I'm sure everyone who has money in the stock market is glued in from of their computer screens right now and wondering "Is this blood bath going to continue?". They are most likely asking the question that's very difficult to answer, "Am I going to sell now? But I'm losing! Maybe it's going to bounce back. Right?!"
If you find yourself in this position, well that's normal. The question is, "Are you going to be a big loser or are you going to follow your system and just lose a little?" In stock market trading, battles (or trades) are either won or lost, but the idea of wise stock market trading is to win the war. Are you losing the battle? If you sold days ago because your stop loss price has been triggered, that you lost the battle, but I'm pretty sure you're very happy that you sold, right? RIGHT!
But, most of us probably thought this blood bath is not going to continue. It's impossible! The Philippine economy is doing good. Real estate is wonderful. Remittances are soaring. So, the stock market won't really go down! WRONG!
The Market Will Decide What It Wants to Do
The market will decide what it wants to do. Although it is true that direction will depend on "signals" like economic indicators but the market will make it's own path whether we like it or not. Obviously, this past few days has been terrible for traders. If you were able to keep you poise and sell when your stop loss was breached, then you are very happy! But if you did not sell because you thought that the stock market would go up and reverse to its winning ways, then I'm sure you are crying!
Discipline and Belief in a System is the Key to Success
I was very busy these past few days and I was focused on my business. So, I almost didn't have time to check on the stock market. Guess what? I wasn't able to sell my positions even when my stop loss prices were already violated. I had RFM, RLC, URC and EEI. Before this week's bloody mess, I was up on all companies: +7.5% with RFM, +5.5% with RLC, +55% with URC and +1.5% with EEI. But because of my pride and because of my lack of discipline, I didn't sell even if my stop loss prices were already breached. I actually thought that the market would bounce back two days ago. So, I had to learn the lesson the hard way. In short, I sold all my positions today with only two in the positive side: RLC at +1.5% and URC at +48%. Sadly, because of my lack of discipline and belief in the system that I know, I had to suffer the consequences of losing heavily on my two other stocks. I sold RFM at -8.5% and EEI at -4.5%! OUCH!!! The Bible aptly talks about this in the Book of Proverbs and I'd like to quote it below:
For lack of discipline they (fools) will die, led astray by their own great folly. - Proverbs 5:23 (NIV)Pride Kills... Always
I mentioned that I didn't sell right away because of pride. Pride that I didn't want to lose any of my stock positions (I rarely lose whatever I bought until now.). I was proud that I've been winning all the stocks that I bought so far and that was what killed me. This reminds me of what the Bible says about the opposite of pride which is humility and I'd like to quote it here:
The fear of the LORD teaches a man wisdom, and humility comes before honor. - Proverbs 15:33 (NIV)If I was humble enough to accept the fact that I would win some and lose some (which was what I mentioned in my previous posts), I would have been spared the very big loss and would still come out a very big winner (net 25% for the past 3 months). But because of my foolish pride, I had to settle for a 20% net profit.
Mistakes and Failures are There to Teach Us
Mistakes and temporary failures are there to teach us the important lessons in life. If we learn from it, then we are spared from destruction. But if we refuse to learn from it because of our pride or our ignorance, we will surely reap from our foolishness. It's like going through the different levels in education. Before one can graduate from Grade 1 to Grade 2, one had to pass all the requirements of Grade 1 first. If the student continues to fail his exams because he has not learned his lessons, he will continue to be in Grade 1 and all the lessons, the same old lessons, will continue to be taught to him. It's terrible being in Grade 1 for three years, don't you think?
In life, it's the same. Whether we are talking about health, spirituality and finances. if we continue to refuse to learn the lessons we are taught in life, if we continue to do the same things day in and day out, we should not expect our days to be all the different. We'll eventually come up with the same results. Unless we learn the lesson, we'll continue to be in that same level.
BONUS TIP: If Everyone is Scared, You Should be Excited!
The greatest and wealthiest investor, Warren Buffet once said "Be fearful when others are greedy. Be greedy when others are fearful." I believe people in the stock market today are fearful and this my friends is our time to understand that there is gold up ahead. This is the time to be on the look out for cheap stocks or stocks that are on an uptrend and breaking out soon. This is no time to cry over spilled milk. This is the time to be ready to win big.
So, what happened to you during this gruesome week in the stock market? Were you able to sell in time to cut your losses or did you refuse to sell your positions because you thought the market would bounce up? If you are the big loser, forget about it. Accept it. There's always time to earn money. As Bob Proctor said, "Money is just an idea." Do you think it is your time to make money?
May you achieve true success!
Bryan
PS1. What does the Bible say about wealth? Is money the root of all evil? Visit http://www.beyondprofit.blogspot.com/.
PS2. If you want to invest in real estate properties, visit www.houseforsalephilippineswithphoto.blogspot.com.
PS3. If you want to get financial literacy training for free, go to www.wealthacademy-philippines.blogspot.com.
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