MONEY MATTERS : 3 QUESTIONS TO ASK WHEN STOCK MARKET GOES DOWN

A tell tale sign that the Philippine Stock Exchange {or any stock market for that matter} is going down: People no longer talk about it as much.

Maybe this is the same realization of Warren Buffet when he said: 'Be Fearful When Others Are Greedy and Greedy When Others Are Fearful'.

Stock market, like businesses, has respective seasons. Sometimes they are up and sometimes, down. On when will this happen, there's no way to tell. Even the most reliable analyst cannot guarantee a 100% return.

Having said that, what do you feel when you see your money {invested in stock market} losing its value? That from Php 10,000 original investment you now see Php 8,500?

Here are three check-up questions worth asking:

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1. What would the market be like in 5-year horizon?

Everything is clearer in hindsight. And while we know there are certain risks that affect the market, past performances show that the returns are good, 5 years after you have invested. This is a screenshot from Bloomberg as of December 11, 2013. If you have invested your money last 2008 you may have tripled your money now and so much more.

 
2. Will this Company be around for the next 10 years?

This is the main reason why one should be inclined to buy blue-chip companies. I've seen PLDT since I was in grade 3 and it's still around now. I've known Jollibee from my 6th year and I still eat their juicy chicken joy till now. As far as I can recall, our electricity bill comes from a company called MERALCO and no one else. 

What's the point? If you bought shares of this company, then rest assured that they are here to stay. Jollibee (JFC) has a stock value for Php 99 years ago, now its market value ballooned at Php 170.

3. What's my goal, really?

Equity investment is very good for people with more time to let their money grow. Hence, it's always a good time to invest early (more thoughts on this HERE). When stock market experiences dips and downward trend - oftentimes sentiment get the best of us. Remember to go back to your goals. 

Money in the bank will mean you won't be beating inflation. So don't let yourself be fooled that you're a lot safer if you keep all your money in a savings account. Be in the know, information is king! -CMK