PSE hits new high of 5,700!

I was able to sell all my positions of SMPH yesterday and am happy to say that I made some money. If you weren't able to sell, don't worry. The price will go back up. The reason SMPH is down now is that alot of people sold their shares. This happens when a TP is hit and the selling off is called "profit-taking". Rest assured, the price will go back up again, so don't sell at any other price than 17!

For our newer investors, suppose you were able to receive a stock dividend of 25% (like me for SMPH) and let's say you had 100 SMPH shares, your number of shares has increased to 125.

To sell all these shares, you first sell all boardlots, i.e. the 100 shares.

You then sell the 25 shares via the odd-lot option in the sell stock options. Please refer to the picture below.

Now, the best thing to do is to reinvest this new-earned money into other stocks that are still below our buy-below-price, but do not buy in 1 go. Divide the cash into 6, and invest it over a period of 6 months. I posted earlier that Philippine stocks might go down because prices are now quite expensive, and the dip in the U.S. market has made U.S. stocks cheaper, thus attracting more foreign investors to transfer their money there.

For more experienced investors, buy when the price hits support levels. For our newer investors, just buy as long as the price is below our buy-below-price, spread out over a time period.

Why do we need to do this? Please refer to the picture below:

Let the X-axis dictate time and the y-axis as price. Over time, prices fluctuate and no one can predict with certainty where prices will go. Thats why we minimize cost by buying over a period of time rather than a 1-time-big-time method.

For example(based from the picture):

Month 1 - stock price P6
Month 2 - P4.5
Month 3 - P3
Month 4 - P4.5
Month 5 - P6
Average: P4.8

You get an average of P4.8, whereas if you buy only 1-time, your purchase might be at expensive levels/resistance levels.

On my next post, we will talk about support and resistance levels and how to draw their lines.