Cost Averaging? or Market Timing? (a Question on Stocks Investing)

EEI stock on PSE - back when it was still about to trend higher up

A friend of mine recently asked me this question via FB:

may tanong ako sa stock investing. i'm following bo sanchez's stock updates. i buy when low. then napansin ko nawala ang gains ko because i kept on buying at buy below prices pero dahil tumataas na ang price per share, tumataas din ang average prices ko. for ex. MBT. dati ang average price ko was 69. i noticed na may gain nako na almost 50% when MBT price per share went up to over 100. but i held on to my stocks. i kept on buying and the ave price went up to 72 na and my gains were now barely 30%, also because share prices pulled back from 100 to 92. sana pala nagbenta nako nung nag 100 ang price. but i haven't sold any MBT stocks.

so i experimented today. i observed na tumaas ang FPH up to 80/share and i noticed na may gains nako na 23%. 80 is still below the buy-below price of 102. what i did was i sold all of my FPH shares and i plan to buy again when it pulls back a bit so i can start from 0, so to speak. i plan to do range trading pero guided by bo sanchez's recommendations pa din. am i doing the right strategy? i'm thinking kasi na as long as i see positive gains, that means i'm earning di ba?

that's what i did with ICT. nag experiment ako. a few months ago, i read in COL research that ICT shares are at market values at 71-75/share. so they recommended to buy when prices pull back to 67. and it did! well i bought at 67.50 and it went up to 71 kanina lang. so good move. pero i only bought up to 250 shares lang coz i was scared to lose my money so ang kinita ko was barely 600 bucks hehehe. better than negative.

Here is my answer:

Hi (friend), nice read !

I think for MBT, what you were doing was Peso Cost averaging right? That's actually normal, as you accumulate per month or per same period of time at the same amount, the average goes up as the price that you get to buy them also goes up. If you really want long term for MBT, then you can continue to buy and be consistent on the Cost Ave Method. Although 50% is already a very good one. But if MBT continues to go up in the long term, who knows? Your gains may go up 50% again.

For FPH, I think you are doing just right. Although if you plan to range trade, yes follow Bo's recommendation. Try to understand the reason why -- the reasoning is: BUY in DIPS. If it dips down low, you buy. If it goes up and reaches a peak you set as your target, you can sell. Take NOTE though -- this kind of market timing is hard, you will need in-depth knowledge or experience and application of technical analysis. YOu have to be careful -- make sure that the mid-term or long-term outlook is UPTREND (range trading is generally used for stocks on a consolidating trend). You will see it through the charts. You will really have to apply what you learn in tech analysis to get proper timing. To be extra safe, make sure you are riding on a fundamentally-sound stock. I haven't been following FPH, but from what I've heard ever since, from COL fundamental outlook, they've been consistently grading it naman as a fundamentally good company.

For your ICT -- that's good! Any positive gain is good. I've heard somebody term themselves"chupitero". But any gain in the stock market is a good gain - kahit gano pa kababa (or kaunti). Kahit pa binteng lang! So I agree with them. A chupitero is a chupitero -- he is still.... panalo! hehe

We may be getting gains now, but gaining in stocks is not really that easy. Once you get losses, you'll know how it feels like. But -- no pain, no gain. You may loss some, but if you know how to handle it well, and know how to use that pain to really learn something -- you will gain in experience. That is, to me, what will give you the golden eggs.

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Happy Investing to all! ;)

4 Reasons why Solar Power is the Next Generation Investment in the Philippines

Anything freely offered by nature (which means abundantly given by our creator), especially when u can harness one, means it's a gift from God.

That's how Solar Energy works. You can harness the natural power of the Sun to give electricity to your home. The Sun's energy is limitless, or according to scientists and physicists, it will last at least for more millions & millions, or maybe even billions, of years (I don't know the exact estimates).

The 4 Benefits of a Solar System:

1. It saves you money
- after the initial investment has been recovered, the energy from the sun is practically FREE.

2. Environmentally friendly
- Solar Energy is clean, renewable (unlike gas, oil and coal) and does not pollute the air by releasing carbon dioxides and other gases.
- Everyone, slowly but surely, is going environmental now... very soon, people will realize we need to take care of our environment. Sure, everyone wants to get rich, but no one wants to die.

3. It can be Independent/Semi-independently installed
- A solar power system can operate independently on your home, office or building, not requiring a connection to a power or gas grid at all: so that you are running fully on solar power alone
- It can also operate semi-independently, where only a few appliances or a few parts of a home can operate using Solar power, and the rest through the typical energy grid in your location
- Solar Panels have back-up batteries, so you can go full solo or semi-independently -- especially during times of storms

4. Low maintenance
- Solar panels have no moving parts, no recurring costs, do not release offensive smells and does not require you to add any fuel -- unlike Wind Energy which has engine parts or moving parts for it's turbines
- Solar Panels generally has a shelf life of 50 years, based on studies
- it's practically no cost after the initial investment (ROI) has been recovered.


How Solar Power works:

Why can we say it's an investment?

In financial terms, an investment is defined as:
1. The action or process of investing money for profit or material result.
2. A thing that is worth buying because it may be profitable or useful in the future.

By this definition, an investment can mean anything - a product, a service, an instrument, a stock, insurance, a company, a business, anything that potentially gives you back something in return in the future.

And so we can say, investing in Solar Power - be it through a solar-powered / environment-friendly company, a Solar Power Company stock (if there is one in PSE), or by using Solar Panels or Solar Systems themselves is surely profitable. Why? Because it removes, eradicates or lessens a critical part of a home or a company's cashflow: the EXPENSES.

And I can say it's a SAFE investment.

Because once you get ROI on your investment, it's gonna cost you savings. Huge and continuous savings.
As in... FREE electricity.
From the Sun.
Forever.


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On my next post, let’s try to see how a Solar Investment can perform better than most stocks – using stock charting and comparable technical analysis.

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