Resurrecting Your Finances

It's good to be able to blog again.

Two weeks ago today I was on a plane to Davao and spent the rest of the week there. Then the week after that, I was catching up on the work hours I lost while in Davao. It's just now, over the long Holy Weekend, that I'm able to relax and hammer away at my keyboard again.

While in the plane en route to Davao, my mind was fixated on the news about Cebu Pac's IPO this coming May. It's been a while since there's been any IPO in the local stock market. I can't remember how the following got listed - CPM and E-Games - but I know they were not IPOs. Their prices went up after their listing, albeit for a few days.

E-Games in particular also benefited its sister stock - IP (ticker for IPVG Corporation) - the stock rose...and died after about three days.

With Cebu Pac, JGS (ticker for JG Summit) also rose, and is now dead, more or less. Dead meaning the price isn't moving. Perhaps when the IPO date nears, JGS will have price activity once again.

In any case, the IPO of Cebu Pac would hopefully create excitement in the market... next to the post election rally.

Speaking of the market, it has been rising... but the volume hasn't, so it's best to adopt a wait and see approach. Volume is a very important indicator, pointing you towards the right direction when you are trying to time the market. Of course, Warren Buffett will tell you that you can never time the market. Actually, you can, to a certain extent, with the help of technical analysis. You can also time your entry to a particular stock.

I learned about technical analysis from Absolute Traders. They recently had an event which unfortunately, I wasn't able to attend. If you are an active stock trader or you plan to be, it's good to attend their seminars.

Technical analysis isn't a fool proof system and it depends on personal discipline. Unfortunately, most people do not have trading discipline, i.e. we make decisions to buy a particular stock based on fear or greed. If you can make decisions mechanically, then it's good to trade. Otherwise, you're better off buying a quality stock and holding to it until the day you need your money.

Or, you might want to look at investing via mutual funds. Let the professional money managers select the stocks for you. Do note that I use the term "investing" and not trading. Investing is a continuing approach, i.e. you put money into something continuously with the aim of withdrawing those funds only when you are about to retire, or, if the money was meant for a bigger investment (usually real estate) or a future expense (wedding, child's education, hospital expenses, etc).

If you invested in stocks or stock mutual funds in 2007 or 2008 and invested only one time, then your money has (thankfully) recovered most of its value. But that's the wrong way of investing. In fact it's not investing.

Real investing is doing it consistently, usually monthly, using a portion of your monthly paycheck as investment fund. Then, whether it's a stock, or a mutual fund, you invest monthly in the same security. By doing this, you are doing peso cost averaging, so you are able to average out the buying values, whether it's in the highs or in the lows.

With peso cost averaging, you are able to "resurrect" your money over the long term because even if you bought at times of market highs or peak prices, you'll also have times where you buy at the lows. Volatility can be a friend.

I don't confess to be a money expert. I'm still learning along the way, reading books, watching news, and learning from others. Money is easily spent but not so easily earned. So if you are not aware of what you are getting yourself into, whether it is in bonds, stocks, real estate, insurance, or what not, it's best to just go via the safer way of investing - buy and hold and diversifying the kinds of investments you get yourself into.