A lot of “long-term investors” who sold their shares when the market was down due to several factors have asked me this question, “Did I make the right decision?”
In contrast, when the stock market was setting record-highs earlier this year, everybody seemed to be stock market experts — not thinking twice about their decisions.
Now, regardless of the market situation, every decision should be made with prudent judgment. A lot of “long-term investors” found themselves confused whether to sell and cut losses or to buy and take advantage of the low prices.
The SM Situation
Remember what happened in SM Mall of Asia last September 16? A part of its ceiling collapsed and an 11-year old boy got injured.
Stocks of SM closed at P805 last September 16. The next day, it went down and closed at P795. It even went down further and closed at P785 two days after the incident.
Kung nagpadala ka sa takot, malamang nag benta ka. Pero kung long-term investor ka talaga ng SM, wasn’t it a good time to buy stocks of a great company at a cheap price?
Paano kung nagbenta ka, eh umakyat ulit ang stock price ng SM nung September 19 at nag close sa P829.50, ano bibili ka ulit? Ano ka ba talaga investor o trader?
Tandaan, ang investor ay part-owner ng business, samantalang ang trader ay gumagawa ng desisyon base sa price movements.
Is the Sy family SM investors or traders? If they were traders, they would have sold majority of their shares when the prices were down. If they did that, their family will no longer own the largest mall chain in the Philippines.
Who Makes the Decision?
If you’re really a long term investor, why did you sell your shares?
Don’t buy as an investor and sell your stocks as a trader.
As I always teach in How to Pick Winning Stocks seminar, you can do both, but that is a recipe for disaster.
Don’t get me wrong. If you sold your shares and you were able to sleep better at night, who am I to question that decision? But it’s a different case if you took advice from a person you do not know.
Different people have different needs, different purposes, and different levels of risk tolerance. That is why I find it strange when people ask for investment advice from people they barely even know, especially on Facebook. (Read “Warning: Investment Tips on Facebook”)
Now, I’m not saying that asking advice for your investment decision is wrong. But you should know the difference between learning from the advice and blindly following the advice. As I always remind everyone, If there is anyone who should take care of your money, it should be you. That’s why before investing in the stock market, ARAL MUNA!
Understanding how the market works will help you make wiser investment decisions based on analysis, not on your emotions. Also, you are taking the advice from someone who knows you better than anyone else – yourself. You understand your needs, your wants, how much you want to earn, and how much you can afford to lose. Therefore, only you can tell if you made the right decision or not.
The market is still going up and down the past few weeks. There is a lot fear, and people left and right are making speculations. Are you stressed, losing sleep or even losing your hair? (Kidding!)
Remember the reason why you invested in the stock market and why you chose that company for long-term investing. If you have confidence with your “business partner” (Read: Be a Partner with Business Tycoons) and believe that they know what they are doing, then
STICK TO YOUR INVESTMENT STRATEGY.