Stock Market – Basic principles – Part 1 of 4
Several people have inquired from me whether they should invest in the Philippine stock market. They also wanted to know how to begin doing it. I am not sure know if they are really seriously asking the question. They might be just curious about the stock market considering that it has been always in the headlines lately. This is brought about by the fact that it is at its highest levels since the beggining of its creation.
Investing in the Philippine stock market is not for the faint hearted. As an investor you must have expectations as to how much you are going to earn for a certain vehicle of investment. Such is expectation is measured in terms of how much your money will grow at a certain period of time. (Most usually this is measured in interest per annum) Because the Philippine Stock market is in its all time high for several months now, people think that they should join the band wagon. They do not even understand the basic principles involved nor do they understand how the stock market works. I am not saying that you should be an economist before you should invest in the stock market.
The point I am making is that you should understand the basic principles first before you will be successful in the stock market. It is true that fortunes are made on the Stock market, however there are also stories of people loosing a large amount of their money. Other who just dive into the stock market without knowing the basic principles of investment quit after some time, telling themselves that the stock market does make any money for anybody.
Let us not begin first by discussing the “how tos” in investing in the Philippine stock market. Let us first understand the basic principles of investment so that we might enjoy trading and be successful in the stock market. There are ten principles involved. We will talk about the first principle here. Other principles will follow in the next articles. Visit my blog if you want to see the whole article.
1.) You must realize that the stock market is just another vehicle of investment – There are several investment vehicles where you could place your money. One is not more superior than the other. They have their advantages and disadvantages, but this will not be discussed in depth here.
You must understand that the stock market belongs to an investment category called “Capital Markets.” Capital Markets are divided further into several categories. Here alone, there are several investment vehicles wherein you could place your money. Examples of these investment vehicles aside from the stock market are real estate, pension funds, bonds, insurance, different types of savings and time deposit accounts. It is of vital importance that you know this fact because knowing the different types of investment vehicles under the Capital markets will help you evaluate whether or not you should invest in the Stock Market considering that there are other vehicles of investment.
As I said each of them has their own advantages and disadvantages. What I personally did is not to place all of my eggs in one basket. I have invested in most of the Capital Markets including the stock market, insurance, pension, deposits, and bonds through mutual funds.






































