Thursday, 21 March 2013

MONEY MATTERS : NEWBIES. STOCK MARKET. DOWN. NOW WHAT?

Happy Thoughts Please!
I am trying to come up with a nice title that will somehow cover my shock over the recent plop on the Philippine Stock Market, but... I can't think of any. So pardon me for the word by word title. Without further ado, let's get the ball rolling. 

FACT: The Philippine Stock Market has been down consecutively over the past 7 days! For someone who just dip her feet on the stock market early this year, this is a major first! To give you an idea what I look like after seeing my portfolio, this can be a good imitation:


Now, before the negatrons lurking everywhere give their "I-told-you-so-stock-market-ain't-good" speeches, here are some perk-me-ups based on factual information:

♣ Correction is a normal phenomenon in stock market. A stock market correction is a temporary reversal in the major trend before the trend resumes.  A correction most often refers to a downward price movement, but it actually means a normalization of prices in either direction. (Source: HERE). 

Simply put, you bought your shares at Php 10, in the past weeks it became Php 12, then Php 15, then when you checked your COL portfolio today, tadaaan Php 8 is the new market price. That's correction. After correction, it is expected that the market price will resume to its upward trend. Let me emphasize that you should pick good companies with strong fundamentals (BPI, Jollibee, BDO, Meralco - won't close anytime soon, they have strong fundamentals). 

 

♣ Remember: We are investors, not traders. I have made this point clear since January, (related post: Springboard #1: Earn a passive income, click HERE). What's the difference? Traders may have been super stressed by this downward plop while investors are hopeful that this will come to pass. Traders have short-term view on things, while investors have long term take on stock market. Given that upward trend is bound to resume, investors will likely think of this situation as a "waiting for their {money} seeds to grow".




♣ This is the BEST time to buy! Have you heard of "stock-sale-alert?" Now you have! :D  Sale alerts are not only for fashion and make-ups! Financial advisers say that this is the perfect time to buy. If I'll buy at Php 8, then the trend resumes at Php 10, then 15, then 20, then 25... you'll be a donya anytime soon! I am planning to shop for stocks and seize this temporary red days. Me any my friends are looking at the first three days of the Holy Week 2013. Anyways, COL is an online thing, very convenient. 



♣ Be mindful of stock-seasons. Now, this is not a 100% rule but a generalization over time. Some say that May to August are ghost months (stock prices are low) while October to December are cash-cow months (time to encash the gains). This trend happens more often than not. Having this mindset can put our paranoid minds at ease. On the average, the percentage of gain we can expect is about 12%. Notice that it surpasses the average inflation rate of 7% and the itsy bitsy interest gain from savings bank account!


♣ My final suggestion will be an excerpt from one of my favorite verses. IN ALL YOUR WAYS, ACKNOWLEDGE HIM AND HE WILL CROWN YOUR EFFORTS WITH SUCCESS. Some version says that. What a relief! This can be used on all aspect of our lives. Be it career, stocks, new business venture, new hobbies, ministries and love, probably? But that's another topic altogether. 

As for me, I'm excited to shop for stocks very soon. I hope to read this post come December while flashing a big smile saying "it's worth the wait". Stay tuned for my next Money Matters post! -CMK
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8 comments

  1. I've been planning to invest my savings in stocks and had no idea how it goes. Thank you so much for sharing this. Helps a lot :)

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    Replies
    1. Hi Carla. Thank you <3 Comments like yours inspire me to write about money matters series :) Hope to hear more from you here! :D

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  2. Very nice and helpful information has been given in this article. I like the way you explain the things. Keep posting. Thanks.. Stock Market Tips

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  3. PSE Academy (www.pseacademy.com.ph) provides a comprehensive, interactive, and practical web-based investor education for market participants, would-be equity investors, and the public in general.

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    Replies
    1. Thanks for this helpful info Christine! :)

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