You will always hear someone telling you to avoid the Philippine stock market.
Get used to it but don’t be gullible. I’ll tell you why.
The Philippine Stock Exchange Index (PSEi) collapsed by over 60% from 1999 to 2001. It went below the 1,000 level in 2001. It went down by over 50% from 2007 to 2008. In 2013, it went down by over 20%. It went down again by over 20% from 2015 to 2016. it plunged by over 20% in the same year. This 2018, PSEi has gone down by over 20% again.
I remember reading newspapers every day in our college library during those years and there was always that piece of advice telling people to avoid the stock market because the index would go down even farther.
Ironically, PSEi is now above the 7,000 level. It reached the 8,000 level this 2018.
If the Filipinos who marked themselves as long-term investors in 1999 followed those avoid-the-stock-market pieces of advice, they would have never gotten the chance to invest in the stock market. They must have missed the bus big time!
Here’s my advice to long-term investors and to our clients at Equilyst Analytics.
Firstly, have a buy case. A buy case is a basket of reasons that made you buy the stock. If your buy case is intact, a technical market correction won’t shake your conviction to continue topping up on that stock.
Why would you avoid the stock market or sell your stock if your buy case for each stock in your portfolio is intact?
If I don’t make sense to you, I don’t know what will.
Secondly, understand the point of view of the person who’s giving you investment advice before you take his or her advice.
I’m sure that the columnists and analysts who wrote those avoid-the-stock-market pieces of advice from 1999 to 2018 had and have talked and written from the vantage point of a short-term trader.
If you’re a long-term investor and someone tells you to avoid the stock market, that means you’re hearing advice from someone whose investment horizon and risk tolerance do not match with yours.
Even if a person knows how to draw a chart or interpret financial statements, it does not automatically mean that his or her advice matches your investment horizon and risk tolerance.
Imagine you’re in Tarlac. Will you ride a bus going to Pasay if you want to go to Pangasinan?
You won’t do that unless you’re a comedian shooting for a sitcom.
In other words, take the financial advice of someone whose analysis is based on the investment horizon and risk tolerance that match yours.
Do not take the advice of someone whose bias is on short-term trading if you want to go long. Don’t force it. Your thoughts and his thoughts won’t blend.
Read the analyses and opinions of analysts whom you think are into long-term investing if you want to go into long-term investing.
Then, you choose who among them has the mindset and strategy that blends well with yours.
Even analysts who are in long-term investing vary in strategies.
For example, Bo Sanchez of Truly Rich Club follows a Buy Below Price. On the other hand, I have proven that my Buying Range outpowers his Buy Below Price.
Read these articles.
Why a Buying Range Is More Powerful Than a Buy Below Price
Why Truly Rich Club Members Should Re-think Their Buy Below Price
Why We Update Our Top Stock Picks’ Buying Range Multiple Times a Day
Is the Top Stock Picks the Same as the Truly Rich Club?
Let me give you a trivia about how I guided our customers during the first launch of the Top Stock Picks (August 2014 to September 2016).
Yes, 56 out of the 71 stocks we recommended from August 2014 to September 2016 were winners.
The average net gain of all the 71 stocks we recommended from August 2014 to September 2016, not counting the dividends, is at 37.53%, while the Compound Annual Growth Rate (CAGR) of the Philippine Stock Exchange Index (PSEi) from 2014 to 2016 was only at 5.11%. We outperformed the market by 734.44%.
Our testimonials and track record are on our Top Stock Picks page.
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