What keeps you from in­vest­ing in the stock mar­ket?

Palawan Daily News - - Opinion -

As I’ve en­coun­tered, you’ll get two typ­i­cal an­swers from this ques­tion. First, peo­ple will an­swer this ques­tion that “they don’t know what stock mar­ket is.” If they know it, they will be hes­i­tant about in­vest­ing the stock mar­ket. You know, I be­longed to this “part” be­fore and I want to share with you my mis­be­liefs and, hope­fully, view the stock mar­ket as an­other source of in­come.

Be­fore I jump off into my main topic, the stock mar­ket is where shares of a listed com­pany bought and sold by trad­ing par­tic­i­pants. When you buy shares or a stock, this makes you a part-owner of the com­pany.

Now, let me break down for you, some mis­con­cep­tions on why peo­ple are hes­i­tant on in­vest­ing in the mar­kets. Here are Five stereo­typ­i­cal Mis­con­cep­tions and I will ex­plain them each: 1. Stock mar­ket is for the rich. “Para sa maya­man lang yan.”

I, too, tend to get this an­swer a lot. How­ever, as I’ve learned through re­search, in­vest­ing in the stock mar­ket is not for the rich. (Yes!) Ev­ery­one as an em­ployee or stu­dent can in­vest in the stock mar­ket. For as low as ₱5,000, you can open a stock bro­ker­age ac­count. (Open­ing bal­ance varies across bro­kers) Yes, you’ve heard it right. In light of this fact, you can partly own big com­pa­nies like Jol­libee, SM In­vest­ments or Ayala Land and take part of its growth and down­turns. 2. Stock mar­ket is a scam. “Scam yan.” Your funds are se­curely stored by your pre­ferred stock bro­ker which are reg­u­lated by the SEC (Se­cu­ri­ties and Ex­changes Com­mis­sion). A reg­is­tered stock bro­ker­age com­pany should be a mem­ber of the Philip­pine Stock Ex­change (PSE) – the na­tional stock ex­change of the Philip­pines. You can check un­der the “Mar­ket Par­tic­i­pants” sec­tion at the PSE web­site (www.pse.com.ph) just to be sure. Un­listed stock bro­kers should be no­ti­fied to SEC (Pro­ce­dures will be dis­cussed soon). Hav­ing a li­cense sep­a­rates scam­mers from the real deal and that dif­fer­ence pro­tects the in­di­vid­ual’s hard earned cash. 3. Stock mar­ket in­vest­ing is like gam­bling. “Pus­ta­han man yun.”

Stock mar­ket in­vest­ing takes te­dious ap­proach in analysis. In the fi­nan­cial mar­kets, we gen­er­ally have two meth­ods namely Fun­da­men­tal and Tech­ni­cal Analysis (We of­fer sem­i­nar/train­ings on these). A tip of the ice­berg, Fun­da­men­tal Analysis con­sid­ers the com­pany’s op­er­a­tional and fi­nan­cial per­for­mance be­fore es­tab­lish­ing an in­vest­ment po­si­tion while Tech­ni­cal Analysis is the study of mar­ket price ac­tions. It’s called gam­bling when a per­son with­out knowl­edge and proper plan­ning buys a stock hop­ing for it to go up. You won’t last long if you have this “strat­egy”. (I’ve had first­hand ex­pe­ri­ence) 4. Stock mar­ket is an easy way in gen­er­at­ing cash. “Gusto ko madal­ing pera.”

Earn­ing money is never easy. Same as other in­vest­ments, it takes time be­fore you see the fruits of your la­bor. Although, you might get lucky in one ran­dom trade but, talk­ing long term, you need a Trad­ing Sys­tem (A key to suc­cess­ful trad­ing) to sur­vive the Fi­nan­cial Mar­kets. A trad­ing sys­tem is a set of rules that gen­er­ates a buy or sell sig­nal. Ideally, it should gen­er­ate more prof­its than losses over the long term. 5. Stock mar­ket needs ex­pert skills or in­side knowl­edge to be suc­cess­ful. “Sa mga ge­nius lang ang Stock Mar­ket”

The only skill you need in in­vest­ing/trad­ing the stock mar­ket is an­a­lyz­ing data quickly. This abil­ity will put you ahead of the herd and, pos­si­bly, max­i­mize re­turns. An­a­lyz­ing data quickly doesn’t fo­cus only in read­ing news but also scru­ti­niz­ing a com­pany’s fi­nan­cial and op­er­a­tional performances and price move­ments shown in tech­ni­cal charts (As men­tioned in #3). Though per­ceived as in­tim­i­dat­ing, an un­der­stand­ing of ba­sic eco­nom­ics and math­e­mat­ics will do.

And that’s it, 5 mis­con­cep­tions that stop peo­ple from in­vest­ing in the stock mar­ket. Though, there are still other mis­con­cep­tions but I want to keep it as re­lat­able as pos­si­ble.

In next week’s col­umn, I give the floor to Keirby Diputado where he will dis­cuss on how to tell if an in­vest­ment is a scam (valu­able in­for­ma­tion). A re­cap from our “Get­ting to know” ar­ti­cle, he was one of An­dré’s (one of the co-founders of Al­phaEdge Re­search) stu­dents and has an in­ter­est and pas­sion in en­trepreneur­ship. Good luck in in­vest­ing and learn­ing!

Dis­claimer: We want to re­mind you, dear reader, that the con­tent in this col­umn is my opin­ion and Al­phaEdge Re­search’s opin­ion only and should not be con­strued as in­vest­ment ad­vice be­cause we’re not your fi­nan­cial ad­viser nor have we taken into con­sid­er­a­tion your per­sonal ob­jec­tives, fi­nan­cial sit­u­a­tion, needs or cir­cum­stances as your fidu­ciary. This col­umn is mainly for your en­ter­tain­ment and ed­u­ca­tion only.

Engr. Fran­cis Louigi P. Cañizares

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