Equity Funds: Trust Diversification, Never Panic Sell

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I remembered writing some time ago about people who panic sell (read here). It's amazing how these know-nothings try to show themselves as "financial managers" (read here). I find it really amazing these people talk like they know better than Warren Edward Buffett. Months ago, I remembered this was what the stock market looked like...

Business World Online

There were lots of panic and sarcastic yeheys when the figure above happened last May 2022. I'm amazed at the economic literacy of the comments in regard to the stock market's status. I bet these people bought stocks in bulk when everything was in green. I bet they were expecting that all the money will return fast. Though, there's the possibility that these people were doing day-to-day trading--something that I wouldn't recommend (read here) I think they want to get rich quick out of stocks. Chances are they probably sold all their stocks at a loss and are probably gambling instead (read here). Somebody may have even pulled out of AXA equity funds and decided to play Axie Infinity instead (read here). 

Selling stocks right now after buying in bulk during a bull market is stupid. What the right mind buys stuff to sell only to sell it at a loss except during a clearance sale? I don't know if this is true or not. I heard a certain someone was dressed in pink and selling rice at PHP 20.00 per kilo and eggs at PHP 10.00 per piece If that's true then it's selling at a loss. I can't imagine how the money went if I bought PHP 1 Million worth of stocks during the bull market only to sell it very low during the bear market. One should only stock on inventory during times when merchandise is cheap. Otherwise, it's best not ot buy too much supply when goods are expensive due to lower demand. 


Buffett has more different advice in contrast to the social media gossipers (read here). Buffett's advice is that fear creates opportunity. The bear market, is in fact, a good time to buy more stocks either directly or through the index fund (read here). There will be people panic-selling. I don't know if I should facepalm or laugh at the panic selling. This fear creates opportunity. Any good investor will actually take advantage of it. It would be better to profit from folly (I bet a lot of those social media gossipers are now selling stocks at a loss if they have them) which may drive the price even lower due to supply and demand. Eventually, some wise buyers will buy off these cheaper stocks from valued companies. Buffett also recommends the use of index funds for most investors. 

If there's an abundance in supply then it'd be wise to stock on as much as possible within a certain timeframe. It would be wise to have extra supplies before scarcity hits. Scarcity will cause the prices of goods to rise up then one can profit from it. In stocks, the same goes when you buy more than usual. It's called value cost averaging. Otherwise, cost averaging means you'll end up buying more units of stock because the prices are cheaper. MY PHP 3,000.02 per month will buy me more units during a bear market which will eventually appreciate during a bull market. In my case, I intend to keep buying more units of the Philippine Equity Smart Index Fund (read here). I decided to reinvest some past dividends from the ALFM Multi-Asset Income Fund (which I sold at a small profit) as well aside from re-allocating the money to the other stock-related funds.

I decided to check on my GInvest. I found out that the ATRAM feeder funds are now increasing in value (a bit). However, they're not yet good enough for selling and it'd be better to hold on to them or add at least PHP 1,000.00 to PHP 2,000.00 per quarter due to the increase in NAVPU for two years or up to five years. I think I'd like to focus on increasing the number of units of the Philippine Equity Smart Index Fund (for now ) due to how the feeder funds are getting expensive. It looks like my opportunity to take the dip is with the Philippine stocks. It looks like I might need to allocate a little more money I don't need for now. 

Besides, looking at Philippine stock index funds--know that these are from good companies. The values of the shares may be down for now. It would be the total amount of money I invested would go to good companies like SM Financials and JG Summit Holdings. I practically bought a piece of them on sale when I decided to pay for PHP 1,000.00 and went beyond the minimum goal of PHP 8,000.00. I think I'l probably put more money into it for as long as possible. ATRAM and AXA already have built a good reputation with their investments. The stocks picked are from blue chip companies. So, buying these stocks on sale is practically ideal during a bear market.

I guess I'm going to just let the social media gossipers panic sell. I have the confidence that the diversification based on blue chip companies will prevail. Right now, I even feel that SM Financials' investment in renewable energy may give it better value later. I can just keep buying some equities (which in turn helped curb my overspending, read here). I can just imagine though how long it might be before those social media gossipers might shoot their own foot at the nth time. Just take advice from people like Buffett or learn from the life lessons of the late John Gokongwei Jr. Sure, not everyone will be rich. Just be sure to never go broke. 

References

Websites


"Buying the dip: Is this a good strategy when markets are falling?" by James Royal (May 26, 2022)

"Warren Buffett: Why This Bear Market Could Be an Investor's Best Friend" by Catherine Brock (July 9, 2022)

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