Its another bloody day and in general its been really a bloody week in the philippine stock market but the way i look at it since december 2006 the rise of the market has been meteoric and i believe what we got is a long overdue correction. Just like a car it needs maintanance every once in awhile. Every 5,000km a change oil and when it reaches 20,000km a tune up and it is no different in the market. We have an economy that is growing and were in the part of the world, asia, where emerging superpowers are in the making and with the us already showing signs of a slowdown and surprisingly an even an admission on their part that they are about to go into a recession! :) actually i even think that the admission of the us about their economy and the china sell off set all of this off. :) if you read my past articles i have stated that asia will boom and the us will go into a recession by 2010 and i still stand by with what i said. This is just one of the things that you got to endure when youre investing. This is what i was telling my friend, nico, last week “dont track the market and dont watch is too closely you have to be detached with whats happening in the market on a day to day basis” here are some of the quotes that i got from my friends about what happened in the market last week and the general condition of the market.
Spyfrat a chartist and short term trader - “down! Its the start of the bear market. The market has disciplined us for it has spoiled us for some time already im out and ill wait in the sidelines.”
bruce a technical trader and short term trader, the boss of financemanila - “cash is king. Ive been getting a lot of “what to do questions apparently from the 95% of those who did not heed my advice to lighten up on the market before the market spiralled downwards. If you joined the market late last year, this rout should only be taking a small cut from your overall equity. But if you joined the market this year my prayers are with you. It may be too late to cut right now for there is a for there is a slight support base (trendline created from june 2006)awaiting near 2,950-2,960. however if we do get a technical bounce from that level, any really from that point should be your cue to sell. How big a rally, how long?i dont know because we are going to paint the chart with this new short term downtrend. it is yet to be created and measured. I gauge this to be a “lower high rally” a rally with a lower peak much lower than the one created at 3,417. after a series of lower highs and lower lows the index may see itself at ultimate uptrendline support(created 2003)near 2,600 or there abouts. we'll talk about it when the time nears, if at all. However in between the trendline supports of 2,950-2,600 there are recent low supports at the following levels 2,830 2,746, 2,520 (opps yes thats below 2,600 already)
nico a speculator who is interested in long term investing - “whether we like it or not the philippine market is hinged in the us as we are heavily dependent o foreign investors. Big picture in global economy and stock confidence can affect us directly.”
joey a friend also investing in stocks - “i believe this is only temporary”
eric a trader and long term investor - “the drop still seems healthy. Prices seem to be at fair value with select issues being a bit undervalued. Long term upside indicate good upside at current levels”
jerty a friend interested in the stock market - “oh my... well it dropped 200points, a lot of people were worried but president arroyo said theres nothing to worry about, its a normal trend in the market and what happened was just cause and effect”
volatility is part of investing in the market. Just like getting punched in a boxing match. It is part of the game. To protect yourself from big drops in the market the solution is to get the stock at rock bottom prices or when it is for sale! :) just like when you go shopping how would you react if you hear this from you wife/girlfriend “oh sweetey im dying to but this bag cause the store is selling it 50% its usual selling price”then i wont blame you if you tell her this “YOUR CRAZY!” but if she tells you that “baby i want to buy that bag and i want to buy it now cause it selling at 30% off its usual tag price.” now thats logical and that makes your partner just “half-crazy” hehehe just this morning my friend joey texted me to ask if i got out of the market already and i replied “nope :)” and he was surprised that i could even smile. Hehehehe and my friend nico also asked if im out of the market already and i Just rEplied “i havent even seen the tickeR yeT for today.” the point im driving at is that invest in the company and not the market. :) if you get a stock of a good company at a fair price then there is no reason to panic. :) even my portfolio took a beating too it drop around 14pts but as i said its all part of the game. But i have stocks of good companies and luckily i got it at a good price so thats the reason why i not yet selling. if you look at price movements in a a shorter span of time the more volatile it is but looking at it in a longer span of time it is less volatile. Everybody has a opinion on the market what it will do and why it will react that way but in the end it is Just all about invEsting in good companies when it is selling at a laRge discounT. My advice just be on the look out for good companies that are selling at a discount and be prepared to hold them for years. :) no reason to panic friends :) god bless.
2 comments:
hello, i'm a newb so forgive the question: how do you know or value a stock price so that you're buying bargains? that is, how do you determine the target price?
value investing is about getting something at a bargain thats the whole principle to it. so you usually value it stock price vs eps, book value, assets, intrinsic value like what warren buffett did when he bought shares of coca cola he knew that the value of the brand of coca cola wasnt reflected in its fs so which would mean that it was undervalued
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