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| Tech Explorist |
I may be no top financial advisor or billionaire. However, it doesn't mean that I can't reject social media gossip such as how Facebook pages are filled with them. I was reading through some Facebook pages talking about the recent stock market crash (which may be nowhere near the 1929 Stock Market Crash). What truly amazed me is how illogical arguments can make. That's why I wrote why I'd listen to Warren Buffett (an investor) over social media naysayers. Buffett has the money, made proof with it, and one of the things I'm doing now is gathering indexes while the market is low. I don't think it'd recover any time soon either. Right now, my focus is to get more stocks through indexes and feeders.
Some might boast that they have an Atenean or La Sallian education from Manila. However, does an education from Manila make one better than the rest of the Philippines? I frequently threw tantrums because I didn't do well in high school (under K+10) and I had to deal with my desire to become an Atenean. For me, an Ateneo De Manila University (ADMU) education meant nobody would dare to look down on me. Unfortunately, some of its alumni have become so arrogant. I'd believe that they have genuine ADMU or La Salle diplomas. However, that doesn't mean that they're always right. I was reminded when a classmate of mine told me of her auntie who graduated from ADMU. It was because I kept whining that I can't enter ADMU because my math grades sucked. I confess my parents didn't want to let me study in very expensive schools either. That auntie of hers had an ADMU diploma but she was lazy after that. It's a far cry from the late John Gokongwei who was a class valedictorian and kept working hard beyond the classroom.
I'm not saying that they should be Warren Buffett or Bill Gates. I'm not saying they should build a business empire like Lucio Tan Sr., John Gokongwei Jr., or Tony Tancaktiong. Instead, do they understand how these businessmen built their empires? Sure, I'm not going to become Gokongwei and never will be--I'm fine with it. What's important for me is to gain financial stability and security. However, these guys would look like they don't truly understand economics. It's not because they're not anyone great. I'm not anyone great either. As said, I'll never be any of the great men I mentioned but I can learn from them. Why I can trust Buffet is not because he's super-rich--he has practical life advice that even people below him can still learn. It's like Buffett's advice to buy an index fund, buy more during the dip, and buy and hold for as long as possible, which are proven effective. Buffett still stands on credibility.
Some of the comments I've read would then blame the government. Some blame former Philippine President Rodrigo R. Duterte or even the incumbent Philippine President Ferdinand R. Romualdez Marcos Jr. for the recent stock market decline. However, we need to understand the factors that affect stock prices. We have company performance, investor sentiments, industry performance, and economic factors. Economic factors have interest rates, economic performance, inflation rates, economic policies, and currency performance. Sometimes, a president may not be able to immediately deal with it because of the world market factors--something economically illiterate people overlook. It's like the prices of gasoline are affected by the world market. Yet, some people continue to ignore the world market. If companies right now sold gasoline at the same price per barrel before the war--they'd all be selling at a loss. Maybe, remove the excise tax to lessen the burden but if it will cause a loss then retain the excise tax.
I guess these people are spending too much time envying the rich (and wanting to get rich quick) rather than learning from the rich. I think it's the mentality of "rich bad, poor good". Such a mentality has caused some innocent rich people to get accused of crimes that they never could've committed. I guess they're spending more time watching nonsense shows than learning about finance. They're more emotionally based. Buffett even said, "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." That's why I wrote that following the crowd all the time is very bad advice. It's a lack of good temperament that derives from being with the crowd that causes people to buy into the cryptocurrency or Axie Infinity craze. It's also having the pleasure of being against the crowd that may also cause people to reject a good investment when the majority is into that investment. The intellect becomes useless when one lets a bad temperament take over. That's what I learned when I nearly joined pyramiding scams in college or got into a bad credit with a family friend. No amount of knowledge from graduate school will help if I have a bad temperament.
These people may also be busy panic-selling. I guess they never bothered to Google or learn from stock investing or buying a good index fund. They could get into legitimate financial websites. Instead, they probably still get their "financial advice" from dubious sources such as Get Rich Quick scammer or maybe from the "think-tanks" like IBON Foundation or Bayan Muna. I feel they probably did the opposite. Stock trading is usually to buy low and sell high. Instead, they bought the stocks when they were high so they panicked when the stock market was mostly in red. Yet, Buffett himself, a real credible investor, is who I should listen to. The Buffalo has these three reasons not to worry about it at all:
1. Investing is a long-term strategy
It's easy to get caught up in the day-to-day market fluctuations, and it can be nerve-wracking when prices start to fall. But one of Warren Buffett's hallmark investing strategies is to buy solid companies and hold them for the long term.If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes. -- Warren BuffettDespite short-term volatility, the stock market has a long history of earning positive average returns over time. Even if the market crashes, there's a very good chance it will recover eventually. By maintaining a long-term outlook and avoiding any knee-jerk reactions to daily fluctuations, your investments have a better chance of recovering from any potential volatility.2. Downturns can be a smart buying opportunity
While it may sound counterintuitive, market downturns can actually be a great chance to buy more. Stock prices are lower during market dips, meaning you can load up on high-quality investments at a lower cost.Warren Buffett doesn't fear market crashes and corrections. In fact, he embraces them, taking the opportunity to invest heavily at a discount.Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble. -- Warren BuffettBefore you buy, though, make sure you can afford to invest right now. You should be caught up on all your bills, and it's also wise to have an emergency fund with at least six months' worth of savings set aside. If your financials are healthy and you have cash to spare, then you can consider investing it to take advantage of the lower prices.3. Research can help your investments thrive
It's always important to research your investments before you buy, but it's especially critical during periods of volatility. When the market is thriving, even subpar stocks can perform well. But not all stocks can survive downturns, and weaker companies are less likely to rebound.Before you invest, make sure you're researching the business behind the stock. Strong organizations make for strong investments, and if the company's underlying fundamentals are solid, that stock has a better chance of recovering from a market crash.We own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie [Munger] and I are not stock-pickers; we are business-pickers. -- Warren BuffettIt's a challenging time right now to be an investor. While nobody knows for certain whether a market crash is on the horizon or not, downturns are not as daunting as they may seem. By keeping Warren Buffett's advice in mind, you can rest easier knowing you're prepared for whatever may happen with the market.
Buffett makes a lot of money and knew how to make a lot of money. I think these social media gossipers talking about finance only know how to spend money, they think money grows on trees (and they're probably either spoiled children of rich families or not even rich, case-to-case), or that they easily take their paychecks for granted or are living in debt. Maybe, they continuously want instant gratification. However, stock markets (and all related investments to stocks) have no guarantee of getting rich quick fast. Just because you bought a stock doesn't mean you get immediate profits. Sometimes, you need to hold on to that stock, buy more of that stock during high and low points (through cost averaging and value cost averaging), and think long-term. I guess they're short-term thinkers--something that finances should never be.
References
Websites
"3 Reasons Not to Worry About a Stock Market Crash, According to Warren Buffett" by Katie Brockman (March 30, 2022)
"Factors that can affect stock prices"