What should I do with my stock investments?
Investing in stocks is more about time rather than timing
QUESTION:
I have invested some of my money in stocks through an equity fund. I am worried about the decline in the stock market. I am investing for the long term. What should I do? —Name withheld upon request via e-mail.
Answer: The stock market is behaving the way a stock market should behave. It goes up and it goes down. The local market has been performing admirably since last year and it looked like there was no stopping its climb but the stock market could not continue to defy gravity.
My advice to you is not to worry if you have invested in the stock market according to your investment objectives, time frame and risk tolerance. If you are investing because you want to grow your wealth, you should be patient in waiting for your money to grow. Investing in stocks is more about time rather than timing. I am assuming you were aware of the risks involved in equities investing and you did not invest blindly, so you should be prepared to see your investments fluctuate.
I asked my friend, Marvin Germo, one of the country’s most sought after stock market experts, about his opinion on your concern. Here is what he said:
“Why should you panic if one of the main triggers of our market going down was primarily based on foreign investors taking profit and selling? At the end of the day, people are in the market to make money and to take profit. So when foreign investors saw the opportunity to transfer their funds back to the US because of signs its economy is recovering for the better, we saw the gut wrenching effect of them selling and bringing our markets down. This is a normal cycle in investing, stock prices go up because of new buyers entering while stock prices go down because investors choose to massively take profit.
“There is nothing wrong with our local market! Our market went down heavily just because of the selling, which is normal and all part of investing in the game. What is happening now is not like the sell-down caused by the global recession in 2008. We started the year at about 5,800 and even if the PSEi goes down to 6,000 at the end of the day the market as a whole is still a gainer. When you dig deeper, does this change the remarkable earnings posted by our blue chip companies? Does this even hamper our economy, which is now the best and top economy of Asia? Does this revoke the investment grade rating we got at the start of the year? Does this stop the ongoing progress of the projects already laid out by the government and the private sector? Certainly not!
“Fluctuations like this should not matter in the grand scheme of things if you are in it for the long term. This is the time to get the stocks cheaper.”
Marvin was right with this advice.
The current decline in the stock market is an opportunity to start buying more stocks (properly selected, of course) or in your case, add to your equity funds. Since you are investing in the long term, stick to your objectives and be patient. Markets will go up and down but in the long run, the stock market is expected to perform admirably—say over five years.
Try to read up more on stock market investing. Investment education will sooth your fears and help you sleep better at night. May I also suggest you check out iCon 2013: The No Nonsense Investment Conference on June 22, 2013 at the SMX where Marvin Germo will be a featured speaker along with other experts, including Efren Cruz, Chinkee Tan, Dennis Sy and myself. Send your inquiries to iCon 2013 to icon2013@ephesians.ph
Randell Tiongson is a Registered Financial Planner of RFP Philippines. He is one of the most sought after speakers in Personal Finance and Columnist of Philippine Daily Inquirer and Money Sense Magazine. He is best selling book author of Personal Finance Step-by-Step Guide.
Source: http://business.inquirer.net/127837/what-should-i-do-with-my-stock-investments
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