I was introduced to stock market investing and trading in April 2007. The Bank I was working for alloted a small portion of new stocks issued to its employees at a price of P64.5 per share. A friend encouraged me to buy and so I did and bought 400 shares. The bank was then raising new capital to satisfy Basel II requirements. The newly issued stock was oversubscribed and there was evident excitement that the price would go up to P100 per share within a few months.
The stock market price of that Bank was then trading between P45-P47 per share but I never bothered to check because I did not know then how. Had I known, I would have bought shares directly from the stock market instead. Indeed, after a few weeks the stock market price of the bank went up and reached a record high of P64.5 per share on July 10, 2007. Somehow, the news that the bank was planning to merge with another bank created the trigger. This was coupled by the fact that the bank's financial performance was showing a sustained reversal from where it was years before.
When news broke out that the US banks were overexposed in subprime loans, the stock market stumbled and so did my investment in the bank. It plummeted from P64.5 to P30.0 in less than a year. Thinking that it already bottomed out, I bought an additional 1,500 shares from April to June 2008. The price did move upwards to P35.0 and selling at that price would have earned me 13.% in less than two months. But I was hoping for the market to go back to the P64.5 level and so I held on. I was wrong. In the weeks ahead, the stock market went down again and again and people were unloading in panic. I was wondering, "When is the downward trend going to bottom out?"
On one weekend, I was reading the business section of my favorite newspaper (The Philippine Daily Inquirer) and in it was an article on Warren Buffet. His advice to buy stocks in times of panic seemed at first unbelievable and facetious. As I thought about it, the man who they called the Sage of Omaha could not haved been wrong. What he eloquently said was a simple principle but instructive, "Buy low, sell high." So while everybody is panic selling, I was at the other end of market panic buying at every opportunity as the price went down further to P29.0, P28.0, P26.0, P24.50, P19.50 then to P10.0 until I had no more money left. Never did I feel I made a wrong decision. I was pretty confident that the time would come for the stock market to reverse its fortunes and I was proven right. And when it did, I was riding along its high waves happily.
When the Philippines elected a hugely-popular candidate running on anti-corruption campaign and a promise of a clean government, the stock market responded positively within weeks. The bulls took control and the good times rolled. The share price of the bank stock I bought simpy skyrocketed. I felt like a farmer going around harvesting his bountiful crops. At every sight of profit, I liquidated my positions at P29.50, P30.0, P34.0, P41.15, P42.0, P49.0, and P65.0. As the market price soared, I began to wonder aloud, "When is this topping out?" I still have 1,400 shares left and when I heard the new bank president stating that the price could hit P80.0, I decided to hold on to my position. It never did. Nonetheless, I still made a huge profit and a nice return on investment. It was a successful first ride.
I enjoyed my first ride and I am coming back for more with better trades and investment decisions this time around. The first experience provided solid lessons on trading and investing and I will build on it. Surely, it is not going to be soft sailing. I expect rough waves. But as the saying goes, "When the going gets tough, the tough gets going." Philippine stock market, here I come!
The stock market price of that Bank was then trading between P45-P47 per share but I never bothered to check because I did not know then how. Had I known, I would have bought shares directly from the stock market instead. Indeed, after a few weeks the stock market price of the bank went up and reached a record high of P64.5 per share on July 10, 2007. Somehow, the news that the bank was planning to merge with another bank created the trigger. This was coupled by the fact that the bank's financial performance was showing a sustained reversal from where it was years before.
When news broke out that the US banks were overexposed in subprime loans, the stock market stumbled and so did my investment in the bank. It plummeted from P64.5 to P30.0 in less than a year. Thinking that it already bottomed out, I bought an additional 1,500 shares from April to June 2008. The price did move upwards to P35.0 and selling at that price would have earned me 13.% in less than two months. But I was hoping for the market to go back to the P64.5 level and so I held on. I was wrong. In the weeks ahead, the stock market went down again and again and people were unloading in panic. I was wondering, "When is the downward trend going to bottom out?"
On one weekend, I was reading the business section of my favorite newspaper (The Philippine Daily Inquirer) and in it was an article on Warren Buffet. His advice to buy stocks in times of panic seemed at first unbelievable and facetious. As I thought about it, the man who they called the Sage of Omaha could not haved been wrong. What he eloquently said was a simple principle but instructive, "Buy low, sell high." So while everybody is panic selling, I was at the other end of market panic buying at every opportunity as the price went down further to P29.0, P28.0, P26.0, P24.50, P19.50 then to P10.0 until I had no more money left. Never did I feel I made a wrong decision. I was pretty confident that the time would come for the stock market to reverse its fortunes and I was proven right. And when it did, I was riding along its high waves happily.
When the Philippines elected a hugely-popular candidate running on anti-corruption campaign and a promise of a clean government, the stock market responded positively within weeks. The bulls took control and the good times rolled. The share price of the bank stock I bought simpy skyrocketed. I felt like a farmer going around harvesting his bountiful crops. At every sight of profit, I liquidated my positions at P29.50, P30.0, P34.0, P41.15, P42.0, P49.0, and P65.0. As the market price soared, I began to wonder aloud, "When is this topping out?" I still have 1,400 shares left and when I heard the new bank president stating that the price could hit P80.0, I decided to hold on to my position. It never did. Nonetheless, I still made a huge profit and a nice return on investment. It was a successful first ride.
I enjoyed my first ride and I am coming back for more with better trades and investment decisions this time around. The first experience provided solid lessons on trading and investing and I will build on it. Surely, it is not going to be soft sailing. I expect rough waves. But as the saying goes, "When the going gets tough, the tough gets going." Philippine stock market, here I come!
No comments:
Post a Comment