Not more than 24 hours ago, the Philippine stock market has broken the bear market territory. At the time of this writing [11:40 PM CST (12:40 PM Manila Time)], the PSEi has bounced up a little back to 7,068 from its low of 6,923.
From a range of fears: higher inflation rate than expected, weaker peso vs. the USD, Fed rate hikes, BSP rate hike not enough, and foreign fund outflows just would not abate.
Everything else seems at its worst at this point of time, and this could be a wonderful opportunity to start accumulating more shares of any companies of interest as long as one has performed due diligence on it.
A quick check list this blog would like to share to any prospecting stock buyers out there are as follows:
- Make sure the company has good balance sheet (look at debt-equity ratio).
- Make sure the company’s book value has grown over time (look at years not just quarterly numbers).
- Make sure the debt figures are not climbing year-over-year.
- Make sure sales and profits are stable or better yet, increasing in recent years.
- And more importantly, Make sure you are not emptying your emergency funds to invest in this market.
These are the times when the market appears irrational and for the investors that are prepared to dive in, a rewarding return could be awaiting months or even years from this point of time.
..bear markets since the 1930s have an average duration of only 18 months and an average loss in value of about 40 percent… (Forbes)