Philippine Markets are Falling, Do You Know Where the Bottom Is?

Philippine markets are falling, but where's the bottom?
Once again we face the great stock market illusion.

I think the bottom of the market is where you think it is.

When investing, I like to think that when executing a trade, you agree, like saying "yes" in a marriage, that you are getting value for the price you are paying for, and also like a "marriage" you have the solidarity and fortitude to stick to this belief, for better or for worse, no matter where the price goes.

I have slowly developed the adage and belief that when investing in companies, you understand the values behind the prices you are paying for, and how these values change over time. This way, you know WHERE THE REAL BOTTOM IS.

And the adage: "Do not try to time the market. When you invest in stocks, don't watch the stock, watch the company."

So going back, the bottom is the point where you no longer want to buy, because of various reasons. It could be that you have already committed to a position and have filled your allotment in your portfolio, or perhaps you think the business is not performing very well lately and carries a certain amount of uncertainty and risk.

This way, you keep in mind, the value of the company, and as long as it is below this value, you are getting a good price.

Trading platforms make us want to sell our positions because of how red our portfolios look sometimes. And if we decide to sell, what we are doing, is turning paper loss into realized or actual loss. We are giving away less cash for the value of the assets we have, and cutting the vital cashflow from the dividends of these stocks.

As Peter Lynch would put it, "The key to making money in stocks is not to get scared out of them."

Hamburgers

That is how Warren Buffett described averaging down and stock investing. He said, if you ever planned to eat hamburgers for the rest of your life, would you be happy if prices continued to go up, or when they sell at discount prices? Let's look at something more familiar, the price of gas. Would you be happier if there are price roll backs or price hikes?

Well, he said, the only place where people get happy when prices go up are in the stock market.

So take a deep breath, get ahold of yourself, sit back and relax for a moment, and think why you bought that stock in the first place,

and from there you will see where the real bottom is.

Probable reasons why the market is falling from BusinessWorld: http://www.bworldonline.com/content.php?section=StockMarket&title=PSEi-could-retreat-to-6,000&id=79790