Sunday, 30 August 2015

MONEY MATTERS : 3 THINGS TO DO WHEN STOCK MARKET GOES DOWNWARD (PLUS SOME STOCK PICKS)


The more I stay invested, the more it's becoming clear to me: stock market (sometimes called 'equities') have a boom-bust cycle. It's more than 2 years ago when I published a post called 3 QUESTIONS TO ASK WHEN STOCK MARKET GOES DOWN. I was a newbie then and even when I know that stock market has inherent upswings and downswings, the psychological part still got me thinking. However, let me tell you that you'll get past that.

It's interesting that articles, shows and media in general abound when PSE is on its tip top shape. But things get a bit eerie when the market hits rock bottom. Answer is pretty simple: Nobody wants to celebrate their portfolio losses, isn't it? Even if it's unrealised, the idea that my basket is on the red side sometimes irks me a bit. In times like these, it's best to ask realistic questions and get back on track. See my previous post for that.

Today, let me suggest 3 things to do when PSEi is diving like crazy! Here we go:

1. Self-talk and say this with me: "It's only temporary."
The chart below is lifted from Trading Economics website (SOURCE) and this is a graphical representation of PSE from 1986 to 2015. Notice that there is an upward trend when you take a step back over a prolonged period of time. The trickles in between (think: ECG waves) are what we are experiencing now. My point is: if you'll stay invested through these volatile times, you'll still get an awesome profit in a 5, maybe 10-year horizon.

2. Evaluate your stock position.
If you find yourself worried on bear market, it's a good time to ask your if your investment money is well taken thought of. Get this: investment money should not be a money that you borrowed or a money that you need to pay your rent for the next month. That's a very dangerous path to tread and yes, I won't begrudge you for worrying. Investment money ideally is a money that you will not need for the next 3, 5 maybe 10 years. That's why it's only a chunk (not all) of your monthly income.

If you're not comfortable with PSEi movement, it's more likely that you're investing more than you should. Pull out some of your money (wait it out till its green or at least breakeven) and get your sound sleep at night.


3. It's PSE sale! Buy your favourite stocks.
I hear you, even if everyone's saying it's time to celebrate because stocks are cheap, there's a place in your brain that tells you: "Celebrate, seriously?" :D I want you to look at the first picture on this post (which is from Pinterest, by the way). We need to do things, and in the arena of PSE sometimes we have to do it quick timely.

Here are my personal stock picks, if you will. Note: By personal, I meant it as the recommendations I get and trust enough to execute. It comes from different sources and others are just my personal take on a specific company. BBP means buy below price. All amounts are in PHP. I'll just go by stock codes.

  • CEB (BBP: 124.80)
  • FLI (BBP: 1.94)
  • DD (BBP: 12.75)

While, typing this, I realised that I made a mental note to invest in property sector such as ALI, MEG and CPG. I'm yet to do my research on them but this is a good alternative especially when you can't afford to buy real estate properties for yourself just yet.

I remember someone I know that raked in an awesome Php 12M gain! Full story HERE. -CMK
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