Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Sunday, 25 January 2015

My 30% Gain from Netflix

This week I have sold my position of 15 Netflix shares that I bought last week.
Over this 1 week period, I have made a 30% return on capital.
This bet of mine was made because of a historical price trend on Netflix's share price.
I bought my shares last week at $324 and sold it this week at $422.
The shares could go higher but I felt that it was good enough to make 30% in a week so I sold it.
But the main idea is the strategy used because this investment bet.

Below is the 1 year price trend of Netflix

What is interesting is the past 5 years historical price movement on January to February.

2014 Jan-Feb

 2013 Jan-Feb

2012 Jan-Feb

2011 Jan-Feb

2010 Jan-Feb

We can see from the 5 year historical (2014, 2013, 2012, 2011,2010) performance that for period of January to February, Netflix faces the 100% probability of having a minimum 10% increase in share price.
This year adds to it as the 6th consecutive year this trend is accurate - It is actually more than 6, but I was showing data going beyond 5years in this article is not my main point.
While there is a tendency for the price to continue up until mid Feb or March, I sold my position because it was added on leverage for this one time gain.

Price trend is only 1 of the 2 reasons I invested in Netflix.
The other being that its price had hit a 1 year low, showing support at around $310-$320 area (look at the first chart).
It is based on these 2 reasons, I invested in Netflix last week for a short 1-time gain.

I believe there are many more companies with such potential/trends.
One of them I believe is - the E-Commerce Gaint.
I will be posting about's trend next week if this strategy is one that works or one that I was just lucky.
Stay Tune~!

PS: The strategy for this investment was derived from the book below.
Although the full strategy is not from this book but based on my understanding of the original strategies, the fundamental idea is similar.
We buy on low price or undervalued fundamentals compared against the past, such as near bottomed price and historical trends.