Philippine Stock Market Research

To Sell or Not to Sell, That is the Question

December 5, 2010

This came up as a question for another class of assets on a personal matter but is also applicable for shares of stocks.

Buyers of shares of stocks in the Philippine Stock Market generally buy stocks whose prices are going up.  This chase generally leads to gains especially if the market is rallying such as the case in September.  Some stock-buyers also sell stocks, whose prices they chased, when they already have a satisfactory return, gain or yield.  Some stock-buyers hold on to the stocks they bought, whose prices they chased, hoping for a spectacular return.  When the prices of the stocks they bought fall below their purchase price, some cut losses and some still hold on waiting for the day they recover and hopefully pull off a gain on the stocks they bought.  The latter puts the stock-buyer in a nerve-wracking period making him or her testy and emotional.   These stock-buyers usually get advice from technical analysis or the price-chart movements for comfort and assurance.

Are these familiar with you??  Just writing that opening is tiring, but these buy, sell and hold tactics are how most stock-buyers normally work.  This is how the Philippine Stock Market is, and this is how it will always be.  It puts the stock-buyer to a frenzied cycle of depression and exaltation enough to affect health and wealth.

Notice that we do not refer to Stock-buyers as Investors.   It’s because what the former does is not Investing at all.  It was not popular to write or talk about the stock market in October and November compared to September when the PSEi rallied to 4,000.  As you can see in the PSEi movement below, the PSEi has been in a general zigzagging downward movement from October to November.   This must have put stock-buyers who got used to the September rally in a depression and sour mood.   Some sold, some held on, some bought back.   Even if these tactics have produced a gain, it must have been very taxing on the stock-buyer.  If we sold stocks of the Pymwymi Fund in the last two months, we would have lost value and would not have ended at the 70% gain level.  That’s a fact.

Now if the stock-buyer just held on to his stocks.  Now if the stock-buyer did not chase the prices of the stocks he or she bought in the first place but instead chose and bought a diversity of stocks that have the best value.   Now if the stock-buyer regularly bought that diverse group of stocks he or she chose wisely with the best value throughout October to November.  Then we would call that person an Investor instead.

As for that other class of assets being decided on whether to be sold or not to be sold, it is better that it be kept for future appreciation in value and aesthetics.  Tempus fugit just like value-stocks.

Pymwymi Fund Performance

The Pymwymi Fund is up 72.8% while the PSEi is up 39.0% from the start of the year to December 3 , 2010.  The Pymwymi Fund’s performance notably bests two ICAP Stock Funds with the highest year-to-date yields.   They are the First Metro Save and Learn Equity Fund, Inc. (up 65.08% from the start of the year) and the Philam Strategic Growth Fund, Inc. (up 57.41% from the start of the year).

Disclaimer

The Philippine Stock Market Research report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report.