Investing in Philippines: Stock Investing is like driving

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Friday, February 25, 2011

Stock Investing is like driving


So many people are still confuse or have many question about investing in the stock market. I know it's a mind boggling activity and a very serious vehicle or means of investing in a sense that you could be a millionaire or broke in just a second.... only if you don't know what you are doing.

The key to a successful or profitable stock investing is really knowing what you are doing. That is why it is said to be one of the secrets of the affluent or the rich one because of the lower tax rate(in the Philippines stock transaction tax is 1/2 of 1% of every sale. I heard about a new law being discuss but have no details yet) and two because you are only placing idle funds(remember only idle funds) which could earn higher to fight inflation.

Now why did I say it is like driving?
I am just a newbie driver. I learned  to drive because I have to drive. Because here in Guam public transport is not famous. Yes there are buses but they come every after hour and it is not fast. There are taxis but the cost is not affordable. Driving is still better and it will get you to your destination sooner.

Stock investing is like driving because like stock investing in order to be good at it you must learn it and really focus on it or else you gonna get into an accident. You don't just drive a car and go into a high way. You need a driver's license and you must have the will to drive(for those not driving you will feel this "will" I speak of when you get to drive a car... if it is your first time you might have thoughts that you can't drive because that fear of getting hit or hitting other cars is always in your mind).

You need focus when driving and it also applies to stock investing. Focus on what you are investing on. You have to learn about the company you want to invest, learn its growth potential, and make a strategy on how to increase your holdings on such stock. The thing is when you make an investment and then suddenly the price drop our tendency is to sell it and get another(for first time investors you will go through this just like what I did). If you invested in a sound company with a proven growth and a stable financials it is still possible that its price will drop(look at TEL today). But when a strong company's price drop don't just go to panic mode and sell it, you have to learn why it is going down.  When its operations is good and yet the price went down then it could be that the market or investors' appetite for it slowed down thus the price is stagnant or gradually goes down. On such occasion it is the best time to cost average.



In driving you have 3 mirrors to guide you but always remember to look at what is in front of you or else you will surely hit somebody. Same thing in investing. You have to look what is in front of you, if you need to you can look at your side mirrors and rear mirror if you need to make a turn or change lanes. In investing you must have one direction and that is to earn. There are times that you will be caught in traffic and thus you need to change lane or take a turn. On those instances you use your mirrors to make a safe turn but you are still going to the intended destination. 

I guess that explains it. If you have more queries or if you have questions don't forget one of the rules and that is don't be shy to ask questions. Search the Internet go to www.pse.com.ph, call up the online stockbrokers(some have free seminars), join a stock investing forum and post your questions( click here for a stock investing forum), or simple ask a friend who is into stock(click here or this one).

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Chitika