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Why You Should Invest In The Stock Market – Part 1
Posted by: | CommentsI had been writing several articles that gave a comprehensive introduction on how to invest in the Philippine stock market . Focus was given on the basic principles that each prospective investors should know. In this article the advantages of investing in the stock market will be given focus.
As I said mentioned previously, the stock market is just another vehicle of investment. You might be wondering what is the reason why you should invest in the stock market? Is there an advantage in investing in the stock market ?
The question could probably be best answered by the following. Be advised that the examples given refer to Philippine based companies and currency. Should you wish to view the article in its entirety please visit my blog.
1.) Investing in the Stock Market has potential for great returns – Every financial expert would tell you that when the market has a potential to go up, it really goes up. Returns could range to as high as 30 % to 200 %+ per annum or even more. In the long term it is expected that you would really profit at lot. In 1997, the price of Globe Telecom Inc. (GLO) stocks was only P152.00 per share. Buying the minimum board lot which was 10 shares during that time would have only cost you about P 1,520.00. Now the price per share of Globe is P 1,620.00+. The value of those shares is right now P 16,200. That means in ten years time your money has grown times ten or a 1000 percent increase. It also means that you have a return of an average of 30 % per annum. Not bad compared to putting it in a time deposit account at less than 4 % per annum. You might also be interested to know that the Philippine stock market is at its highest these days. A bull run is still expected for the next 2 to 3 years. So hold on to your horses, I mean bulls and make the best out of the bull run.
2.) Investing in the stock market would make you “part owner” of the company that you are investing in. – Franchising a Jollibee outlet could cost you somewhere between 20 to 25 million pesos, not to mention the time and the effort you have to put in. Instead of franchising a Jollibee outlet in order to own your “own” Jollibee why not buy stocks of Jollibee instead ? For only P 5,000 + you get to own 100 JFC shares (Jollibee Foods Corporations – JFC) That means you indirectly own the more than 1414 stores in the Philippines and 175 in other countries not to mention Red Ribon, Chowking, Deli-France, A popular fastfood chain – Yonghe King in China and popular teahouse chain from Taiwan called Chun Shui Tang including Jollibee’s pilot restaurant “Tio Pepe’s Karinderia.” Isn’t that cool! You could proudly say to your friends and relatives the next time you eat at Jollibee that you like to eat there because you “own part of the company.” Perhaps owning stocks of PLDT or Globe will make you more prompt in paying your bills.
3.) Belonging to a “special group of people” -
When somebody will ask me to join a multi-level marketing scheme I always ask when the company started. The reason is that because if it started a long time ago, then my chances of recruiting other people will be slim because almost everybody I know has already been recruited.
But investing in the stock market is not multi-level marketing. It does not matter whether the market is saturated or not. But it’s good to know that we are among the first to exploit the market’s potential.
Most of those who invest in the stock market are from the class A and B segments of the population. An Asian Development Bank study done in 2005 revealed that only 600,000, out of the of the country’s 87 million population, invest in the stock market. This means that only 0.7 % of the population are involved in stock market trading.
Would you like to know more about investment strategies ? Visit the blog of Zigfred Diaz where he blogs about several interesting topics such as investments, money management, business, making money online and Stock market investing
Basic Investment Principles In The Stock Market – Part 2
Posted by: | CommentsThis is part 2 of the four part series on the discussion of principles of investment in the stock market. In the first part, the first principle involved realizing that the stock market is just another investment vehicles and that before you start investing in the stock market, you must realize that there are other vehicles of investments. We continue by discussing the next two principles. If you wish to view the entire article, please visit my blog.
2.) Investing in the stock market is a roller coaster ride – The advantage in the stock market is that when it goes up, big profits are often made. But when it drops fast, big losses are made also.
So when the market goes up we take advantage of the situation by selling and when the market goes down we take advantage of the situation by buying. When I first invested in the stock market almost 2 years ago, the Philippine Stock exchange index was only about 2000 + points. I’ve seen it go up to 2500 points and drop back to the 2000 level in the middle of 2006. It then slowly and steadily climbed up to the 3200 level in the 1st quarter of 2007 and then drop in a very short period of time during the final days of the 1st quarter of 2007. It then climbed steadily to a high of 3700+ points in July 2007 but dropped below 3000 points a month after. It then climbed steadily to its highest at 3800+ points by October and dropped to its present 3600 points.
There is only one conclusion that can be drawn here, that is it is really a roller coaster ride. Huge Profits and losses are made during those times that the market is up or down.
3.) Long term or short term ? – You should determine what type of investor you are. Ask yourself the question on whether you are a long term investor or a short term investor. This question is very important and should be asked by every serious new investor. The reason for such is because it affects whether you should buy or sell a certain stock.
Long term investors hold their stocks for 5 to 10 years. This means that that they believe in the company that you are investing in. This also means that and that they have extra money for other things because they can afford to put in their money for a long period of time.
Long term investors also do not have to worry about the gruesome day to day technical analysis that has to be monitored. For as long as they believe in the fundamentals of the company there is no problem if the stock is held for a long period of time. But if you are a short term investor, that means you decide to cash in within a months time to 6 months time, then you should consider several things. You have to monitor the day to day activities of the market.
Like the long term investor, you have to make sure that you can afford to put in your money for a long period of time but not as long as the long term investor. The reason for such is because during the short period wherein you plan to invest and pull out your stocks, you may incur losses during that time so you may decide to wait a little longer.
When I started out I determined to be more of a long term investor. I do have stocks whom I consider as short term but I consider most of the stocks I hold to be invested in the medium and long term period.
Would you want to know more about investment strategies ? Visit the blog of Zigfred Diaz where he writes about several interesting topics such as investments, money management, business, making money online and Stock market investing
Principles Of Investments In The Stock Market – Part 4
Posted by: | CommentsThis is the final part of the series on principles of investment in the stock market. The last seven principles was discussed in the past articles. We will be discussing the last three principles in this article. Visit my blog if you want to see the whole article.
8.) Study Study Study !!! – You have to do a lot of study if you want to be a a successful stock market investor. Don’t expect that you can just place in your money and hope that it will somehow grow. Read a lot of books and materials on the stock market. I started out this way. I searched the internet for materials on the stock market, especially the Philippine stock market. The Philippine stock exchange has an “investor’s primer.” I bought this material and other stuff from them.
You can also attend seminars on how to trade in the stock market. Several brokerage firms have conducted free seminars for those who are new to the stock market. I attended a 2 day seminar by CITISEC Online last year. CITISEC online is one of the most innovative, well managed and most active brokerage firms in the country. The information that you could learn is astounding. Studying the stock market requires continual study. You should not stop learning.
Do the best you can to read all the materials out there and attend all the seminars if possible. Do not give up just because you encounter terms that you could not understand. For example when you went over this article you would probably scratch your head since there are terms that are difficult to understand. Terms such as “points”, Philippine Stock Exchange Index (PSEi), “Blue Chips” or “Bull run” may sound foreign to you. Add to the fact that you don’t even understand what a stock is and how it works. So what ? When I first began I did not even know what these things are.
You can never learn these things in school. However I learned these things by reading a lot about the subject and through experience. In order that you might be inspired, I suggest you watch the movie “Pursuit of Happyness.” This inspired-by-a-true-story movie is about a man who overcame all odds to learn the stock market letting him make millions later on through stock market trading.For sure, you will be inspired by watching the film.
9.) News Clues – Know today’s news and use them to your advantage. There are a thousand factors that are in the news that will definitely have an effect as to which direction the market will take. The most important page that an investor should read is the business page. This will give you an idea as to which stock should be bought or sold. My preferred daily news reading is the Philippine Daily Inquirer. I get ideas here on the possible directions the market will take.
10.) Now is the best day to start – Some people say that experience is the best teacher. I agree, experience is the best way to learn. It does not matter if you start small at first, the most important thing is that you start immediately. Never procrastinate but don’t rush immediately without first studying the basics. When you have already learned the basics of investments, start buying your first stock. The most rewarding thing in your career as a stock market investor is when you have profited from your first sale.
Would you like to know more about investment strategies ? Visit the blog of Zigfred Diaz where he writes about several interesting topics such as investments, financial management, business, making financial online and Stock market investing