent of his capital. Due to the drop in the prices of TEL and PIZZA, his overall performance was pulled down to 99.91 percent.
HRB2015 bought his present inventory of 300 MER shares as early as the start of the virtual stock trading challenge on March 1. After a failed attempt on March 2, he has not done any additional trade. This leaves him with P399,020.00 of cash to invest since then.
Pixiu’s newest acquisitions have improved her potential overall investment return. She just has to resolve her problem with low trading volumes and the irregular price movements of her stock picks.
After his trading transactions in Week 1, Small Time Trader has stayed silent since then. His stock selections are fundamentally sound, but he has yet to maximize the mix of his investment portfolio.
We’ll continue with the reconciliation of stock positions of the rest of the players next week. In the meantime, let us take a look at how the market is seen behaving in the coming days.
Amid optimistic prognosis, the market continued to slip on the first three days of the week. Technical factors were cited, such as the absence of new leads to be behind the market’s weakness.
From what I gather, however, the reasons are more fundamental than technical. Rising inflation appears to weigh single-handedly on investor sentiment at the moment. It is felt that inflation will remain to be a major issue in the coming months.
Along with other concerns that are diverting or stunting government’s efforts on economic development, economic growth is expected to moderate. And with the possibility of another increase in interest rates within the year, this may as well contribute to the market’s weakness.
Until we see solid steps that will address the issues soon, weaker investor sentiment may drive down the market further.
Den Somera is a licensed stockbroker. The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. E-mail address of the writer is email@example.com