Why I Got Out of the Stock Market

Harvest Time

One year.  That was how long my relationship with the stock market has been.  But there was a pre-story, which was training, lots of training, before I found the heart to jump in and play for real.

And to jump out too.  But first things first.

Flashback to 2008.  Giddy and excited and with fake money at hand, I started with the online stock exchange (it offered a practice account).  Prepped by my financial planner, pumped up with some reading I had done here and there and some monitoring of the market, I found I gained some fake USD$600 in a few months.  But I since I was in no real danger of getting poor or rich, I soon found myself bored.  The market bottomed out too, wiping my gains, but ironically, it was also the perfect time to get in for real, to play for real.

I found the nerve to contact a friend’s broker and introduced myself and bought my first stock.  It was one of the safest I could find.  I personally thought it masqueraded as a stock but is actually some safe investment because it promised a return of 8.88% per annum and quarterly distribution of dividends.  Perfect for a me, I thought.  I bought some.

Then the market bottomed out further.  Because my first stock was safe, I did not fret but toyed with the idea of buying more.  I was about to burn the line to my broker but I held back.  Turned out, that day was the lowest the stocks got (I still have the unsent text message).  When I felt that the stocks were on their way up (and will not hit bottom again for some time), I bit my lip and got in.  I thought, well, the stocks are trading at less than 50% of what they are worth.  I should be safe.  I told my broker to buy me this and that (it was fun).

Further into the year, the market bottomed out in the US (signaling the recession).  I heard Warren Buffett issue a marching order: buy.  Faithful Buffetologist that I am (read: fan), I told my broker to buy although the prices were not as low as that one point when I first bought my stocks.

And then April hit and the looming Philippine election started to shatter my stock market confidence.

I kept telling myself – 7 years – like Buffett.  Hold on to it for 7 years.  Don’t even look at the papers, don’t worry, it will be alright, it should be alright.

I panicked.

One week before elections, with my gains standing at 25% of my original investment, I issued an order to my broker: sell.

Let me tell you that selling was quite an experience. I felt so grown up.  My broker was telling me at which price to sell right there and then – because if I sell so high, I may have to wait and my loot might not get sold (and the market was going down). I listened to her do her trading – in real time – while I was on the other end of the phone.  She was telling me, okay, at this price and at that price, sold. The stocks I chose did not disappoint, one even had a gain of almost 100%.  Except for one, a bank.

So why did I get out?

I will never know.  In buying, I used my gut.  In selling, I trusted it again.  I know there are so many stock market rules: timing the market, do not be greedy, have a target and get out when you reach it, stay for the long haul, buy low and sell high.

But personally, I got uneasy.  I did not want to see myself trapped in case the post-election scenario gets worse.  I just wanted to see my money – and a little extra – back.

But time will tell if I made the right decision.  As it is, the stock market is stabilizing because the election – surprisingly – was fast and peaceful.  But maybe there is no wrong and there is no right move.  I did buy low and sold high.  Maybe I could just rest easy that I may have done the right thing this time and then get in again.

I was rereading Amy Tan’s Joy Luck Club and something struck me: “We used to play mahjong, winner take all.  But the same people were always winning, the same people always losing… You can’t have luck when someone else has skill.  So long time ago, we decided to invest in the stock market.  There’s no skill in that.”

I had to laugh.

Be rich,

Issa

Article by Issa. Art by D. Copyright 2010.
Website: www.YouWantToBeRich.com
Email: issa@youwanttoberich.com

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