Editor’s note: This article was first published in February 2014; the share prices and valuation figures it cites, including Gowex at about €20 and Lenovo at HK$7.70–8.00 with a P/E ratio of 13.42, are from that month. These February 2014 trades are kept as a historical record and are not investment advice. In July 2014 Gowex collapsed after its chairman admitted that its accounts had been falsified, and the company filed for insolvency.
Gowex has been the most profitable investment I’ve made in these years, bearing in mind that I bought in long before the split (I’ll leave you to work out the return). The idea of letting go of this stock at €20 is not because I think it has peaked or I expect a correction. It’s simply that I want to get into Lenovo, and since five major investment firms have advised against it, knocking its price down, I’m going to take the opportunity to buy it at 7.70–8.00 Hong Kong dollars.
Because I suffer from the affliction of not being rich yet, and I’m short of cash, I have to sell shares to be able to buy Lenovo. Given that I’ve held Gowex in my portfolio for more than two years, for tax reasons these are the ideal shares to sell. I also believe that Gowex’s share price will now rise at a calmer pace, so for me personally it makes sense to start building a position in Lenovo, a company that I believe, after studying it carefully, could have a lot of potential. It’s not that the price is undervalued, but the truth is that its P/E ratio (13.42) is attractive, and after the recent setback I hope the company keeps doing what it’s doing.
I’m investing only half the money, and I’m ready to average down a couple of times if it falls further.
So it’s been a pleasure, Madam Gowex, and many thanks for your pleasant and profitable company all this time. Hello, Lenovo, let’s see how you behave.
See also: A brilliant investment strategy if you expect the market to fall
Featured image: N509FZ, CC BY-SA 4.0, via Wikimedia Commons.
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