“Life hack: refers to any trick, shortcut, skill, or novelty method that increases productivity and efficiency, in all walks of life.”
Being a parent is the most difficult intellectual and emotional experience possible if you really put yourself into the process of trying to do a good job. As your children grow older, you need to teach them things like using a spoon and fork, brushing teeth, and then, for me, with four sons, how to shave and how to make a proper knot for a necktie. You also want your children to learn from your experiences, hoping that they will not have to make the same mistakes—go through the trial and error—which you did.
But we think that maybe there are some universal “rules” we can teach that will lead to a successful life, or at least put the odds in your favor. That is particularly true for handling money and investing.
“Never buy when the market is going down.” This goes along with “You can never pick the bottom”. Except, bottom fishing is from where the greatest profits come, and it is not that hard to find. When prices stop going down, they will start going up —maybe. The only caution is the first wave up will usually see prices come back to support. Of course, you should try to pick the bottom. The way to protect your investment is, if that bottom is broken, cut the position.
“Trust no one; assume nothing.” Your parish priest has a hidden agenda. So does your mother, for that matter, and your favorite stock-market guru. There is nothing wrong with that fact. Except, any time you receive advice, ask yourself, “What’s in it for the advice giver?” If I ever talk favorably about buying a particular issue, I own it, unless I specifically say otherwise. Caveat emptor.
However, stock prices go up on “mass hysteria” and “crowd mentality”. That is what this game is all about. The secret is to be at the front of the crowd. If you think that is where you are, by all means go for it. And then tell the guy next to you about your buying. I said at the end of February—contrary to the gloom and doom because the market ended the month down—that it was a great month. The next 200 points on the Philippine composite index are going to be difficult. But then the move from 7,500 to 8,000 will be much easier. That is because above 7,500, the mass hysteria is going to rule. So, buy shares of “&%#” to double your money.
“Eat at restaurants that are always crowded.” The food is fresher and people don’t patronize bad places. Also, one rule I learned traveling the world is that Chinese restaurants are always the best bet for freshly cooked, good-tasting meals. You can figure out on your own what that means for the stock market. While you may be the first customer at an undiscovered gem, better to follow the crowd. In other words, a jump in trading volume that is sustained after a few days is the “restaurant” where you should be eating.
But the best “life hack” for the stock market—and life—is “have fun”. If your investing is not enjoyable, you will fail miserably. That is guaranteed. If you do not approach the market daily, weekly, or whatever with a smile on your face and a song in your heart, run away.
E-mail me at firstname.lastname@example.org. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.