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| English: Phillippine stock market board (Photo credit: Wikipedia) |
Financial IQ Philippines Quick Hit(s):
Do you still have a lot of investments on the Philippine Stock Exchange? If so, it is definitely worth your time to go through this. For the complete article, please visit the link below.
Q: The stock market has started to move sideways last week after registering an all-time high at 6,800 points recently. I wonder if this is a good time to take profits now as many stocks are already expensive, but I also worry that I might regret it later if the market resumes its uptrend and goes up further. I want to maximize my profits from stocks. Can you advise me? – Evan De Vera by e-mail
A: The reason you hesitate to sell your stocks now is you have the feeling of greed that comes with the anticipation that the market will further go up. The feeling of greed tells you to hold on to your stocks and wait for it to go higher as everyone expects the stock market to break the 7,000 target soon. There is a feeling of denial within you every time you see the market falling because you don’t want to hurt your ego by accepting the possibility that you may be wrong about your expectations.
Yes, there is no doubt that the market will go up again and possibly set another record high but every time the market goes up, the risk of losing also gets bigger. Considering the rocket speed and steep rise of the PSE index, which rose by 18 percent in less than three months, it is not hard to see that the stock market may soon be due for massive correction.
It may not necessarily be a sharp fall unless there is a reason for the market to panic but it may decline slowly on choppy fashion. Speculators will trade less as buying slows down. Traders take a back seat and assess where the market stands fundamentally. Some may fear that the market has topped already. Others think that since the Philippine stock market is already trading at scary valuations, many stocks are now ripe for the harvest.
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