Philippine Stock Market has been taking a beating for many days now and it is a concern to many. From a high of 9000 and dipping to 7500 in just 4 months, there’s so many things that goes on the mind of investors.

Let me share you a very insightful discussion I have with my good friend and stock investing advocate Marvin Germo about the PSEi bloodbath.

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My post yesterday was viewed so much which means many people are really concerned with what’s happening in the stock market so I might as well write a follow-up.

Let me remind that the stock market volatility is the nature of that kind of investing which is why investing in equities is for the risk takers. Remember, high potential returns are high risks in nature. The external factors have taken over the sentiments of people. Fear was the predominant emotion running in the past few days but yesterday’s trading saw a buying action – it seems that there will be very aggressive investors who wants to do bargain hunting. The trading halt due to the technical glitches did not dampen the buying spree, which resulted to a higher index by the end of the day. Will the low stock prices continue to attract the buying momentum? The US equities saw some up in the earlier time of their trading day yesterday but ended down by later part of the day.

When the market dives, should you dive with it? Should you hold on to your stocks or equity funds and wait for it to recover or should you cut loss already and wait for an opportune time to come in again? Well, it really depends on your objective, conviction and strategy. Why are you investing in equities in the first place? Is it to finance a long-term goal like retirement or education of your kids or is it so you can finance your vacation next summer? Knowing why you are investing and when you will need your money will allow you to develop your investment strategy and philosophy. If you are investing because you want a comfortable retirement in 15 years, why worry with what’s happening today? The stock market has proven that when you invest long enough, you will experience good capital growth with your investment.

What should you do now? Well, if you are aggressive enough you can start buying selectively but it might not be a good idea to empty all your savings and buy now as you might end up catching a falling knife. If you are investing through equity funds like mutual funds, UITF or VUL, you might want to consider adding in tranches and not all at the same time. You may also consider waiting until you are certain that the dust has settled just to be sure. Your action will now be according to you and your convictions. Just make sure to always keep in mind your objectives, time frame and risk tolerance. Also, invest money that you are not planning on using in the next 2-3 years.

Just like yesterday, I asked more of my expert friends as to their thoughts and advise regarding the current stock market condition:

Markets tend to have knee jerk reactions to global events, and selloffs are often self-feeding which can result in steep drops. Longer-term, however, historically it’s the fundamentals which have dictated where markets have eventually gone. So if your view is long-term, it may be good to remember that Philippine fundamentals are solid. – Riza Mantaring, CEO of Sun Life of Canada Philippines

As we all know the market correction is driven by the fear that the Chinese economy will no longer be the accelerator behind the global economy. This resulted in an almost 40% reduction of the stock market in Shanghai, which as many Chinese individuals invest their savings, is expected to also impact the domestic demand in China. The reaction however seems to be extreme and mainly caused by panic, as medium and long-term prospects for the region are still positive. My advise is to not try to catch a falling knife, but prepare and be ready to increase holdings at discounted prices when the market becomes a bit more stable in the coming days. – Rien Hermans, CEO of AXA Philippines

Stock markets would always be volatile, it is because of this volatility that above average earnings is possible, embrace volatility! – Alijefty Gonzales, investment advocate & VP of Insular Life

The huge drop in the market over the recent days is an opportunity for long term investors to accumulate. It does not mean that you will not lose money in the short term but it does mean you will earn over the long term. Remember time in the market is more crucial than timing the market. Their emotions when investing especially at times like these sway a lot of people. Stay strong! Keep calm! Live well! This is not the end of days; in fact it is bargain-hunting days! Moderate your investment purchases in tranches over 3-6 months or even 1 year. – Jess Uy, Global investing advocate.

Live a life of wisdom and faith, not of fear!

Here is a easy to understand infographic from Time that will help you understand the factors that are affecting the stock market today.

The Philippine Stock Market took a heavy beating yesterday, August 24, 2015 due to external factors. The fundamentals of the Philippine market has not changed but the bearish sentiments since March has made many investors jittery, to say the least. Last Friday’s major decline in the U.S. markets had a domino effect in the whole world, coupled by issues in China.

The result? The Philippine Stock Exchange Index (PSEi) drops by 487.97 points or a retraction of 6.70% to 6,791.01 in just one day.

I recently started a MoneyTalks Viber group and quite a number of people have been active in that group because of the stock market decline. It’s nice to see that there are a lot of people who are learning much from the interactions with the experts and with each other. If you want to be part of this very active group, send your Viber number to my assistant, [email protected]

While I will never downplay what has happened yesterday, I wish to remind many that the stock market is the way it was because that is it’s nature. It is said that the stock market can be overly optimistic or severely pessimistic and the later was what has been prevailing lately and especially yesterday. The stock market cannot defy gravity – what goes up most ultimately come down… but what goes down will also go up eventually. Despite the fears, I still believe that the stock market is a great way to grow your money but you must understand that it pays to think long-term when it comes to this kind of investing. This hold true whether you are buying individual stocks or investing through equity pooled funds (Mutual fund, UITF, VUL).

If you look at the how the stock market has behaved in one month, it really will scare you.

However, if you view the stock market from a long-term perspective, you will see a different picture.

I have asked my stock market expert friends of their advise to investors with regard to what’s happening in the market recently. You will find their advices insightful, helpful although they can have conflicting opinions.

“Today wasn’t a mere correction, it was more like major psychological and technical breakdown by the market. We advise investors not to catch a falling knife and to allow the market to signal an intermediate bottom first. Looking at the peso-dollar rate vs. this 7% one-day historical drop by the PSEi, we are not convinced that this is a structural exit away from PHL assets. Most likely we just had to adjust to regional peers which have come down much against us but had more modest corrections today.” – Tony Herbosa, Chairman of Philstocks and founder of Traders Apprentice Pilipinas (TAP)

Investors should understand that markets do not go up on a straight line and market declines happen. But it is during these drops when better opportunities are presented. For as long as you do not lose sight of the big picture of why you invest, there is nothing to worry about and continue with your investing journey to be financial free. Investing during these times is not just for the brave– it is for everyone. – Marvin Fausto, President of IFE Management Advisers Inc. & former Chief Investment Officer of BDO Universal Bank

While the severe drop in global stocks show critical issues and concerns on valuation, it is the pervasive negative sentiment that makes things worse. Times like these represent opportunities to take positions in companies that present good value, more so given the lower prices. The important thing to consider is one’s investment horizon, and staying power is key amidst the volatility. – Rex Mendoza, President of Rampver Financials and former CEO of Philamlife

Everyone should treat this market situation as like a major earthquake happening. A strong earthquake will have repercussions that take time. Those who are inside should not insist on going out in panic. Those outside should not go in. There will be aftershocks. Those inside should treat their stocks for the long term. Let the dusts settle before making any decision. –Dr. Alvin Ang, PhD, economist of Ateneo de Manila

The drop is an effect of price movement due to what’s happening globally. If you look at it, the rest of Asia and most of the developed world is down. When you look at the fundamentals of our country I don’t think locally there’s anything compelling that should be a cause of alarm. However, given that we are trading and investing in stocks. There’s such a thing as expensive and a bear market. Our fundamentals are good but we are still expensive which would cause buyers to want to wait out until we become cheaper. Our fundamentals are good but we have been in a downtrend since April and will continue to do so until proven otherwise. My suggestion is for each investor to follow their buy/sell plan. It would be great though if they could wait to see until selling subsides and forms a support before they buy. It’s great to buy cheaper but not when everyone else is selling. – Marvin Germo, stock market investing advocate and best-selling author.

Always invest according to your investment objective, time frame and they must be consistent with your risk tolerance. The stock market is not for the faint of heart but we should also not be afraid of stock investing. Learn as much as you can about stock investing and always invest according to the 3 factors I mentioned and don’t forget to diversify and you should be fine.