Markets are down… is it time to buy, hold, or sell fund investments?
August 15, 2007
Markets worldwide are on a slide due to subprime lending concerns in the US. Even the Philippine stock market is not spared. After experiencing a series of all-time highs during past months, Philippine equities are currently on a downtrend.
So if you have stocks, mutual funds, or unit investment trust funds (UITF) holdings, is it time to dispose of them, hold on to them, or buy more?
Click "Read More" to see a few PMT members' opinions.
dwin shares:
As for me, my investments with Philequity will remain. Aside from the confidence I have in the fund managers, I think it's time we put into practice what we have learned so far. These include:
1. Mutual funds are meant for the long term (5 years and up)
2. Stocks will outperform all investment instruments over the long term (except maybe FOREX), come bull or bear markets
3. Low gain equals low risk, and high gain equals high riskI've invested P500t with them, and so far I've lost 9% of the value of my shares. It's really testing my nerves right now, but I'm sticking with my plan.
the.oracle thinks:
If you're in for the long term and you don't need your money then I suggest you hold. But if this causes you sleepless nights and makes you very unproductive on your work then I guess cut loss is an option. If you would ask for my personal opinion this is just a healthy correction. Remember we will not get to new record heights without market dips like these. Besides ganyan lang talaga sa equities.. high returns or high losses… no pain no gain.
a1roxy's thoughts:
Today i redeemed something like 50% of my investments in equity mf/uitf. I decided to cash in on the gains i made, some big, some small. The important thing is they made some gains already. As for the remaining 50%, I'll probably sell if I still see a lot of uncertainty on the markets, that is, the subprime losses not yet fully accounted for. I'll sell on the next upticks whether I make or lose money. It won't matter. I'll then try to reenter slowly (cost averaging) as I believe the equity mf/uitf navs will still go down.
I'm done with buy & hold. Investing is indeed for the long term but I'll try to buy, sell, buy & sell for the long term.
rael's opinion:
I have mixed feelings about this…
Although being in a pooled fund, I know the managers are already reallocating accordingly. I see potential in maximizing returns when you take profits at the correct time. And when equities start to come back up, then, no problem, just buy again.
I have a stop loss at -10%. I think the buy and hold strategy serves well to those who already earned huge profits (say 50% at least), such that short term market corrections are of no consequence anymore.
ekimonk thinks:
The Philippine stock market has been on a downward trend 3 weeks ago.. and with the US financial problem it just make it more obvious. The lack of liquidity meant that the market has reached a peak.. the mortgage problem just made it more obvious.
If i have enough money, I will park my money on real estate in Manila and its vicinity. This is the next target of foreign investors as our real estate prices are very much reasonable. Lots of upside…
How about you, what's your plan?
Share your thoughts in the following discussion threads in the PMT Forum:
- To redeem or not to redeem (mutual fund/UITF investments)…
- When to get out of UITFs?
- Stocks are down, should I hold or sell off and minimize losses?
August 16th, 2007 at %I:%M %p
This is the best time to buy… but the question is which stock to buy. Better be sure that you’ve done you’re technical analysis and your homework…
August 16th, 2007 at %I:%M %p
I am out!
I read the US depression (1930’s) thing, years back. The current situation is difficult to size up. The ice berg maybe just a tip. And Murphy says….so I am out.
September 17th, 2008 at %I:%M %p
This is the best time to buy!
September 18th, 2008 at %I:%M %p
What you are talking about is timing the market. Yes, it’s possible; no, it’s not recommended for anyone how is not a full-time professional and master of his own emotions. Think about it: if it really were that easy, why is virtually every stock fund in the world down for the year? There is no earthly possible way to be sure that the stock market has found a bottom; in the 2000-2002 market crash, the market found a bottom for weeks or months at a time, rallied, then plummeted further. Also note that some stocks do find a bottom, but some others do not, so it’s not just a question of timing the market, but timing indivdual stocks.
Personally, I think you’d be crazy to be in this market right now. This is just my gut feeling, but I think this is a once-in-a-lifetime bear market the likes of which hasn’t been seen since the 1970’s (not as bad as the Great Depression, though, I imagine). But that’s just my opinion, and I could be wrong, or worse, I could be right for now, but then change my mind a couple of months later – without telling you, of course.
The bottom line is that, unless you have hundreds of thousands of dollars invested in the market, you would probably do better spending your time worrying about how to make more money by doing your job better, rather than timing the market (trust me, I do this for a living full-time, and it’s still damn hard).
Oddly enough, for non-professionals (and for most of them, come to think of it), the best thing to do is invest steadily, blindly, dollar-cost averaging – over the long run, without any thinking, without ever withdrawing money unless you actually need it (and no market timing) – has been shown, in numerous research studies, to beat almost any other strategy in almost any kind of market.