Disclaimer: Ang book summary na ito ay isinulat na parang binibigyan ko ang aking sarili ng investment advice. This article is for informational purposes lamang at hindi dapat gamitin to make investment decisions.
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Kung mayroon lamang isang kadahilanan na maaari mong gamitin upang gabayan ang iyong mga investment decisions, it should be: Most markets go up, most of the time.
Sa nakalipas na isang daang taon, despite a great depression, two world wars, the threat of nuclear war, and a great financial crisis, ang stock market sa United States ay tumaas ng 160,000% from 1922 to 2022 after adjusting for inflation. With such a robust and consistent na pagtaas ng halaga ng stock market over time, there might be no better investment advice than “Just. Keep. Buying.”
Ngunit para sa karamihan ng mga tao, lalo na tayong mga Pilipino, continually investing in a volatile stock market ay nakakatakot. Tulad ng sinabi ng sikat na financial author na si Jeremy Seigel, “Fear has a greater grasp on human action than does the impressive weight of historical evidence.”
Fear #1: THE MARKET HAS PEAKED, AND IT MAY NEVER RECOVER!
Ang isang pangkaraniwang counterargument to the “just keep buying” investment philosophy is Japan’s stock market performance sa nakalipas na 33 years. Kung naginvest ka ng one thousand dollars in Japan’s stock market in 1989, it would only be worth $690 today.
However, kung patuloy kang nag-invest ng $1,000 in Japan’s stock market each year for the past 33 years, ang iyong $33,000 would be worth approximately $59,000 ngayon. Not a great return, but it beats keeping your money in cash and watching it get eaten away by inflation!
Ngunit hindi mo kailangang mag-settle for mediocre returns (like Japan’s stock market returns over the last 33 years) if you don’t wed yourself to one market. Tandaan, MOST markets go up, most of the time, not one market goes up until the end of time.
Sa anumang 30‐year period, 88% of markets sa buong mundo make new highs.
Samakatuwid, if you invest in several markets, the chances of your portfolio recovering from a crash in 30 years is almost 100%.
Ang isang madaling paraan to invest in most markets is to buy a large world stock index like the Vanguard Total stock index ETF (ticker symbol: VT). The total world stock index ETF is a collection of 9,551 stocks in every investible market in the world which automatically replaces dying companies with thriving companies, so you don’t need to manage it.
Kapag nag-diversify ka in a world index of stocks like VT fund, hindi ka na umaasa lang sa isang region or one economy succeeding. Sa halip, you’re investing in human ingenuity and our ability to make businesses and products that earn money over time.
Ngunit kahit na sa pinaka-diversified stock indexes, you will encounter substantial volatility (huge price swings throughout the year). The S&P 500 (the 500 largest stocks in the US – which makes up the majority of the world index stock holdings) had an average intra‐year price decline of 14% over the last 50 years.
However, sa kabila ng large intra‐year declines, the S&P finished positive at the end of 40 of the past 50 years.
You must tolerate some volatility kung gusto mong palaguin ang iyong kayamanan, but author Nick Maggiulli says you should not tolerate more than a 15% decline in your entire investment portfolio. Ipinapakita ng history na kung maiiwasan mo ang isang 15% decline by dedicating a portion of your portfolio to income‐producing assets like long‐term Treasury bonds and specific stock market sectors like energy, consumer staples, and utilities (which have historically risen as the overall stock market declined), you will outperform the overall stock market over time.
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Fear #2: THE MARKET IS CRASHING! I WILL WAIT FOR THINGS TO GET BETTER BEFORE I BUY…
When the stock market portion of your portfolio crashes below 15%, it can feel like your money is being incinerated and it is hard to just keep buying. Ngunit kung makakahanap ka ng lakas ng loob to keep buying stocks when stocks are getting massacred, the money you invest will enjoy supercharged returns kapag ang stock market ay nakarecover.
Kung nag-invest ka during a 20% decline and the market recovers, you don’t make a 20% profit; you make a 25% profit. Gayundin, kapag nag-invest ka when the market is down 33% (like it was in March 2020), you don’t make a 33% profit when the market recovers; you make a 50% profit when the market recovers.
Kung mas malaki ang decline, mas malaki ang upside, and the longer you can wait for the stock market to recover.
Sa panahon ng Great Financial Crisis in 2008 and 2009, the market was down 55%. If you bought when everyone else was panicking, you could have patiently waited ten years for the stock market to recover and enjoyed an 8% annual return for ten years.
But the market didn’t take ten years to recover, it took four, at ang mga patuloy na bumili as the market bottomed enjoyed a 22% annual return over the next four years.
If you hold off buying, or worse, sell your stocks and get back in the market later, you will likely miss the bottom and need to buy back your stocks at a higher price. Kahit na sa prolonged bear market, tulad ng 1970s, Kung napalampas mo ang ten best days between 1970 and 1980, you would have endured a ‐20% return. But if you stayed invested, you would have received a positive 17% return. At kung wala ka sa market and holding cash throughout the 1970s, inflation would have eroded your purchasing power by 17%.
Author: The Pinoy Engineer
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