Is It High Time To Bail While The Stock Market Is Taking A Plunge?

There’s panic on the streets of Ayala, and stock traders are wondering if life will ever be the same again.

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Cyrus, 28, a software engineer, pulled out his shares the moment he heard news about Philippine share prices taking a dive last Monday at the Philippine Stock Exchange. Being a new blood in the stock market game, he cautiously took a step back after reading about China’s slumping economy. He knew the riptide would soon hit the country and he was adamant to sell his shares all as fast as he could.

Despite being a new player, he has been reading a lot about finance and stocks for a while now. “I watch the news every day to monitor the prices of my shares,” he says. “I go to Bloomberg, ANC Money, and Reuters for news and I ask my mentor for some tips.”

He may have let go of his shares for now, but he says he would buy again if the prices dip further.

While Cyrus was easy to pull out of the stock market after seeing danger signs, his work supervisor and mentor, Daniel, 41, a senior application developer, didn’t budge at all. Daniel has been playing the game for more than a decade, and has a background in qualitative economics, making him more aware of the benefits of investing in stocks.

When the bloodbath last Monday happened, he remembered one thing. “The basic rule of stock trading really is not to panic,” he says.

“I did not sell any of my stocks [when I’ve heard of Monday’s news] and I don’t intend to,” Daniel adds. “My belief is that the prices of stocks will continue to go up and down as they always do.”

Cyrus and Daniel are classic examples of two different kinds of stock market players—one who plays it safe, and the latter, a veteran risk-taker.

They work closely and both monitor the stock market news religiously, but took different measures upon hearing news of last Monday’s incident.

What is the right approach when faced with such untoward instances? What’s the best way to react whenever you see the index going downhill?

Black Monday—or is it?

There’s panic on the streets of Ayala, and stock traders are wondering if life will ever be the same again. On Wednesday, the Philippine Stock Exchange Index took a sharp dive by 287.17 points, or a whopping 4.37% to 6,288.26. According to reports, this recent dip has been the lowest that the stock market has experienced since August 2015.

As is the case in August last year, analysts point out the relation of our stock market’s crash with our neighbor: China.

With China’s bearish economy causing shocks worldwide, it’s no surprise that our country’s economy will also be affected. The simmering tension in the Middle East only aggravates the situation more.

Should people who put their money in the stock market make a panic sale now?

According to Hans B. Sicat, PSE President and CEO, the stock market may look bearish at the moment, but the country is enjoying a robust economy brought by economic changes over the past few years.

“The situation though does not change what is happening in the real economy, with the growth drivers seemingly intact,” Sicat told the press. “The demographic dividends are all the more pronounced, given strong business process outsourcing performance, robust consumer sector, lower inflation, and growth in infrastructure.”

Luckily, the market picked up on January 13 as some investors took advantage of the bargains from last Monday’s bloodbath.

With the market more volatile than ever, the only thing stock market players can do is stay frosty for the movement of the market.

Should people worry about the index crashing below 6,300 points again? Keep in mind that exactly five years ago, the index was at a dismal 4,132.04 points. –Dino Mari Testa