There are two kinds of stock market investors. The technical investor and the longterm investor.
The technical investors are mostly day traders. These are the people who engaged in a lot of buying and selling in the stock market. Actually, in the Philippines, almost 80% of the investors are day traders. They don't care on the fundamentals of the Company like earnings, dividends, growth, and sustainability. All they care is the price of the stock and their charts. If their chart says the trend is buy, they will buy the stock but if their chart says sell, they will sell it. And then they will call it technical analysis where in fact it can be called speculation or fortune telling (manghuhula). These people normally buys a stock today and will sell it tomorrow or buy a stock at 8 am today and will sell it at 12 nn today. And no wonder, at the end of the bull bear cycle, 85% lose their money. This type of investing is what makes the stock market a form of gambling.
Warren Buffet, one of the richest man in the world is allergic to these type of investors. He said "We've long felt that the only value of technical investors is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
Longterm investors (also called value investors) on other hand do not care whether the stock price will go up or down. They don't read the charts of the technical investors whose recommendation is different to the recommendation of the long term investors. We act as if the stock market do not exist. We don't care what the technical investors are saying. The most important for us are the fundamentals of the business of the stock we are buying, the company earnings, growth, sustainability, management integrity, sound business strategy, etc.
I asked her " Saan mo ba nakita?" "Sa Citiseconline dun sa recommendation nila ". Oh yes, if you will check their recommendations, its contradicting. The Technical Guide said sell but the Investment Guide said buy. Then I explain to her the difference between the recommendation of the longterm investor and the technical investor. Do not look at the recommendation of the technical investor because you might just lose another strands of hair in your balding head. Warren Buffet said “I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost.”
The technical investors are mostly day traders. These are the people who engaged in a lot of buying and selling in the stock market. Actually, in the Philippines, almost 80% of the investors are day traders. They don't care on the fundamentals of the Company like earnings, dividends, growth, and sustainability. All they care is the price of the stock and their charts. If their chart says the trend is buy, they will buy the stock but if their chart says sell, they will sell it. And then they will call it technical analysis where in fact it can be called speculation or fortune telling (manghuhula). These people normally buys a stock today and will sell it tomorrow or buy a stock at 8 am today and will sell it at 12 nn today. And no wonder, at the end of the bull bear cycle, 85% lose their money. This type of investing is what makes the stock market a form of gambling. Warren Buffet, one of the richest man in the world is allergic to these type of investors. He said "We've long felt that the only value of technical investors is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
Longterm investors (also called value investors) on other hand do not care whether the stock price will go up or down. They don't read the charts of the technical investors whose recommendation is different to the recommendation of the long term investors. We act as if the stock market do not exist. We don't care what the technical investors are saying. The most important for us are the fundamentals of the business of the stock we are buying, the company earnings, growth, sustainability, management integrity, sound business strategy, etc.”
My friend Anna recently invested in the stock market. She bought a good company, Metrobank from her savings and plan to let the money stay there until her retirement. She said , "Metrobank has all the qualities I am looking for a long term investment so I am buying it". I told her " Wow, galing naman, keep on, keep on!".
After one week she called me and a with a loud voice said " Randy, Metrobank has a sell recommendation and the stock is going down, my gosh I am going to lose my hard earned money!!!" "Grabe, ang dami ko pa namang plano, bigla na lang mawawala!!!"
You know what, I was also rattled, not with the news she brought up about Metrobank stock going down but rather with her skyrocketing emotions, high blood pressure and I thought she would faint. I asked her " Saan mo ba nakita?" "Sa Citiseconline dun sa recommendation nila ". Oh yes, if you will check their recommendations, its contradicting. The Technical Guide said sell but the Investment Guide said buy. Then I explain to her the difference between the recommendation of the longterm investor and the technical investor. Do not look at the recommendation of the technical investor because you might just lose another strands of hair in your balding head. Warren Buffet said “I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost.” Disclaimer:
Investing involves substantial risk. I do not make any guarantee or other promise as to any results that may be obtained from using this blog. No reader should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing the prospectus and other public filings of the issuer. To the maximum extent permitted by law, I disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations in this blog prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.
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