Change in PSIndex

August 27, 2012 | By Fitz | Filed in: General Information.

Hi! It was announced that PCOR will replace CEB in PSIndex effective Sept. 10,2012. Does this mean that I need to sell all my CEB stocks to cut my loss?

 

In your own personal experience, do you practice “cut loss” in stocks?  When do you sell a stock to cut loss so you can reinvest in other moving stocks? Can you cite a certain % of loss to give a “go” signal to sell?

Thanks. Your insights will be very much appreciated.

 

 




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6 Responses to “Change in PSIndex”

  1. Fitz says:

    Hi Floranta, I’m not a stock market analyst but in my opinion, it might be a good time to sell, specially if you’re up or at least breakeven.

    If you’re negative, decide how much you are willing to lose and put your stop loss at that level. This is a purely technical approach though.

    However, if you firmly believe that CEB stocks will rise in the future and you are willing to wait it out and ride the market, then that’s enough reason for you to keep your shares.

    In the end, it’s always a matter of your risk tolerance and appetite. And whatever you do, always believe that you did the right thing at that moment of decision.

    Which means, if you sell and CEB rallies; or if you held and CEB plunges – don’t hit your head with a hammer – no one can ever really predict the market. Just move on and invest again.

  2. ForsakenOne says:

    Hi Floranita!I own PCOR stocks myself, but I don’t think that it’s replacement of CEB in the PSEi is a signal to sell you CEB shares. CEB shares can still rise or drop in value. Being left out of the PSEi just means it’s own fluctuations is less reflective (has less weight on) the overall drop and rise of the PSEi.

    If you invested in CEB based on your research on the company and the conclusion that it is a good investment, CEB being dropped from the PSEi should not heavily impact your previous conclusion. You may of course decide to reassess or re-analyze the stock, as any investor must do to the stocks they own from time to time.

    If you invested in CEB simply because it was in the PSEi, then it may be time to sell. This is what you might call an “Index” approach (I’m not sure what it is officially called). A few factors make this at least viable but maybe not endorse-able approach: the stock index generally improves over time, few people – even the most experienced and trained ones – can out-guess the market, lack of time/knowledge/training can impair even the most though-out decisions, buying stocks of the index (all, not just some) instantly gives you diversity, and lastly if the index generally goes up, and you aren’t in a position to out guess… well to paraphrase a saying “if you can’t beat it, join it”…

    I should say I’m not really suggesting that you keep or sell. I just wanted to clarify that your choices will depend more on your investing strategy (that you started out with when you bought CEB).

  3. ForsakenOne says:

    Also, I do not practice “cut loss” – which is a mistake, based on advice from a lot of sources.

    In my defense, I do not invest in a company that I do not believe is in either a fantastic position to succeed or is practically in a “duopoly” (globe/smart) or “triopoly” (shell/caltex/petron – although only petron is local). So at some point, I’m expecting my losses will turn into a net gain – huge gamble, but one I’m willing to take.

    I’m note sure how you should set a loss threshold. I would think there is a formula for it. But from what I understand, you set it beforehand – as in before buying stocks – and simply execute your plan. I think maybe 2%? Or whatever is acceptable depending on your risk tolerance?

  4. Enzo says:

    Hi Floranita!

    If you want to have a mentor, i suggest you join Bo Sanchez’s Truly Rich Club. He will bless you not only for having a guide in investing in the stock market but you will also be blessed with his teachings about having abundance mindset. To know more of his blessings, just visit this website:

    http://bosanchezmembers.com/amember/go.php?r=29147

    On August 27, he emailed all TRC members about recommending to sell CEB and SWITCH to other giant companies. Below is taken from his email:

    “Cebu Pacific (CEB) has been the last remaining SAM* Stock that has
    never gone up. Last week, it went even lower—first of all, because the
    entire Stock Market went down (Yeheey! Everything is on sale!). Second,
    CEB was removed from the Philippine Stock Exchange Index (a small list of
    Stocks that are used to represent the entire Stock Market). Third, because
    oil prices have gone up again, affecting the profits of the entire airline
    industry.

    We are reluctant to sell CEB and we were happy accumulating it these
    past few months, because CEB is such a fantastic company. It’s actually
    run very well. We can actually hang on and keep buying—but we feel it’s
    just taking too long a wait. Reason: CEB is in such a lousy industry. In
    today’s world, the airline industry is one of the most difficulties
    industries to make money.

    But now that the entire Stock Market is down, now is the perfect time
    to sell CEB—because we can buy other SAM* companies at a cheaper price.
    We’ve made a decision to take this opportunity to make a SWITCH. Sell CEB
    now and simply switch your money to SMPH and/or MEG and/or MBT. You’re
    getting them at a cheaper price.

    I know we’re selling CEB at a loss, and we don’t like doing that, but
    getting into other great Stocks is the best strategy to take now.

    Example: In 2008, during the global recession, my stocks in America
    went down by 40%. Being a neophyte in the Stock Market world, I panicked.
    But my Mentor smiled at me, patted me on the back, and said, “Your stocks
    are fine. Trust me.” He told me to SWITCH. I sold all my stocks and
    switched my money to one great stock that was very cheap, as the entire
    Stock Market was down. The following year, it zoomed back up 100%.

    Let me repeat: When the Stock Market is down, long-term investors
    like us throw parties, dance the boogie, and sing hallelujah. We love
    times like this because our little monthly investments buy MORE stocks.

    Sadly, we throw in the towel on CEB today.

    But with the proceeds, we grab the other SAM* Stocks.

    Keep investing, and you’re going to be a multimillionaire one day.

    May your dreams come true,

    Bo Sanchez”

    *Note: SAM means Strategic Averaging Method, a semi-passive method of buying stocks of selected giant companies. To know more about this, click on the link below to visit the website:

    http://bosanchezmembers.com/amember/go.php?r=29147

  5. Randolph Culanculan says:

    hi, i have a question to Forsaken One.

    Can you explain to me the role of PSEi?

    thanks

  6. Fitz says:

    Hi Randolph,

    The PSEi, in simple terms, is often used as a quantitative measure of how good (or bad) the Philippine stock market is performing.

    To Forsaken One,

    I also try not to “cut losses”, at least not prematurely. Whenever I buy a stock (for trading), I already have in mind my “stop loss” price, and my “target profit” price – and simply wait it out until either one gets hit.

    Indeed, one should not risk more than 2% of your available trading capital for each trade, so that you won’t have a large drawdown on your account and can “stay in the game” longer.

    And more importantly, one should always have at least a 1:2 risk/reward ratio to be profitable in the long term.

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