Good Temperament Needed to Handle the Current Bear Market

It's nearly the end of July and I feel we need some lessons in temperament n investing. I wanted to recall some bad experiences I had with finances (as well as other life decisions) due to a bad temperament. It was a bad temperament that caused me to get cheated out of cash by a family friend. It was a bad temperament that caused me to nearly join pyramiding scams (read here). Now, I decided to take a look at a post on Facebook a few weeks ago that shows so much economic illiteracy and poor temperament...

Simply, I just can't help but laugh (or cringe) at the comments written here. Dare to read them on Facebook if you dare. What can truly be astounding is the bad temperament of those people. It's very contradictory to what Warren Edward Buffet said namely, "The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd." Yet, the cringeworthy comments in that post prove otherwise. Is it me or is there a long way before Filipinos learn economic literacy? Though, I'm not going to wait until Filipinos become economic literate and business savvy before opening up the economy (read here). What's needed is that politicians who have Buffett's temperament do not derive pleasure from being with the crowd or against the crowd. I felt that a lot of bills concerning economic liberalization were left unsigned because of politicians with that kind of temperament. That's why I advocate for shifting to a parliamentary system (read here).

It was really a lot of stupidity to see when people panicked that the Philippine Stock Exchange was in red. However, Buffett's advice has been rather different. People should listen to experts like Buffett over social media gossipers (read here). Buffett chooses to take a look at bear markets not as a time of whining but for investing (read here). Buffett would look at it as his friend rather than his enemy. Some may laugh at me that I may never become Buffett. Of course, I'll never be Buffett. However, anybody can learn from his basic life lessons such as buying an index fund. That's why I'm keeping my equity fund and buying more units of the Philippine Equity Smart Index Fund (read here). Buffett says to periodically invest in an index fund and you may end up doing better than the direct traders. Of course, it's not always a guarantee as some direct traders are having more money than I do right now.

Some things I did to curb my bad temperament are these. It's more than willpower. One can do some cardiovascular exercises such as walking, and aerobics, and it might be ideal to buy a MiBand (read here). It would be important to eat healthy such as minimizing sugar (I suggest ordering your milk tea with less or even without sugar or going for fruit teas with little or no sugar as much as possible) and eating more vegetables and less meat. It would also mean spending less time on entertainment and more time doing financial research as well as other types of research. This would mean to cease being a social media gossiper if you're one. Dissociating from the pseudo-intellectualism of being a social media gossiper is good for one's well-being. Consider it like quitting drugs and never return to it no matter how good it feels.

Right now, I feel the need for extreme patience is there. My AXA Chinese Tycoon Fund (read here) still goes on and on. My PHP 3,000.02 per month now will mean more units purchased than it was during the bull market. Meanwhile, buying some extra units of index funds and feeder funds from GCash's GInvest means I'll get more because of the dip. It's common sense that a lower NAVPU means I'm going to get more units than when the NAVPU is higher. As Buffett advises, buy undervalued stocks from good companies. Since there's no Standard & Poor 500 (SP500) in the Philippines--I think the Philippine Stock Index Fund (from BPI) or the Philippine Equity Smart Index Fund (from ATRAM) would be a good pick. The fees are as low as 1.0% to 1.5% depending if it mixes active and passive or not. I prefer to mix both since it'd be more advantageous to take the best of both worlds.

I'd probably be laughing at people who are panic selling. Some people may have pulled out their AXA equity finds to play Axie Infinity (read here). Some people may have been buying high then selling low (read here). Sometimes, it's advisable to sell any stock that continually underperforms during a bull market or if that company is dwindling. Meanwhile, if the stocks are from good companies (such as those that make up the PSEi) then it's ill-advised to sell low when you bought their stocks high. Instead, it would be advisable to continue investing for a certain horizon. One can continue with cost-averaging or buying more if one could buy more. Otherwise, it's never advised to buy stocks in the bulk during a bull market. I'll just have to try and do my best to keep my cool in investing in this still ongoing bear market.

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