I have just printed off some 50 sheets dating from 2006 from my normal account (lots of doomed penny stocks), and from my ISA account.
I have never done this before, and finally I am at a stage to do so. I'll be tabulating it in a spreadsheet also.
I will list the ticker symbols later in this thread - it'll be a walk down memory lane!
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It is done, it took about 3 hours of crunching.
The average hold time is 3 months, which surprised me. No system, no risk management, just finger in the wind. Rudderless if you like.
Overall, a big loss. I would put a number on it, as this being the "Stock market tuition fee." Cheaper than one year of a University tuition fee today, but more than buying a sandwich! I have learned a lot and it will be unlikely I will be lured by a tip or some penny stock these days.
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My ISA account finished up by nearly £1000. This is with the same rookie type finger in the air type of guess trading as with the other account.
This is incredible, and shows the danger with risky penny shares, and companies which are loss making.
The average holding time is also almost double at 7.7 months.
BACKGROUND - ISA CGT tax protected accounts only allow stocks from the main exchange. There are better regulated, and generally are not loss making. Only in recent years has the Chancellor allowed AIM shares into ISA accounts. AIM shares are generally growth companies, loss making, and are riskier penny shares.
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I have removed dates, and values and share numbers like the other table. If it is too small, you can press Control and + together to increase the size incrementally, and Control and - to go back a step.
I thought I had bought Subsea resources at some point. It looks like I didn't. It was a under sea exploration company that would go to ship wrecks and dig out copper, silver and gold bars. Just like that! It was a magazine tip, that turned out to be a disaster!
But look at the opportunity...!
Mistakes and Findings
-I invested in far too many pie in the sky ideas. Generally, I bought too many junior mining/exploration/ CEO champagne lifestyle companies. I then got cold feet after 1 or 2 months OR if the price dropped, and I took a small loss.
-The only mining companies that made me money, was during the boom. Notably I made a 4 figure some from a junior gas company - luckily I sold because soon after it went bust. It wasn't skill, it was luck. Anybody can make money in the right sector that is hot, at the right time. You have to look for the right sectors to be in.
-I loss hugely if I got too attached to the company, and started to get too involved, by reading every news piece and every bulletin board piece. I thought the CEO was telling the truth and that there was going to be more jam tomorrow. The next drilling result would be a bonanza find. Rio Tinto was going to bid for the company! The stock price would start to go up, but instead of selling, I would hold or add. Great news ahead? Except, a large placing would take place, and the stock would drop like a stone. It would be weeks of further small drops - I was dying slowly by a thousand cuts.
-Most if not all of the penny stocks, even today, are lower than when I bought them. They amounted to NOTHING.
-Penny stocks are really generally awful 90% of the time (with the exception of a red hot bull market in the sector). And 95% of the stocks are AWFUL. Having AIM penny stocks barred from the ISA account was the difference between a £1000 profit and a 5 figure loss. This is eye opening stuff to all future traders and investors out there.
-Chinese AIM companies have had a lot of bad press lately, but during the boom years, they did really well for me. The non fraudulent companies made me 5 figure profits. When the bust came, the frauds came to the front and the real companies left AIM for the main exchanges in Hong Kong. These companies include West China Cement and Renesola.
-Penny stocks, which I regard as having share prices of less than 20p, and market caps of less than £100m to £50m. They were barely profitable trades, as they were difficult to get out of at break even because of their low liquidity, and wide bid and ask spread. They typically have a spread of 20%. So when I bought, the stock stock had to just increase by at least 20% just to get out even - not possible in a slow market and my average holding time being 3 months.
-The very worst stocks were the sub penny stocks. They lost me a small fortune because they kept issuing stock like confetti. Not only that, it was easy to delude yourself that 1m shares could turn into £1m. It isn't going to happen, the odds are not in your favour. The bid and ask spreads were even worse. They were the most easy to trap yourself in - the stock can drop 25% in a day and the spread could widen massively. I made the cardinal sin of adding to my losses by adding in share placings. I was throwing good money after bad. The two sub penny stocks I remember vividly were Atlantic Coal and Erix Therapeutics - both now delisted.
Call me "mug punter". I got the T-shirt, been there and done that!
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Biggest Regrets.
-Not buying to big winners that existed in the market such as ASOS, and Rightmove. I thought I knew everything about the stock market, and didn't need to read the subject. I had read one book, I think it was Robbie Burns's Naked Trader. It helped me largely take small losses. But I needed to keep reading if I was to learn. I regret not reading more in the earlier years.
-Believing the talking heads, that the precious metals would come back. There was going to imminent Weimar hyperinflation, and that the financial system was going to collapse permanently. The FED does not know what it is doing with QE, and we will be resorting back to bartering and hoarding tins of baked beans.
-I made good money during the mining boom years, but kept the "faith" that the bull market would come back after 2011. It did not.
-Not understanding bull and bear markets. No matter how good you were at stock picking, even if you picked the best company in the whole world, it was NOT going to go up if the general market was flat or going down. I had to work on market awareness and patience - PATIENCE!
-Not being born in the right time so I could make a fortune in the dot com bubble. Only joking - I don't think I would change what I have done. I learn and move on.
Which book turned the light on.
It was Turtle Trader by Curtis Faith. It helped turn a nice profit in Hochschild mining. I look back and there were some 20 trades in and out - which netted me a low 4 figure some. Looking back, it looked like a lot of work for little reward, however it was the birth pangs of a new beginning to my understanding the market. Like a baby chicken trying to break through an egg shell. Turtle Trader was just a stepping stone, it does not complete the puzzle - it was just one piece closer to completing the 1000 piece puzzle!
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