Pinoys and the Stock Market, part 1

By Randell Tiongson on July 24th, 2012

Every time you watch a business channel or open up the business section of major newspaper, you will hear some news about the Stock Market. In today’s social media environment, you will also notice the proliferation of discussion with regard to the Stock Market. You will often read and hear reports on the Stock Market index going up or going down, rising or crashing. The Stock Market makes up an interesting news report or casual conversation among many it seems.

Why is the Stock Market creating such a buzz? Well, though a lot of people have lost money investing in the stock market, a lot of people also made money there too! There are many reasons why we should invest in the stock market even if it’s riskier than most other investment instruments and the biggest reason would be returns. Over a period, investing in the stock market has been proven to be a good hedge against inflation and figures can prove that the returns of investing in the Stock Market is worth the risk. Let’s look at some facts: If you invested in the Stock Market whether buying individual shares or through a pooled fund like a UITF or a Mutual Fund, you would have realized a return of about 30% per year. Had you invested 5 years ago, the yield will be lower at about 10% per year which is significant because all Stock Markets crashed in 2008 due to the Sub-Prime crisis. Even with one of the worst market crashes in history (2008) occurring, investors in the market would have still yielded good returns and those returns will outperform most other investment instruments like Bonds. As to whether the Stock Market will continue to rise in the next few years, only time will tell but the general contention of many is that the Philippine market will continue to surprise the world with its performance.

One more thing about the Stock Market is that you don’t have to be a wealthy person to invest in the market. A few thousands here and there and you can buy your shares – or with as low as P5,000 to P10,000 you can  buy into a Stock Market Fund, also known as Equity Fund through Mutual Fund Companies or the Bank (for UITF). The Stock Market is a very good hedge against inflation and it’s something we should always be concerned about. The growth of our investments should always outperform inflation rates over a long time, lest the value of our money will erode in purchasing power. Money’s value is really based on what it can buy, not on its absolute amount. Stock Market investing is very good for long termed objectives like retirement, education and others because of its high returns over a long period is great, well at least in theory.

I’ve asked two of my friends who are experts in Stock Market investing as to why we should consider investing in equities. Incidentally, both of them are named Marvin.

According to Marvin Fausto, Chief Investment Officer of BDO we should be investing in the Stock Market because “the Philippines is entering a new phase in the economy where most of the variables are pointing to a growth momentum. Interest rates are low, inflation is stable, our currency is strong and business confidence is high. It is by investing in blue-chip companies in the Stock Market where Pinoys can ride this momentum of growth and benefit from its long term investment returns.”

Marvin Germo, a Stock Market investor and educator (popularly known as Mr. Stock Smarts) thinks Pinoys should really consider the Stock market because “it is a tool available for everyone to hit their financial goals and at the same time take part in the growth of the country.”

… Catch part 2

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7 thoughts on “Pinoys and the Stock Market, part 1”

  • Every investment vehicle has risk (bank deposit, stocks, real estate and mutual funds). Know the risk FIRST, and how will you deal with it. The “potential” rewards will usually take care of itself. Media is on the buzz for something new, so make a common sense when entering stock investing..
    I think the biggest RISK among many Pinoy is lack of financial literacy and proper investing mindset, which keep us greedy/fearful in investing.
    Classical example of fear in investing, we kept Trillion of Pesos are on low yielding bank deposits because we are afraid to “loose”. Those Trillion pesos are being enjoyed by banks for their investing and business expansion. As a saver, your money was being eaten by bank fees, charges and the dreaded inflation.
    Classical example is too much greediness, sabi nga nila, there are more loser than winners in the stock market because Pinoy mindset move in as “speculator” or “trader” more than as “capitalist” or “investor”.

  • Hi guys,

    I am a member of Bo Sanchez’s Truly Rich Club and he has already blessed me in so many ways. Part of the blessing is he will guide you in investing in the stock market, such as:

    1. Choose what companies to invest (they’re giant and growing companies)
    2. At what price you should stop buying (they call it Buy Below Price)
    3. What price you should start selling and reinvest the profit to other giant companies (they will provide a Target Price)

    Bo Sanchez has a group of financial analysts from Citiseconline reviewing the performance of the selected giant companies and determining the buy below and target price, so he is just sharing to us what he learns from his mentors. This method is called Strategic Averaging Method (SAM) and the potential growth in this semi-passive method is exponential compared to the purely passive way of investing.

    By the way, the TrulyRichClub isn’t just all about the Stock Market. It’s also about having an abundance mindset. Why? Believe me, all the technical stuff Bo will teach about the Stock Market WON’T WORK if you don’t have an abundance mindset. If you want to learn more, you may visit this website:

    http://bosanchezmembers.com/amember/go.php?r=29147

    Wish you all the best in your pursuit in attaining financial freedom =)

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Pinoys and the Stock Market, part 1