Taking advice

I remember when I started trading a few years ago, just when the stock market was peaking in 2007, I invested in four companies that i thought made sense to me. MBT and BPI simply because I have been a client all my life and that they seem to be so high up there that nothing could possibly go wrong. I invested in MEG just because buildings were rising everywhere with "MEGAWORLD" on its banners. Lastly, I also invested in COAT, back then i believed COAT was one company you cant go wrong with due to its push for biodiesel as an alternative to fossil fuels. Buying them was of course an advice from a person who said "buy into a company you are willing to own". Although I did not hold on to these companies for long, I think it's quite obvious how my lack of preparedness for the stock market cost me quite a bit. I bought my first stocks on expectation that they would grow without any fundamentals to back up that idea.

After trading away all my first batch of companies, I decided to chase tips (the norm just when the index was about to crash). Friends were telling me to buy PA, BEL, etc, etc. Companies that made no sense to me at that point not because I knew their numbers were bad, but because I didn't have the numbers when I traded them. And just when we were starting to make progress, the crash happened. Everyone seemed to be in panic mode and again I was left with whatever I could salvage (which at that time, was 50 percent of what I started with). All this was again from people who advice-d me to do this or that.

Now I'm not here to blame people who have given me advice and have left me losing money. If there's anyone to blame it should be myself, I jumped right into something I have no understanding of. I believe I learned from that episode and have managed to incorporate that perspective into my trading strategy.

The reason I mentioned all that was because of the recent price surges in companies that have laid dormant or have underperformed the market. SMC, PCOR, CYBR, etc and I have absolutely no idea why they are moving as fast as they are. I don't understand how a high PE or low-growth potential can make a company attractive to an investor. And unless I can justify investing in them, I don't see why I should. Although it has been tempting to ride the wave its just counter to all the rules I've managed to establish for my trading strategy. I imagine some of these companies' followers have their reasons to invest in them and I congratulate them on their earnings, but buying into something I don't quite understand just doesn't sit right with me anymore.

There were two lessons that I learned from my stock market crash experience.
1. Establish rules for yourself and don't compromise
2. Take every advice with a grain of salt

Those two lessons have helped me rebound from my losses and have earned me a more than substantial return in the past 2-3 years.

On another note, SCC has surged above the 200 mark and is now currently trading at a 210-214 range. It must be noted that this company is expected to post a substantial increase in profit due to its Calaca power plant project coming online for a full year. Both Citisec and First Metro believe the company will post a more than 80 percent increase in profit in 2011.