Are you a stockholder or a stocktrader? (Part II)

The Misnomer of the Filipino Investor (contd)

More often than not, it's just a dichotomy. You're either conservative or ultra-risky. Much of it is really rooted in how we were raised.

We were always told three major things while growing up. I call these the three golden rules of being successful, circa 'the old times':

1. Get good grades in school
2. Get a good paying job
3. Save your money for the future

These are strong practical advice, yet they just give us a glimpse of why most of us don't invest. In some ways, I know I sound like Mr. Kiyosaki, but I can honestly say that I have only read the fist chapter of his first best seller (Rich Dad, Poor Dad). And I couldn't agree with him more.

However, I think we have to probe a bit deeper into our local culture. Judging by the withdrawals of the UITs last year, the panic selling in the stock market recently, and the fondness for people to 'invest' only in traditional bank deposits, we really have much to learn about investments. And it's really expected since we're still, by definition, part of the 'emerging markets' of the world. But for me, that shouldn't serve as an excuse for us to just stay with the traditional investments. The local setting has a slew of investment options that we can choose from.

Out of the non-core investments, there are the bonds, stocks and even real estate. However let's focus on the stock market since this is something that's still unknown to 99% of the 80M Filipinos living in the country. According to Mr. Francis Lim, President of the PSE, there are only about 1% of the population that invests in the local stock market. The number is ridiculous considering that our economy has about 20-30% of the people living in the middle class.

What is the stock market?

To start off the topic, I'd like to borrow this topic from http://www.investopedia.com. This captures most of the beliefs people have about the stock market -

The Five Biggest Stock Market Myths
1. Investing in stocks is just like gambling
2. The stock market is an exclusive club in which only brokers and rich people make money.
3. Fallen angels will all go back up, eventually.
4. Stocks that go up must come down.
5. Having just a little knowledge, because it is better than none, is enough to invest in the stock market.

I'll expound more on these in my next update. Until then folks, invest with caution :-)