Bizarre PSE Affair: The Stock Market Love Story

As the Philippine Stock Exchange breaches 8,000, I just let go of one of my stocks. In the stock market jargon, they call it cut loss but for me, it was more than that—it was a decision made because the agony of holding on was more than the pain of letting go.  Investing or even trading in stocks or shares could be a perfect or dysfunctional love story. You pick that ‘one’ stock, or probably a couple of stocks (in case you are polygamous), that meets your standards, as we usually do when we choose who we want to be with in life. We watch it grow, we put our high hopes, and invest regularly to ensure great returns, but inevitably, the time comes when you have to let it go. While others parted with their stocks with a smile, I say mine was tragic---a love story cut short.

And, I...

I never really thought I could love this much, but yes, I did.

                                                                                            

Getting-To-Know

It has been said that the secret to getting a great partner in life lies in choosing. In the world of stock market, to say that choosing that lovely stock which only meets the eye won’t quite suffice. Basically, I should choose based on the predefined standards analyzed and studied over a considerable period of time (or until criteria are well-defined). The getting-to-know-you period involves research on the company’s background, knowing its growth potentials, its historical and projected financial reports, and all relevant facts about that company you are planning to invest in.  Just like knowing a woman—you will take the time to learn about her interests, her character, her family, her roots, or whatever associated with her. This information (fundamentals) are taken into account as to whether to pursue the relationship or investment.

I skipped everything and let my emotion-driven mind hit the buy button. I bought a stock I did not even know. I made a mistake and the consequence comes with a price material enough to jeopardize some of my needs.

Timing

“We had the right love at the wrong time,

 Guess I always knew inside

 I wouldn’t have you for a long time.”

So goes a famous song “Somewhere Down the Road” by Barry Manilow. But is there really a wrong time for love? Maybe, but in the stock market, I’m sure there is.

Disregarding the timing was as bad as missing out a sound selection process. I did not understand timing back then. No entry and exit points were established to guide me on my investing journey. I just invested blindly and got burned.

Some would gather enough information and watch the perfect time to come in, while others, overwhelmed with excitement, plunge recklessly. Those who are adept with time, they use barometers (charts, candlesticks, graphs, oscillators) to gauge when to come in. They buy on dips or tranches as they call it and take profits when a target price is hit.

Having the right stock at the wrong time is no better than having the right love at the wrong time. Whichever angle you look at it, sooner or later it will cause your pain and will leave you wondering how things could’ve been better if only time was at your side.

Holding

But when do you know you’ve had enough? When do you know it’s time to let go? More often than not, we do not know the answer. Because of fear of the unfamiliar and detachment, we tend to hold on, putting our high hopes that everything will be fine in time.

I’ve been there. I was in denial and tried to justify my wrong decision on buying a bad company at a wrong timing. I have believed that it was a journey of up and lows just like in any other relationships. I experienced watching my stocks plummeted in the depths and watch it soar a little higher. I knew back then that the company is not performing well and stock price movement is only played through speculation. I held on hoping that one day it will regain its glamor.

Letting Go

Recently, I attended the StockSmart seminar and realized what a fool I was holding into something that’s not worth my resources and time. The comprehensive seminar taught me that there are much fish in the sea. Sound investing is about maximizing your gains and managing your risk and losses well. My investment could have grown with larger profits had I cut losses and sell it when there were signs that I needed to let go. I let a relationship linger longer than it should be by not letting go the moment I knew I should.

After learning sound stock selection, understanding when to come in and out (entry and exit points), learning when to hold on and when to let go, I finally sold my stocks and let go of my position. It pained me that I have lost money and time but it was also a relief knowing that this experience has taught me valuable insights on how to manage the investment.

Just like any other love story, ours was never perfect. It may have ended painfully, but I have learned my lessons which made me wiser (and emotionally tougher). And just when I thought I would never enter the realm of investing again, I just did, I fell in love again —this time, harder.

Post Script: PSE Bizarre Affair: The Stock Market Love Story came out as an idea over cups of coffee and was written in collaboration with a travel, financial advocate blogger, Jessa Marie Cortico. You can visit here works at http://passionsandall.blogspot.com