Revisiting my first post: Is it a good time to invest now?

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source: http://www.stockginger.com

It is worth reading an old post. 

Back then the situation is pretty much similar that is we are in the middle of a financial crisis. (Click here to read my very first post. Please leave your comments on how different is today's crisis from the last). My question was "Why invest?"

Now this is my question: Is it a good time to invest now?

Yup the stock market had a roller coaster ride. The Philippine Stock Market reached its highest two or three times before it succumb to its current level due to US debt crisis. You might wonder why am I asking if it is the right time to invest. Well as I recall again there is no right time to invest because "now" is the right time to invest. But it is so scary out there don't you think. The DOW dive nearly 600 points down then recovered back then went down again, it is so risky and still why do I say it is a good time to invest now.

source: http://www.bloomberg.com/apps/quote?ticker=INDU:IND

Now probably you have to ask me direct, Louis why is it a good time to invest now?

Here are my reasons:

1. Stock prices of blue chips companies went down therefore you

    are getting them at a bargain.

2. The current financial crisis is of the US not of the world yet. So it

   may have affected other markets but surely it is temporary as it

   has always been. So take advantage of the time.

3. Stocks of true value will come out in such situations. Those who

   are really just mere stocks will fall but those who truly deliver 

   profitability amidst crisis will stand out.

4. If you already have stocks it is a good time for you to average

    down big time. 

So what is your move now? Probably you might say you'll think about it. And that is good as well. In stock investing you always have the final word. No one can tell you what to do but only you as an investor have to push that buy button or if you prefer to sell then sell button.

source: http://iamamentallychallengedteen.blogspot.com

So is it really a good time to invest now? Would appreciate sharing your thoughts by leaving comments below.

When in doubt dont buy a stock

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source: http://www.ipprospective.com

I have been out for quite some time... so here am I again...

At times one may be hesitant and then let the day pass then we learn that the stock we are planning to buy just drop further or if worst bad things happen and the company started to go from one problem to another.

Back then the SEC(Securities and Exchange Commission) made an ad on all TV stations regarding the part of the public to know more about the companies that one may invest into. The message was" Invest: Investigate". That time a lot of Pre-need and insurance companies are closing one after the other and one has been all around the news for the alleged embezzlement of the officers of the company.

So I guess you are thinking then we shouldn't invest in companies anymore because they might close down run away with our money. The thing is as an investor one should always do what we call due diligence. What is "due diligence" then?

Wiktionary defines it as:

A legally binding process during which a potential buyer evaluates the assets and liabilities of a company.

Investopedia defines it as:

1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.

2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party. 

In a due diligence this is where audit and Fundamental analysis comes. But such is too hard to do so for ordinary investors like us we should always check their Financial statements that is filed to the SEC. 

 source: http://nrgshift.com

At least we can check how is the standing of the company. 

Is it Liquid(by means of the Current Ratio or Working Capital Ratio which should be at less 1:1)? 

How big its Liability in relation to Shareholder's Equity(by means of  Debt to Equity Ratio that shows if such company is debt strapped that is the likelihood of control is to creditors)? 

Is it Profitable(by means of the Profit and Loss Statement), Is it growing(by comparing This year from last year which is commonly known as Fluctuation Analysis) .

Again that is why when picking stock to invest into one should make a background check on the company. Some stocks have not so good fundamentals and performance and thus they end up into what they call speculative stocks. Investors and players speculate that a good news about the company will make a short uptrend thus players buy it at a lower price and sell it once the price goes 2-5% up. They use volume to profit from such. But as an investor in which one looks at the long term benefits of an investment one should always do what we term "home work".

Again a reminder to do due diligence, invest in fundamentally sound company, invest only free cash, and trade at your own risk.

PSE Website Part 8: Knowing who manages the companies that you invested

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 source: http://www.cmu.edu/
In business it is important that you trust the persons that manage the company. Their educational and professional background maybe impressive but if investors don't trust them it will be hard to see growth due to lack of investor confidence. 

One good example is Steve Jobs of Apple. Jobs was the primary innovator at Apple yet when his attitude turns from good to bad the company started to fall and eventually led to his expulsion to the top post. He learned his lessons and was able to get the trust of the people inside Apple and eventually the investing public. Since then Apple lunch one of the greatest gadget, The iPhone and has been a key player in technological innovations.

To see the managing team of your stock's company you can check them by going to the  the Board of Directors and Management link in the Corporate Information link:

Note: the use of ABS Corporate information is for illustration purposes only.