Yeah, you fancy yourself being a successful stock investor. You can no longer bear your excitement upon opening an online stock investment account and seeing soon those ticker figures while your portfolio gets green, and hoping not turning red at all. I know… Wait, and wait!
Are you really sure and decided about getting into this ‘high-risk’ investment? If not, then perhaps you could give yourself a few more minutes skimming this article, ‘You Shouldn’t Be a Stock Investor If…,’ for it identifies but the attributes and practices unbecoming of a good stock investor.
Coffee break, please! I have recently observed the downtrend in Metro Pacific Investments (MPI) stock price that plunged yesterday at PHP4.61 (below its current book value). Last year, I sell off all my MPI shares, and two days ago I bought again a board lot at PHP4.87. I should have waited for the plunge, but it’s okay. Anyway, Metro Pacific Investments, Corporation is a multi-billion Philippine stock market player engaged in real estate and infrastructure projects with investments in water utilities, toll operations, power distribution, hospital operations, rail, logistics, and others. Phew! I should expect then a profit in a matter of months as soon as the local stock market recovers.
Going back, here are the four signs you shouldn’t and cannot be a good stock investor. Go slow with the items, and feel free to share this article to your friends and colleagues by clicking Facebook and Twitter icons above.
[1] You still don’t know how stock market works. Many Filipinos get into money-making ventures and schemes without understanding how they work. As a result, they fall prey to scams and loss-making investments. The Philippine Stock Market is not a scam, but when you get into it without even knowing what stocks are and how they are traded, then soon you lose all your investment capital, you may never give it a second try.
As a beginning stock investor, you should have learned the basics of stock market investment including but not limited to different types of traded stocks, reasons behind stock price fluctuations, earning profits from stock appreciations and dividends, stock trading fees and brokers’ commissions, and other stock market terms [Read also, Investing in the Philippine Stock Market Made Easy].
[2] You’re expecting to make millions overnight. Don’t be foolish. Unless you already have millions to invest in the Philippine Stock Market or you’ve been investing for quite a long time, you can make more millions or your first million in the next few months. However, if you’ve just had your account since last week with PHP 5, 000.00, then you surely sound too ambitious making your first million. Come on, no stock rallies to its thousand percent position even within a week, a month, or years, maybe. Lo, it takes time!
I have been a stock investor for two years and a few days, and my colleagues think I get richer day after day. The truth is, I haven’t yet earned a big fortune from my stock investment, except the decent stock dividends. I have just accumulated a reasonable capital in my portfolio across years of regular saving and peso-cost averaging.
It’s a big LOL hence when a colleague once had a glance at my COL Financial account and innocently commented, “Wow, ang laki na ng pera mo! Oo nga, ang bilis nga daw yumaman d’yan. Turuan mo nga din ako para ganyan na din ang 5K ko sa loob ng isang taon.” She thought I had the figures gained from just a 5K capital [Read also, How You Can Make Millions in the Philippine Stock Market].
[3] You’re extremely impulsive and impatient. If you want to be a good stock investor, then you should be cautious and patient – cautious, in a way that you buy and sell your stocks based, not on the unsolicited tips and recommendations, but on your wisest and most informed decisions; and patient, that you’re emotionally capacitated to withstand the stress brought by extreme market volatility and wait till all reds turn green over time. Stock investment is extremely high-risk, but highly profitable in the long term.
In most cases, when investors experience a paper loss of 20-30% of a stocks’ acquisition value, they become highly impatient, and hence, sell off their shares at a loss. Yes, overthinking about just the paper loss. In the first place however, if stocks are bought at the right time after research and analyses, they should not easily fall 10% below the purchase price. So, don’t get impulsive buying stocks.
Sell-off decisions are also based on the belief that such a loss may be recovered from other more performing stocks. Going through an unfortunate cycle of ‘cutting loss and moving on’ may lead to a major or possible loss of the entire investment capital. Other stock investment articles also worth reading:
- 9 Reasons You Shouldn’t Be Afraid of Stock Market
- Bakit Magandang Mag-invest sa Stock Market?
- Iba’t ibang Uri ng Stocks
- Bakit Pabago-bago (tumataas at bumabagsak) ang Presyo ng Stocks?
[4] You don’t have long-term perspectives. Stock market fluctuations are directly influenced by supply and demand as driven by many other factors such as company earnings and performance, general economic factors, government regulations, and even petty unverifiable rumors related to corporate management – all which may pose long-term and short-term effects.
As a stock investor, you should not lose your long-term perspective despite triggering market dips and corrections. Having a long-term perspective in stock investment means you are taking advantage of current market dips by acquiring more shares of promising blue-chip stocks at their bargain prices while waiting for their rebounds.
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