Economy Rose, Stocks Fell, Uncertainties Remain – How We Can Benefit

Photo Credit: missy & the universe
(Creative Commons)

There’s been several mix of news lately which may concern investors in particular. The one that got me excited was the recently released GDP numbers for the Philippine economy which says that it grew by 6.4% on Q1 2012. This extraordinary performance caught the attention of many due to the fact that it was unexpected. It’s no doubt a positive news for the country but doubters say that this cannot be sustained. There’s just no strong fundamentals, they say, to experience this high performance on a consistent basis. Of course, consistently good increase in GDP is what could potentially benefit more people. A blip like this will mean nothing to ordinary Filipinos. But for investors who wait for positive signals, this is a good indication that the Philippines may just be a good place to do business in.

Add to this bit of good news the successful impeachment of the former Chief Justice of the Philippine Supreme Court and the improvement of the government’s credit rating by Moody’s. There’s enough reason to be optimistic. Investors will likely give points for the determination of the current administration to clean itself of irregularities. It will go as far as impeachment of the Chief Magistrate to do it. The increase in credit rating is just a reflection of how well finances has been managed which also gives the impression that nothing ought to be wasted. Agencies are working in an efficient manner.

On the other hand, the world economy continues to struggle. Worries with the debt crisis in Europe remain. The weak recovery of the US is only made worse with news that US unemployment slightly went up in May. This kind of news can have disastrous effects particularly on stocks. I have seen my stock portfolio lower in value such as I have never seen in months. 

I can remember the question lingering in people’s minds just a few months ago. Everyone seems puzzled over the strong performance of the Philippine stock market. I have even written about whether or not it was wise to invest in stock given the rapid rise. Now, the mood has shifted.

But although the picture does not look as rosy as before, lower stock prices can still be a good thing. It's always a better time to buy stocks when prices are low. Contrary to what most people would do, buying and selling stocks only make sense when you don’t lose as a result. Too many will feel the need to offload when stocks have fallen which will mean loses. While the same people buy when stock prices have risen which can sometimes only mean that there’s nowhere else to go but down.

So going against the ordinary whim of people may just be the wise thing to do. It would really make sense to buy during times when prices are low even if it’s not attractive to do so. It’s not a sure bet but it’s a safer bet than buying when you feel like riding a rising trend.