Thanks for this post. very helpful…sort of calms my jitters and reminds me that my stock investments are for the long haul…that’s why i chose equity over fixed income.

I am not an expert but I feel that relaxing woul not be best. Today, the market is under unprecedented strain. Just imagine that even money markets - an investment vehicle that is treated to be one of the safest, needs to be bailed out. This maybe the right time to revisit ones investment strategy and see if it still makes sense. I would not like to be on the same shoes as those from Lehman, Bear Stearns and other supposedly infallible financial institutions, who lost big time because they relaxed and were not in a position to react in time.

Thanks for this insight. My problem tho is I am retired and my investments are in the U.S. institutions. I do not know whether to pull out (which may be stupid because of tax implications) or ride the storm and see what happens. In the meantime my money is shrinking fast. What do you think I need to do. I still have my S.S.S. as my cushion to survive for a while.

Thanks

For amateur investors who undoubtedly get frazzled over shakes in the market, it is always good to remember the reason for having invested in the first place. And lately, just like prayers, these reminders have been constantly drawn to calm one’s nerves.

before you gamble,.. i mean, before you invest, make sure you put in money you can afford to lose. that should be the number 1 lesson. that way, anything you gain is a bonus and losing everything won’t hurt a bit.

gosh!

i am grateful i was not able to put down any investments early last year when the market seemed so infallible!

and look what happens in just a course of one year?! wow!!!

forgive the sarcasm but shouldn’t we just hide our money under our mattresses?

hey i like walden bello’s article today on how this whole crisis came about.

For Rational long term investors , this is a good time as any to buy attractively priced stocks, i am optimistic that prices will fall further , a true investor should not be stampeded to sell his shares becuase the price has dropped but instead should show conviction and buy more if the basis of his initial purchase is fundamentally sound. Its like buying food, since we are forever buying food, we are always on the lookout to buy at cheaper prices, my take on this is, if your’e investment horizon is 20 years, then cheaper stock prices is in the investors best interest since he/she will be continually buying.

Most of our problems with stock prices, is that we are too interested in what is the market currently doing.

It’s really hard to just stay put when you know your money is dwindling fast. But I guess if you have a diversified portfolio then you can afford to win some and lose some. Maybe, due to the volatility of the stock market it’s time to be less aggressive and leave only a small percentage of your portfolio in equities.

FREE Personal Finance Advice

relax, learn, enjoy and pray.

Money invested in stocks should only be “extra money”. I have a lot of paper losses but I’m alright and happy. I’m not losing any sleep.

oh and i just recently read Rina David’s article “Who can we trust” dated 093008 re “hiding money under the mattress”… guess i’m not alone thinking that!

I couldn’t agree more with this post. Very calming indeed. I admit that I do feel a little jittery sometimes. I guess what’s happening in the financial market poses a significant learning lesson for us investors and would greatly contribute to our maturity. I’m still more than a couple of decades away from retirement and I am sitting back, relaxing and watching the storm.

I think people who generally would like to invest should invest first in their education. How would you know if you are doing the “right” thing or choosing the “right” security? Invest in your education first, may it be stock, business or Real Estate.

Ladies and Gentlemen: Lend me your ears.
Unless you’re like me who rushed into putting a big chunk of my retirement money on Mindoro Resources Ltd., an otc-bb a.k.a., pink shit, pardon the phrase, please, you are okay. I can sense most of you are young, so now is the time to dollar cost average on your holdings in your portfolio.
For time immemorial, google the S&P 500 historical performance, Mr.Market behaves like having a menopause. Relax. Learn the lesson from: Ang Langgam (sa batangas ay Guyam) at ang Balang story, at least during my time, in Grade 1.

I’ve been thru the 1997 crisis and i have done some research and thinking about investing. Truth is the govt and financial institutions prefer everyone not to panic and just ride out the “storm”. This is for their peace of mind and has nothing to do with investor benefit. If you have PLDT now at 2645 and let’s assume it will fall some more before going up to say 3000. Question is how long will that take. Why not get out now and put in fixed income instrument and get back in when it reaches 2645?

Mr. SUNJUN,

I have Series 7, 63 and 24 FINRA Registration here in U.S. Will SEC and PSE recognize my licenses? I have plans to stay there for sometimes and excited about P.E.R.A. Thank you. Illinois Retiree.

I only invest in the stock market if there are fresh funds coming in (either from work or business).. otherwise, my funds will sit in TDs.

I try to avoid money market or bond mutual funds/UITF, you’re better off investing in 5 YR TDs from big commercial banks here. Remeber that those sales load and annual mgmt fees will kill your gains.

In stock investing, for me, safety of capital is prioritized before cap gains. I’m satisfied with investing on big companies with a dividend policy. Reinvesting those dividends will ensure a hefty fund in the future.

Read Jeremy Siegel’s book — Stocks for the Long Run

happy investing everyone =D

@ Will

The problem with that approach is that no one knows for sure when it will go back up. If you performed cost averaging, assuming you have incoming funds, then you’ve gained on your shares when the price is low.

Since the advice are for those who will not retire immediately, the premise is that the markets will go up. It is a given that the markets goes up and down, but in the end it will go up. In the end it is not a guarantee that markets will go up.

Ask yourself why did you put your money on stocks in the first place? It means you are willing to take the risk, knowing that events like this can happen. So as “lotto player” said “make sure you put in money you can afford to lose”. So if you want stable income why not go for fixed income securities.

As for those who are retired or about to retire, think about the price the you started investing. If the average price of your total investment is below the current price then you gained some earnings. If you have losses then you have the following choices: (1) Don’t withdraw yet and wait for the markets to go up again, (2) withdraw systematically, it might hurt you now but as markets go up so does the value of your investment, or (3) withdraw them and put it in a more “stable” investment.

disclaimer: this is mere opinionated advice and not an expert advice. if you want to follow proceed with caution.

Let the market dictate to you what to do. But be rational not emotional. Don’t sell, buy. Learn from the world’s greatest investor. Warren Buffett just bought Goldman Sachs and GE shares and still looking for good buys.

Buy in bear market when prices are low. Sell in bull market when prices are high. Isn’t it rational? Why do most people do the opposite? Because most people are emotional not rational. I’m buying more stocks.

The market do go up in time but that is the market. If you are investing in individual shares and the company belly up, then you are in trouble. The recent events showed that even big companies like Lehman and Bear Stearns are not immune to this. Those who had invested in these companies lost their equities for believing “expert” advice.

If you have invested in index trackers, you may be in a better shape to follow this advice.

guys… in every rule/stock….. there is always an exception….. please do take a look at the 60 day historical chart of piltel and pacific online gaming and philex mining…..

I have watched my stock in SPH tumble from 5.60 to 3.45 but decided to hold on it since the company fundamentals are quite strong. Today it’s back to 6.00 and i intend to keep it until such time that its back to at least 15 times earnings.. Im still hoping this storm will soon be over and we will see the light at the end of the tunnel.

My recommendation is to hold on the your position if you dont intend to retire soon..

To quote a famous investor, “excitement and expenses” are enemies of an investor.

What is meant by ‘losing investments’ in the subject ?

Does it mean falling stock prices ?

Falling stock prices do not necessarily mean ‘losing investments”.

In fact, if you are referring to Philippine companies listed at the stock exchange that are falling sharply in recent weeks, most if not all of them are not really losing investments.

Their stock prices are merely falling because of the usual negative market reaction to the unending negative news on the US economy and also to the high inflation rate in the country (now in its double digit).

If the fundamentals remain strong or even if fundamentals are slighlty affected by the current market environment, as long as the recovery is still there, then there is nothing to worry about and we should remain invested to our holdings.

Always remember, do your homework before you listen to market analysts and investment professionals. More often than not, they are merely big nuissance.

This is what I’m doing: I had some investments on UITF and Mutual Funds which were all in Equity Funds. And since the stock market is down today, definitely all are losing except for the mutual fund that I have since I invested it last 2006. What I did is that I left my investments in UITFs and Mutual Funds and started to DIRECTLY investing in the stock market thru BPI Trade. In just three weeks, I was lucky earning around 7K as I swing the ride of the ups and downs of the stock market with my link.

[...] What to do with losing investments [...]