When the stock market takes a dive, what should you do? Part 2

By Randell Tiongson on August 26th, 2015

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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!

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

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2015 Outlook, part 9

By Randell Tiongson on January 23rd, 2015

Interest rates, heightened geopolitical risks, global growth and many other factors will have an effect on 2015 and yet, Riza Mantaring, the CEO of the country’s number 1 life insurance company (Sun Life) feels that Philippine outlook is still positive. Ms. Mantaring’s company has been in the forefront of getting Filipinos financially abled and she views that there is still a lot to be done.

 

The 2015 Outlook of Riza Mantaring

Giving an outlook for the year almost seems like a shot in the dark given how wrong most people were last year — equities market expected to be slow in anticipation of higher interest rates and a global slowdown, but the PSEi ended the year up 22.8% and close to its all-time high; US interest rates expected to be up with the end of quantitative easing, but ended the year much lower; Philippine treasuries expected to move past 5% but ended at 4.5%; oil prices hit an all-time high mid-year at $107/barrel but ended at $53, a price not seen in years.

Again, this year, interest rates are expected to move up, and heightened geopolitical risks and global growth dragged by Europe and China may cause some volatility, but for the Philippines, our outlook is quite positive. Abundant liquidity, lower oil prices, and a slightly weaker currency will all contribute to strong domestic consumption. Aside from this, anticipation of election spending and increased government spending on infrastructure and public works can all contribute to higher GDP.

 

 

rizaRiza is a member of the Sun Life Asia Executive Team. She has also participated in various international special projects and teams such as the task force for worldwide restructuring of the company, the task force for business processes, and special teams for Mergers & Acquisitions.

In 2010, on the occasion of the 100th anniversary of the University of the Philippines College of Engineering, she was selected one of the 100 Most Outstanding Alumni of the past century. In 2011, she was named by Moneysense Magazine one of the 12 Most Influential in Personal Finance. She is also a recipient of the 2011 CEO EXCEL award given by the International Association of Business Communicators. Riza was recognized for bold and innovative programs anchored on a five year strategy, “Route 5”, and harnessing the power of communication to implement these programs, including the multi-awarded and pioneering “It’s Time!” financial literacy advocacy. The strategies and programs put in place have resulted in unprecedented growth for Sun Life in sales, assets under management, and provincial presence.

In February 2011, the company announced the acquisition of 49% of Grepalife Financial Inc, creating Sun Life Grepa Financial and opening up the bancassurance channel for Sun Life.

Riza graduated with a B.S. Electrical Engineering degree (cum laude) from the University of the Philippines, and an M.S. Computer Science from the State University of New York at Albany. She has also attended numerous executive development programs conducted by Harvard University, The Wharton School, Duke University, Oxford University, Asian Institute of Management, and The Niagara Institute. She is a Fellow of the Life Management Institute (with distinction).

She was a board director of the Philippine Life Insurance Association from 2011-2013, serving as Secretary in 2012 then Treasurer in 2013. She served as a board director of the Philippine Federation of Pre-need Companies from 2006-2008.

Riza also serves as an independent director of Ayala Land Inc., the country’s largest real estate firm, and Microventures Foundation Inc., which runs the Hapinoy social entrepreneurship program.

 

 

 

 

 

 

 

 

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2014 Outlook, part 6

By Randell Tiongson on January 14th, 2014

It is always a pleasure to present the views of one of the persons I admire a lot, a former colleague and now the CEO of the country’s largest life insurance company, Riza Gervasio Mantaring. A marathon runner, Riza’s disciplined approach in life helped her propel Sun Life to the top spot. I also admire Ms. Mantaring’s passion to help improve the nation’s financial literacy through many endeavors.

 

The 2014 Outlook of Riza Mantaring

2013 was the proverbial “start with a bang, end with a whimper” year. While fundamentals in the Philippines remained solid, changes in the external environment dragged the market down so that we basically ended the year back where we started.

So as we start 2014, to what do we have to look forward?

The first half of the year is likely to be volatile as the US winds down its economic stimulus program given its improving economy. Performance of its equity markets in 2013 has been stellar, reflecting the outflow of funds from developing economies back to the more developed markets.

Inflation may creep upwards, possibly curbing spending which has been driving our economy. In terms of public spending, government rehabilitation efforts in quake and typhoon-hit areas may somewhat offset the withdrawal of the PDAF and DAP, and hopefully PPP projects finally get underway at the pace necessary to sustain growth.

With an expectation of higher inflation,  we may see local bond rates continue to creep up.  Likewise, with a weaker earnings growth expectation from the banking sector, we are anticipating lower aggregate earnings growth for the market.

Still, despite a possibly volatile first half of 2014, the second half of the year should be more positive as we get better indicators on company earnings growth and the progress of government infrastructure spending. Longer term, the Philippines remains a favored destination and is forecast to continue its rapid growth over the next few years.

As to where the market will end?  We expect a base scenario of 6500 for the Phisix, possibly reaching 6800.  Remember, though, that the best time to buy is when the news is negative, not when it is positive!

 

riza mantaringRiza Mantaring is the President & CEO of the Sun Life Financial group of companies in the Philippines, and a member of its various boards.She started out in Information Technology and took on various roles through her 20+ years at Sun Life before becoming CEO.

Riza is a member of the Sun Life Asia Leadership Team.  She has also participated in various international special projects and teams such as the task force for worldwide restructuring of the company, the task force for business processes, and special teams for Mergers & Acquisitions.

In 2010, on the occasion of the 100th anniversary of the University of the Philippines College of Engineering, she was selected one of the 100 Most Outstanding Alumni of the past century. In 2011, she was named by Moneysense Magazine one of the 12 Most Influential in Personal Finance, and became a recipient of the 2011 CEO EXCEL award given by the International Association of Business Communicators.  Riza was recognized for bold and innovative programs and harnessing the power of communication to implement these programs, including the multi-awarded and pioneering “It’s Time!” financial literacy advocacy.

Riza graduated with a B.S. Electrical Engineering degree (cum laude) from the University of the Philippines, and an M.S. Computer Science from the State University of New York at Albany.  She has also attended numerous executive development programs conducted by Harvard University, The Wharton School, Duke University, Oxford University, Asian Institute of Management, and The Niagara Institute.  She is a Fellow of the Life Management Institute (with distinction).

She has been a board director of the Philippine Life Insurance Association since 2011 and is currently its Treasurer, and served as a board director of the Philippine Federation of Pre-need Companies from 2006-2008.

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