Tuesday, June 25, 2013

PMC Thought # 11: Philippine Stock Market - To Invest or Not to Invest

Our last article promised that from this point forward we will be discussing the principles contained in the book “The Richest Man in Babylon.”  However, because of the length of that would-be-series, I opted to simply answer one of my dearest friends’ question. 

Last week, this friend of mine asked:  Can you invest in the stock market without attending any seminar?  Which stocks are good to buy?

I was shocked!  Why would she ask me about such things? I’m not a financial expert.  But I answered her questions as far as my limited understanding of the stock market could reach.  And then I promised her that I will send her an email so I can share her what I know. 

While I was thinking of fulfilling my promise, I thought, “Hey!  Why don’t I just post here my supposed email to her?  That way, more people will see and hopefully learn too.”

So here are my answers to her questions. 

1.       Can you invest in the stock market without attending any seminar?  The answer is Yes.  Seminars are not required before someone can participate in the stock market.  I know of people who have been in the stock market for a long time but haven't attended any seminar.  But if I were you, I would grab every opportunity to learn first before I venture into the stock market.  A little research in the internet will even lead you to some free seminars that companies may offer.  You will be surprised with how much you can learn.  I know of an online stock broker who provides free seminars on investing in the stock market.  Spending a little of your time to learn a few new things can go a long way.  Tip:  Don’t do this at work, dangerous.

2.       Which stocks are good to buy?  My initial response was, “It depends.  Are you gonna be a trader or an investor?”   Honestly, there are no best stocks. 

In a stock market as young and active and volatile as the Philippines’ who would be able to say which stocks are good and which are not?  Just a few weeks ago, the entire country was “hooray-ing” for the all time high records being achieved day by day at the Philippine Stock Exchange.  International business news channels and other media were talking about the Philippines.  But today (June 25, 2013), the PSEi closed at 5,789.  I couldn’t even remember when was the last time it was that low.  So, selecting the best stocks requires a lot of analyses and understanding.  It will always boil down to whether you are going to be a trader or an investor.  Traders look for the short-term.  Investors will be there for the long term.  Which of the two are you? Tip:  If you will be an investor, there are lots of good companies to take part in.

What’s your “WHY”
Perhaps the more important question to ask is "why."  Like all other decisions, whether in our professional or in our personal lives, the first thing we should ask ourselves is the “Why” of things we do.  Ask yourself if your “why” would be worth the time, the money and the efforts that you will be investing for it.  Your why will be the foundation of the succeeding actions and decisions that you will take.  So make sure it is founded on something solid and unshakable.  Remember the two man who built their houses - one built it with the sand as the foundation and the other built it on solid rocks?  You know the rest of the story; Jesus has been telling that to the world for more than 2,000 years. 

If you know your whys; the how, what, where and when will come in handy. 

Investing in the stock market is very exciting.  In a short period that I am studying it, I realized that it is not for the faint of heart.  One day it’s up, the next day it’s down.  Or with what we are experiencing right now, the Cebuana used to say, “it’s like gravity has also been pulling the stock prices down.”

In the stock market, the question is not how much are you expecting to gain.  The question is how much losses can you handle.  If you can’t stand the sight of your portfolio getting all red (I say “red” because it is the color of decline), you may want to reconsider other options. Stock investing is not for everyone unless you are willing to learn. 

Disclaimer: I am still a student trying to learn the ins and outs of investing in the stock market. Or should I say, taking part in the ownership of giant companies.  I wish you could join me in this new and exciting endeavor. 

P.S.  Whatever your aspirations may be or your chosen path to financial freedom is, always remember that as a PMCer, our goal is to be millionaires for reasons higher and more noble than the money we could amass; it's all about the lives we could change.


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