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.
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.
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.