SAFELY LAND THE PLANE AGAIN, SHALL WE?
April 23rd 2009 00:00
Illustration pic. Planes on queue for take off
This post is not really about flying planes or landing them, this is about newbie investing. But for you to better appreciate the discussion here (in case you are interested) please refer to the post immediately preceding this. I guess, I just can't get away too long from airplanes these days (there are two roundtrip tickets in my hand carry bag at the moment and I just deplaned yesterday) thus the title.
I wrote the previous post “Passenger lands a plane” to encourage new investors to continue to personally learn how the maket is played instead of just depending on their brokers. I have nothing against brokers. Many investors need brokers like the way many airline passengers need their airline pilots.
In normal times, the pilots or brokers can take care of their respective charges without much intervention from them. But then, there are instances when the passengers or the investors are forced to make the decisions and that is when personal knowledge becomes of critical importance. Like, you know, when Doug White had to land that plane.
Okay, so maybe those are the extremes. I mean, I ride planes all the time but the only thing I know about flying is what little I can learn from dabbling with a computer flight simulator (game)! But at least, I know there is such a thing as “stall speed.”
Now, going back to investing. Time is gold and, while there are people who believe that it would probably be better if all investors should just stay at the sidelines while all the scary stories are coming out, there are those who believe that they cannot stand still. They go looking for opportunities and eventually make handsome profits – at the very same time when the rest of the world are just too afraid to do anything.
To give an example: While everyone is saying how bad the world economic situation really is, how long the recession will be, why a certain rally cannot be sustained, why it is safer to keep your money under your mattresses, and why the market is still so dangerous to be in, the prices of some stocks were actually going up.
Let's take the case of PSE in my local market. The lowest it went down was 110 in December. By March this year it was at 139 and twice, since April 14 to date it went to as high as 310. Now, what do you think would have happened if you just stayed cowering in fear in one corner? In the meantime, some of the knowledgeable guys have already almost tripled their money!
So you'll say that's probably an isolated case. Fine! Let's talk about AC. Sometime in November 2008 its price went down to as low as 171. By January 2009 it went up to 235 by March 4 it went back to a low of 178. Twenty days later it was back at 227. It gapped down and went to 202 on Apr 1, but on April 17 it climbed up again to 227. If you don't know anything and you just concentrated on the negative stories you won't even know what you missed.
I do believe that a knowledgeable investor would know how to spot those opportunities and know what to do when he sees them.
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