The stock market has been crashing the past few weeks. I’m not worried nor am I sad. As I posted in my Facebook wall, “I am keeping calm and investing on.” Why?
The basic definition of a stock is “ownership in a business.” (If you are a short term trader, this blog is not for you.)
Buying ONE SHARE of a company’s stock actually makes you a business partner in that corporation. (Read Be a Partner with Business Tycoons here)
People forget this fact all the time. You are a business partner in a REAL BUSINESS that employs people and sells products or services. If a company makes a lot of money and grows significantly, the stock grows in the long run as well.
However, real businesses do NOT grow leaps and bounds overnight. It takes YEARS and even DECADES! How many malls can SM build in a year? PLDT or Jollibee did not suddenly pop out of nowhere. They had their ups and downs as well.
The stock market has been going down significantly the past few weeks because foreign investors have been pulling out their investments here and placing them in other countries. Kumita na sila sa Pilipinas, kaya dun naman sila sa ibang bansa.
So why should we NOT be worried? Hindi naman nagkagera bigla sa atin. The blue chip companies whose stock prices crashed double digits continue to operate and sell their products and services. They are not suddenly laying off thousands of people.
Hindi naman biglang naglaho yung 750+ branches ng Jollibee nung bumagsak presyo nila diba? Higit pa dito, naghahanap pa ang mga nagpapatakbo niyan ng mga bagong paraan upang lalong kumita sa mga darating na panahon.
In PESOS AND SENSE, we advocate long term investing in stocks. Pick a good company and regularly (monthly/quarterly) invest a fixed amount over the next several years.
Situations like this (down market) are an opportunity to buy good companies at cheap prices especially if you are following our recommended Peso Cost Averaging Strategy
(Read more about this strategy here: Peso Cost Averaging Explained). If you are already invested and feel bad that you should have sold last month, don’t. (Long-term ka naman talaga di ba?)
This is an opportunity for Smart Investors like you.
Keep calm and invest on.