Profit taking, page-29

Dear Stefan,

Based on everything that you post on HC, my opinion is that you are not an investor but more a trader. Suggest that you reflect on your actions and then work out a strategy that works for you. If you trade but think you are investing then you will always make the wrong decisions. There is nothing wrong in being a trader as long as you understand what you are doing.

I remember not long ago you were all negative & emotional about A2M, share price does not go up in a straight line. To be successful as a trader or investor you need emotional control and emotional intelligence.

Benjamin Graham, said "in the short run, the market is like a voting machine (tallying up which firms are popular and unpopular). But in the long run, the market is like a weighing machine (assessing the substance of a company).

The way i look at my portfolio is:

1. Value it as cost or market price whichever is lower. That way you never bank profits until you realise it. You cant lose money until you earn it.
2. Calculate an intrinsic value of each company you own and update it (lower or higher) based on factual information (not share price movement), once the share price goes over that value sell it all.

Personally I am negative on APT, not because anything is wrong with the company but on valuation. I short sold it today allocating 1/3rd of the target amount, if it goes up another 5% I will short another 1/3rd.

My reason is irrational exuberance @5.5bn this is way higher than my intrinsic value. I don't look at fancy metrics and acronyms to value a company. For me it is simple NPAT & Cash flows, when you have to create new acronyms to justify a valuation that to me is a sure red flag.

If you believe that current market value is less than intrinsic value then hold it or else sell it. A bird in hand is worth 2 in bush, if you are sure there are 2 in bush then go for them or else be happy with the 1 in hand.