Yesterday, I went to our office for work. Normally, we are taking a break of five minutes within the 8 am to 1 pm morning period before lunchtime. During the breaktime, we went downstairs to puff one cigarette and shake the stress a little bit. While we were discussing something, we heard a loud thud at the nearby building and saw one person throwing a ball high up in the air and fall right back into the ground.
Law of Gravity
What is the law of gravity in the first place. According to Encyclopedia, "Gravitation is the force of attraction, that exists between all particles with mass in the universe. It is the force of gravity which is responsible for holding objects onto the surface of planets and, with Newton's law of inertia's responsible for keeping objects in orbit around one another.""Gravity is the force that pulls you down." -- Merlin in Disney's The Sword in the Stone.
When you throw a ball up, it will always go down. It's a law. It is universal. No matter what kind of throw you will do, a ball will always go down. Nobody can make a ball suspend in the air. You are in Antarctica, Middle East, America, India, Philippines and Africa, a ball thrown up in the air is always going down.
Likewise in stocks, when a stock price goes up, it will always goes down. Never in the history of stock market that a stock price goes up infinitely. It will always goes down. But sometimes the downward movements is so short, the investors do not even feel the effect of it once it goes up. There are a lot of factors playing out in this high low movement. I have written some of these in this blog also. For a quick view, please go to http://theofwinvestor.blogspot.com/2011/05/7-factors-that-affect-risefall-of-stock.html.
Roller Coaster
"There are risks you cannot afford to take. But there are also risks that you cannot afford not to take"- Anonymous
A lot of us perhaps have ridden a roller coaster. I remember when I was a kid, we normally go to Star City as part of our field trip destination. There you will find different types of rides children would normally crave for to try. It is in the excitement in trying these rides (especially if it is your first time) that are worth remembering. Oh yes, I tried the roller coaster when we went in Star City. Most of my girls classmates are afraid to try it out but being a boy who wants to impress the other kids, I gave it a go. "I can do that" I would normally say even though inside my heart I was totally scared. I would sometimes shivers in nervousness but in the end I still tried. The thrill of the up and down movement of the roller coaster coupled with the vomit inducing, praying like crazy, and gripping into a steel bar you have never done before, it was worth it. It was so exhilarating, that trying it on the second time won't be as much as scary before. The excitement is still there but nothing beats the first time experience.
When I first thought of entering the stock market, I was filled with doubts, and was totally scared that I would lose my money someday. Through the motivation of Bo Sanchez, I gave it a shot. (By the way, if you want to check the writings of Bo that inspired me financially, you can click the banner on the right side. Truly Rich Club deals mostly on financial guidance especially on stock market and wealth prosperity). My first stock is the telecom giant, PLDT. I bought it around 2100 per share and I was happy that I am now in the stock market. I thought at that time this is the beginning of the financial freedom I truly deserved. The price of PLDT skyrocketed to 2400 and you know what, I am so happy I jumped up and down in our house,whistling like I won a lottery. Yes, that was a special moment for me that I will never forget because in the next few months, PLDT stock spiralled down to 2000 per share. Disappointment ensues, discouragement is whispering in my ear "See, stock market is not for you, this is only for the big boys". I almost quit but I studied further and strengthen my knowledge in the stock market. Being an accountant also made my life easier in analyzing these companies. Yes, I've been through the ups and downs of the stock market. I have experience losses and gains as well. Overall, my ride with the stock market has been pleasant and exciting.
Emotional Discipline
Since I started in the stock market, I have experienced euphoria and depression. When the stock market goes up, I am ecstatic and when it goes down, panic attacks. These feelings and emotions that we experience are normal. Our brain are hardwired to release a natural chemical called dopamine when positive news are heard or read causing a soft euphoria. On the other hand, when stocks drop it fires up your amydala, the part of the brain the processes fear and anxiety and generates the famous "flight or fight response". These feelings are just natural you can't help feeling fearful when stock prices go down.
I heard in one audio talk given by BoSanchez in his interview with Edward Lee, the Chairman of Citiseconline, by the time the bull bear market cycle ended, 85% will lose money. These money will of course go to the taxes, stockbrokers fee, and issuing companies. I might also add to these 85% losses is that when the stock market is high everybody is jumping into the stock market. Greed comes in and the stock market goes into unchartered territory. When it goes down and panic attacks, everybody is selling the stocks even if they are losing some money into it.
Since losses are sometimes traced on our emotions than following our investment plan, it is very important to have an emotional discipline. As Benjamin Graham (author of The Intelligent Investor book, Warren Buffet teacher) puts it, the typical investor "would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons mistakes of judgment". Stick to your investment plan, use the fluctuations in the market to your advantage, not disadvantage. Warren Buffet famous philosophy "Be fearful when other are greedy and be greedy when others are fearful." is one of the best cliche I learned in stock market investing.
Strategy
Since nobody can predict the stock market perfectly, one of the strategies I used is the peso cost averaging. In this type of investing, you are just putting a portion of your salary in the stock market and buy blue chips companies every month. You don't care how much is the price of the stock because through the law of averages, a stocks bought on a higher price this month can be bought at a lower price next month.
Another one would be to buy stocks during the bear markets and sell then at bull markets. But you would be a great analyst if you will be able to predict the high and low of the stock market accurately.
Value investing on the other hand involves a tedious process of analyzing the information of a given stock but you will be able to tell if the stocks are overvalued or undervalued. In this type of strategy, you could based your decision to buy or sell based on the companys financial information.
Law of Gravity
What is the law of gravity in the first place. According to Encyclopedia, "Gravitation is the force of attraction, that exists between all particles with mass in the universe. It is the force of gravity which is responsible for holding objects onto the surface of planets and, with Newton's law of inertia's responsible for keeping objects in orbit around one another.""Gravity is the force that pulls you down." -- Merlin in Disney's The Sword in the Stone. When you throw a ball up, it will always go down. It's a law. It is universal. No matter what kind of throw you will do, a ball will always go down. Nobody can make a ball suspend in the air. You are in Antarctica, Middle East, America, India, Philippines and Africa, a ball thrown up in the air is always going down.
Likewise in stocks, when a stock price goes up, it will always goes down. Never in the history of stock market that a stock price goes up infinitely. It will always goes down. But sometimes the downward movements is so short, the investors do not even feel the effect of it once it goes up. There are a lot of factors playing out in this high low movement. I have written some of these in this blog also. For a quick view, please go to http://theofwinvestor.blogspot.com/2011/05/7-factors-that-affect-risefall-of-stock.html.
Roller Coaster
"There are risks you cannot afford to take. But there are also risks that you cannot afford not to take"- Anonymous
A lot of us perhaps have ridden a roller coaster. I remember when I was a kid, we normally go to Star City as part of our field trip destination. There you will find different types of rides children would normally crave for to try. It is in the excitement in trying these rides (especially if it is your first time) that are worth remembering. Oh yes, I tried the roller coaster when we went in Star City. Most of my girls classmates are afraid to try it out but being a boy who wants to impress the other kids, I gave it a go. "I can do that" I would normally say even though inside my heart I was totally scared. I would sometimes shivers in nervousness but in the end I still tried. The thrill of the up and down movement of the roller coaster coupled with the vomit inducing, praying like crazy, and gripping into a steel bar you have never done before, it was worth it. It was so exhilarating, that trying it on the second time won't be as much as scary before. The excitement is still there but nothing beats the first time experience.When I first thought of entering the stock market, I was filled with doubts, and was totally scared that I would lose my money someday. Through the motivation of Bo Sanchez, I gave it a shot. (By the way, if you want to check the writings of Bo that inspired me financially, you can click the banner on the right side. Truly Rich Club deals mostly on financial guidance especially on stock market and wealth prosperity). My first stock is the telecom giant, PLDT. I bought it around 2100 per share and I was happy that I am now in the stock market. I thought at that time this is the beginning of the financial freedom I truly deserved. The price of PLDT skyrocketed to 2400 and you know what, I am so happy I jumped up and down in our house,whistling like I won a lottery. Yes, that was a special moment for me that I will never forget because in the next few months, PLDT stock spiralled down to 2000 per share. Disappointment ensues, discouragement is whispering in my ear "See, stock market is not for you, this is only for the big boys". I almost quit but I studied further and strengthen my knowledge in the stock market. Being an accountant also made my life easier in analyzing these companies. Yes, I've been through the ups and downs of the stock market. I have experience losses and gains as well. Overall, my ride with the stock market has been pleasant and exciting.
Emotional Discipline
Since I started in the stock market, I have experienced euphoria and depression. When the stock market goes up, I am ecstatic and when it goes down, panic attacks. These feelings and emotions that we experience are normal. Our brain are hardwired to release a natural chemical called dopamine when positive news are heard or read causing a soft euphoria. On the other hand, when stocks drop it fires up your amydala, the part of the brain the processes fear and anxiety and generates the famous "flight or fight response". These feelings are just natural you can't help feeling fearful when stock prices go down. I heard in one audio talk given by BoSanchez in his interview with Edward Lee, the Chairman of Citiseconline, by the time the bull bear market cycle ended, 85% will lose money. These money will of course go to the taxes, stockbrokers fee, and issuing companies. I might also add to these 85% losses is that when the stock market is high everybody is jumping into the stock market. Greed comes in and the stock market goes into unchartered territory. When it goes down and panic attacks, everybody is selling the stocks even if they are losing some money into it.
Since losses are sometimes traced on our emotions than following our investment plan, it is very important to have an emotional discipline. As Benjamin Graham (author of The Intelligent Investor book, Warren Buffet teacher) puts it, the typical investor "would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons mistakes of judgment". Stick to your investment plan, use the fluctuations in the market to your advantage, not disadvantage. Warren Buffet famous philosophy "Be fearful when other are greedy and be greedy when others are fearful." is one of the best cliche I learned in stock market investing.
Strategy
Since nobody can predict the stock market perfectly, one of the strategies I used is the peso cost averaging. In this type of investing, you are just putting a portion of your salary in the stock market and buy blue chips companies every month. You don't care how much is the price of the stock because through the law of averages, a stocks bought on a higher price this month can be bought at a lower price next month.Another one would be to buy stocks during the bear markets and sell then at bull markets. But you would be a great analyst if you will be able to predict the high and low of the stock market accurately.
Value investing on the other hand involves a tedious process of analyzing the information of a given stock but you will be able to tell if the stocks are overvalued or undervalued. In this type of strategy, you could based your decision to buy or sell based on the companys financial information.
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