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Paskalis Investment Annual Letter 2019

Dear Investor

For everyone that has started our journey from the beginning, I am sure that we all agree that 2019 was an exciting one. That year was the start of our path to financial success. As all starting points, bumpy roads are inevitable obstacles; however I do believe that early rocks will be useful as guidance to sway from future avalanches. For those that joined later, my below self-introspection will be enough to tell the story.

Despite my usual monthly performance reports that started from June 2019, I began my stock market interest months before that. It started when my father invited me to join him to ‘play’ stocks in his account. Back then, tales about failures of stock ‘players’ had been told to me especially from people that does not know a thing about stock. They only know that playing equity will drain your money and it resembles gamble in a way. However, I also knew that many people succeed making money in the market. So, because of my boredom at that time, I agreed to join his account and deposited a small money into it. After reading one or two articles about stocks, I started to buy them. I did not remember what was the first one, I guess it was HRUM.

For those who know me, I am not a talker and quite an introvert. ‘Playing’ stocks did not require me to go outside and talk to people, I only have to see the charts on my computer or write messages to other people and I think to myself “This is a perfect job for me” and I dived deeper into it. I started to learn about charts and indicators. The easiest one was Bollinger Bands and since I played on my phone, it was the clearest to read. I did not even use support and resistance bands, BB and RSI were the only two indicators that I used. Of course it was a disaster, none of my chips hitting jackpot. Even worse, since our account was a joint account, I did not know how much I was losing. After a couple of weeks, I quit playing.

Fast forward several months after losing the game, I have started investing in other platforms. I was still intrigued by stocks but never touched it again because I told myself “Most of successful stock players gain less than 10% a year which is better than bank’s interest rate but much worse than my current investment, why bother?”, I have also told my friend about this fact and they seemed to agree. But then, I forgot why I jumped back to stock (yeah, my memory is bad) I think it was my meeting with a guy who trade for a living. Yeah, after we talked for several hours, I thought again to myself “My current investment gave me a very nice return, but it might not give me this rate in the future, I have to prepare myself to make better or similar return in other ways.” That was my primary reason to open a new security account, of course in a different one from my father’s. I have learnt my first lesson.

I bought two stocks the first day my account was activated, CLEO and RISE. Why those two? he told me to buy these companies. How can a guy who live from trading stocks gave me wrong stocks? They should rise (no pun intended) even higher. Well, one of them did and it was not RISE. At this point I was convinced that ‘playing’ stocks was THE JOB for me. I started to learn seriously about charts and indicators from the basics like BB, RSI, Support and Resistance until squiggly lines and weird theories like Ichimoku and Bandarmology. On July 2019, I spent a month learning and practicing several strategies and wrote all of it on my notes. I won some and lose some, but on 28th July 2019, my equity was almost break even.

I considered playing stocks as my part-time job since I have just learnt it again. Managing my companies is my full time job. My companies are not huge by any means but it takes a considerable amount of time to run, especially when troubles came, and they came almost everyday. On Monday morning, 29th July 2019, I have a monthly meeting scheduled at 9 a.m. As usual, I arrived at the office around 8 a.m and immediately opened my laptop. After preparing myself for the meeting, I still have 15 minutes while waiting for my staffs to come, so I opened my stock account. I saw POSA was ARA (Auto Reject Atas which means that the stock’s price rise for 25% in a day) for 2 days in a row.

Days before, I saw a YouTube video that explained some chart patterns for a definite BUY signal. One of which was if the chart was hitting the resistance by a huge margin and huge volume, that it is time to buy. Obviously, POSA had that signal for 2 days in a row and of course I bought it immediately. However, I have never tested this strategy, so I bought it and scribble on my note: the buy price, the amount and under the strategy column I wrote Gambling, then I closed my laptop and went to the meeting. 3 hours later I finished my meeting and took a peek of my gamble on POSA. I lost 44.44%.
Fun fact: 4 in Chinese language means ‘dies’ and my gamble on POSA gave me quadruple deaths. After this tragedy, I swear to not gamble again on stocks.

August 2019 I began my recovery from a stock trader to investor. I still follow some stock tips from a random chat group, but only made 3 moves in a month compared to 25 trades a month before. Then I started to learn from the Gurus such as Teguh Hidayat, Warren Buffett, Rivan Kurniawan, etc. After reading their advices, my perspective gradually transformed from stock trader to stock investor. My first moves were buying a wonderful companies such as GGRM and HMSP then selling inferiors one like CLEO and RISE. Months passed and my portfolio was better although it’s just a fraction better than IHSG, but at least now I know that I headed to the right direction.

Other than that story, my biggest takeaway from 2019 performance was managing greed and patience is the most important factor for investing in stock market. I know a bit or two on how to find a great company, however when I found them, I cannot help myself not to buy it immediately. It was not that I bought them at high valuation or without enough Margin of Safety, but I tend to pour all my allocated money on them when I thought the timing could not be better. Of course most of the time I was wrong and my investment slowly trickling down because I did not prepare any cash for averaging down.

Fortunately, after all my failures in the past half year, I still gain 3.3% (NAV 1,033). Obviously I hope 2020 will be a better year for IHSG and I definitely learnt lessons that (hopefully) will not be repeated in the coming years. For all investors, I thank you for trusting me through the ups and downs. For others, I hope my articles are useful for your knowledge, and if you need consultations please do not hesitate to reach me. After all, free consultations are the least I can do to share my knowledge and experiences.

Andreas Paskalis Muljono
Paskalis Investment

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