We Will Ride This Slide All the Way Down!

Two days ago, I bought ALI(Ayala Land) and FPH(First Philippine Holdings). These stocks are going down and may even go down further until the investors will go out of their cave and plunge again in the stock market. The investors are a bit cautious on what is happening in Europe's debt crisis,and US weak economic data.

Even with the underspending of the government in the 1st quarter, our economy has posted a modest 4.9% growth. Actually, the income of the government through taxes, fees, duties, etc in the 1st quarter is bigger than the expenses. We have a surplus in budget. Because of these excesses in the the budget, the government is planning to dramatically increase the spending in infrastructures in the 2nd half of 2011. This will somehow help in achieving the 7 to 8% target set by our government officials.

This month, we have seen the stocks slide down. SCC which I bought at 220, and 214 respectively is now trading at 203. If I am going to sell them today, I will lose money. Fortunately, stock market is just a cycle. A cycle of ups and downs. With the current price of the stocks right now, most of them are trading at a discount. ALI which is selling at 18 plus last month is now selling for 15. The bargain hunters like me are on the hunt and are trying to put up additional funds in this fearful market conditions. I always remember what Warren Buffet said in his book, be fearful when others are greedy and be greedy when others are fearful. Today, the investors are fearful and it's the time to be greedy. Few investors will plunge in because of the uncertainty of the global economy but if you are optimistic on the fundamentals of our economy, most likely you will ignore the noise outside.

The noise outside are what really drives the investors to sell. And we don't blame them because that is a normal reaction when someone invested his money. On the other hand, we must
ignore our emotional swings upon reading one news after another because we might end up in a loss. Yes, stock market winners are people who stick with the fundamentals. People who stick with their own research and thinking. I have seen last Feb 2011 how awful my money in the stock market looks like. If I sold my stocks at that time, I would have lost 20,000 pesos. And yet I stick with my stocks looking very optimistic that the stock market will soon go up. And yes, the wait has paid off. Last April, the stocks started to go up like an airplane taking off from the tarmac. I ended up taking a 40,000 pesos profit when I sold them.
In the midst of May, the stock market is going down again and I am on the prowl looking for stocks being sold at a bargain. Mind you, I am not talking about penny stocks. What I'm looking for stocks are blue chip companies, or emerging companies with potential to become a blue chip company.

I have a great colleague who also tried the stock market. We have been discussing the pros and cons of the stock market before and eventually he decided to give it a try. He bought stocks upon seeing the rising stock market in their own country. In just a few weeks, the stock market in their country went down dramatically. He started to question the viability of investing in the stock market. He started questioning the investors, the traders and the volatility of the stock market. He sold most of his stocks incurring a loss and not bothering to invest again. He said that he will just concentrate in real estate from which I did not object.

First experience in the stock market with a stagerring loss will deprive you with sleep. It will become stressful for you especially if you are just trying to give it a shot. Based on my experience, I would suggest that you buy when the market is down so that when it goes up, you can sell at a profit. This will provide positive feelings that hopefully will translate into a routininary savings in the market instead of the banks. However, do not be carried away by your profit because there will come a time that the market will be in a long downward movement which will require your patience and discipline.

Since I plunge into the stock market and learned the fundamentals, I never stop enhancing my knowledge. Every purchase is a learning experience for me and I take that into account when buying in stocks in the future. With our current state of economy, I am very optimistic in the stock market. Under the Aquino administration, investors are flocking in our economy. We are a money magnet from foreign investors. Our economy is very alive, the government has been ticking the right buttons here and there, and with next five years, the stock market will be on a roll. This will be the best legacy that Pnoy will leave after his presidency.

With the next three years or less, I have a target of how much I will earn in the stock market. I believe it will happen and it will happen sooner. I just need to be faithful in
doing the right thing.