Saturday, January 20, 2007

Quick Lesson: Contra vs Cash

There has been some people writing to me, telling me they have lost big money on contra.

Just like to send out a note to all readers that all my recommendations are not contra recommendations, but recommendations for the short (not contra short) to medium term.

And I've never had luck with contra. Everytime I do that, i see the price drop, and I'll do whats known as a "panic sell", and most of the time I'll see it rise above my buy price.

Buying contra is really like going to Genting (Highland), for a double or half (double cause most contra on more than their capital, hence 100% gain).

I won't recommend going contra. Its very vulnerable to daily market flauctuations.

2 comments:

Anonymous said...

GOOD advice.

I dabbled with contra before and my success rate is only about 20%. It is not worth it for the stress you have to endure.

Similar like you, everytime I bought the stock, the price dropped. After T+3 days when I had to sell, the price started to pick up. It is infuriating. HAHA. :)

Great work.

Anonymous said...

That true. I have 2 investment profolio. We should have the funds to prepare for medium to long position if it does not perform within your initial trade (T+3).

The first one isn't doing well cos I looking for contra counter and usually trade $10-$30K worth of security. If that security didn't perform, I likely to cut loss before T+3, some even on the same day due to panic sell down. And after the 5th day, I see my price again but already paid my losses.
Second one only invest on a security at a time with the total fund as the limitation of trade. So I traded in even warrant for contra and security for long term for a 50% gain. Currently still in BBR with a floating grain of 75%-80%.
BTW, anyone have any idea whether BBR will move to a $0.20 share?