First, I would apologize for my terrible English. I’m neither a good writer nor do well in that grammar stuff, so please bear with my … horrible Manglish.

            Today the topic I plan to write about is Strategy.

            Every battle is won BEFORE it is fought – Sun Tzu.

Disclaimer: If you searching for tips or head and shoulder or breakout thingy, nope, you can find those who proclaimed 92% success rate, or those whom willing to sell their holy grail at a mere Rm 8k or RM 10k or .. Whatever.

          And I don’t know about complicated stuff such as advance accounting nor advance valuation stuff. If you guys are interested with those stuff, I could recommend kcchongnz to learn about FA.

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I doubt that most of the investor / trader in this forum doesn't know much about Portfolio management. I think most of them will be like "eh ... 100k portfolio only, manage what ? find good tips 50% gain enough lah... "

Some of the sifu are lean towards FA gang, and some lean towards TA gang. But to me, FA and TA are nothing but pawns to me. The real General who control the outcome of the war ... is you. Yes, you. The one whom control the war. 

Yaya, Chinese Chess... does anyone know how to play it ?

In chinese chess, we have the least powerfull (appearing to be useless) pawn, the bishop, the knight, the cannon, and the rook.

Every part of the chess, is vital to your success.

A good general doesn't sacrifies their pawn easily - some players achieved victory by using pawns to checkmate their opponent.

Some might just using the powerfull rook, and ended up their favorite pieces "locked“ by their opponent.

You must look at the whole situation, assess it, and use every pieces to their maximum advantages.

[ Even a war hero, unable to win a well planned war]

Look at portfolio A and portfolio B and portfolio C. Both of them have the same capital (assumption is RM 100k) , same stock (4 stocks as example ) , buy at the same price But yield different total return.

ABC bought @ RM 1.00 ,  Current RM 1.50   - 50% gain

DEF bought @ RM 12.00, current RM 8.00   - 33% loss

GHI bought @ RM 0.50 , current RM 0.45     - 10% loss

LFA bought @ Rm 1.00, current Rm 1.20      - 20% gain

Portfolio A is diversified portfolio, A allocated 25% of capital for each stock, hence it gives a return of 6.75k return.

ABC gives 25k x 50% = 12.5k gain

DEF gives 25k x 33% = 8.25k loss

GHI gives 25k x 10% = 2.5k loss

LFA gives 25k x 20% = 5k gain

Portfolio B, however is a more concentrated portfolio / leans towards a stock. It allocated 40% to big cap (DEF), and a smaller portion to medium cap (25% to ABC, 25% to LFA) , and 10% to penny stock. It yields a 4.55k return.

ABC gives 25k x 50% = 12.5k gain

DEF gives 40k x 33% = 13.2k loss

GHI gives 10k x 10% = 1k loss

LFA gives 25k x 25% = 6.25k gain

Portfolio C is another penny stock believer. It allocated most of the capital on small and mid cap (45% for GHI, 20% for ABC and LFA) and another 15% for big cap. It yields 4.55k return too.

Thats an example on different portfolio, manage by different player, yielding different result , even they have the same buying price and the same stock.

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Okay, enough of talking bullshit.

Let just share one of the portfolio management I encountered across a blogger.

This blogger, equip himself with 3-1 strategy.

3 portion of share, and 1 portion of cash, doesn't matter the candlestick breakout till your monitor rosak, or breakdown till suffered from Myocardial Infarction.

Example : RM 100k portfolio

75k allocated to the stock , and the rest 25k is allocated as cash.

When the market rallies, 

the stock value increase until 100k ... but the cash remains 25k.

So the ratio become 8:2

Hence, he had to reduce the stock value, and return the portfolio to 3:1 ratio.

The same thing happens when the market falls.

The stock value drops to 50k. The cash remains at 25k.

Hence, the ratio was 2:1. 

Hence, he is able to add some stock, and return the portfolio into 3:1 golden ratio.

That's what he does. 

However, this is just a BASIC CASH/ STOCK ratio balance. 

How he did the stock management ? I have no idea.

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Another example of portfolio management given by the famous Gxxxxxxxx teacher was to differentiate the stock holding into 3 parts.

The first part will be assessed , and is planned to be locked for a very long term.

The second part will be assessed via themeplay and fundemendal. It is more lean towards - theme + wave playing.

The 3rd part ? Everybody's favorite. Punting part. 

How they allocate precisely, I have no idea, again.

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To sum up, I'll use a chinese quote .

天时 (The timing), 地利 （The advantage of the field ), 人和 （The human resources) is vital for a war.

Apply it to your portfolio management.

Remember, you can win 100% , 5 times, 10 times, or 20 times, but you will lost all your fortune when you lost 80%... in one shot.

Last but not the least,

What's your portfolio management. Active discussion is encouraged. Thank you.