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Investment

5 years of stock trading: What I’ve learned

Reflecting on my past 5 years of small-time investments.


I’ve obviously been very, very lucky. Of the 19 stocks I’ve bought for the past 5 years, 13 was profitable. The top 6 most profitable stocks returned a combined profit of $22 236, while the top 6 biggest losses only cost me a total of $843. The one biggest investment (Paradox Interactive) made up 80% of my total profits.


Total investment

$20 949

kr 190 443

Total profit

$21 909

kr 199 261

5 year return

104.5%

5 year OBX Index

66.25%

Biggest win: Paradox Interactive

$17 499

kr 161 375

Biggest loss: Norsk Hydro

-$456

kr 4146


Top 6 investments

Paradox Interactive

114%

Apple

71%

Facebook

47%

Nvidia

37%

Games Workshop Group

32%

Weifa

23%

Bottom 6 investments

Norsk Hydro

-19%

AF Gruppen

-13%

Nordic Semiconductor

-10%

Thin Films

-9%

Lockheed Martin

-7%

XXL

-2%

Biggest mistake

Trying to “diversify” my portfolio by buying several big, traditional Norwegian stocks like Norsk Hydro, AF Gruppen and Orkla. A diversified portfolio strives to reduce loss while giving a decent return. Just buying a random bunch of big “safe” companies is not good diversification, nor can any company be considered “safe”. To do that properly, I should have followed a strategy, like Ray Dalio’s All Weather portfolio. As it turned out, my biggest loss over the past 5 years is Norsk Hydro, meant to be my most boring and safest bet, ending up at -20% even after buying several times at lower valuations.

Best decision

Changing my strategy from the misguided “diversification”, and cutting my portfolio to only 1-3 stocks. I didn’t know anything about those big companies I bought, barely what they sold. I had no idea how different news affected them, and that made me unable to react to anything. When focusing on just a few select companies I actually thought were interesting and knew a little about, I was in a much better position to make decisions.

On Paradox Interactive

The above decision made me trust my instinct and going almost all-in on Paradox Interactive after my initial research on them, and then keep buying it even as the valuation grew.

I first became aware of Paradox after playing some of their games, and noticing their clever expansion pack strategy that could make hardcore players spend between 100-200$ on each game. They had a good selection of titles, and I enjoyed several of them myself. Paradox bought some interesting companies, and was also a publisher of games, not just a producer. They were for example the chosen partner for the highly successful Cities: Skylines.

When I saw they were valued at roughly the same price as Funcom, the norwegian game studio behind the hyped Conan Exiles, I sensed an opportunity and started to dig a little deeper.

I got lucky on this bet, and it ended up making 80% of my total profit.

February 3, 2017

First Paradox purchase

750 stocks at kr 53.50

February 3, 2017
February 15, 2017

Buy

413 stocks at kr 58.65

February 15, 2017
April 19, 2017

Buy

900 stocks at 66.25

April 19, 2017
August 9, 2017

Sell

500 stocks at 68.50

August 9, 2017
November 30, 2017

Sell

150 stocks at 87.75

November 30, 2017
March 15, 2018

Sell

600 stocks at kr 132

March 15, 2018
May 29, 2018

Sell

813 stocks at kr 209

May 29, 2018
August 14, 2018

Buy

150 stocks at kr 153.8

August 14, 2018
February 5, 2019

Sell

150 stocks at kr 149.9

February 5, 2019

By Eirik Nereng

A great guy