Saturday, November 08, 2008
Talk of recession
The world economies are now in downturn. Frankly, I don't know anything about economics except my proven truth that I spend what I earn and the more I earn, the more I spend, the lesser I save. I think I have to mend my ways.
Economic literatures state that if the following trends continue for six consecutive months, then the economy is considered in recession.
- people buying less stuff
- decreased production
- unemployment growth
- slump in personal income
- unhealthy stock market
I'll just leave it with the economic techy to debate whether we're really in recession now or it's just a temporary economic slump.
One thing is certain, though. World market is on a plunge and one question we have to ask is: What can we, OFW's, do?
Buy, don't sell
Let's buy cheap during recession; sell high after. This is based on a premise that those who stretch to buy all they can when the market is cheap will make big money! Those words were from Jack Miller of Seeking Alpha. He conducted seminars during the 1982 and 1991. He said: "those who responded made a lot of money in the bull markets that followed".
I think this is the best time to purchase investments, if we have money to spend. If we don't, then this is the best time to cut on spendings and save some money.
What can we buy?
Stocks. As per Philippine Stocks Exchange website, Ayala Corporation has recently offered their stocks for PHP500 per share (at a minimum subscription of 100 shares). Check PSE websites for other stocks information.
Dollars. Foreign currencies are on the rise. One dollar was equal to PHP45 two weeks ago. Now, it's PHP48. Last year in December, the rate was PHP42 per dollar. This year, some foresee a further reduction of peso to PHP50 by December 2008. See graph below about the peso performance against dollar.
I don't know anything about mutual funds or treasury bills but I heard they are also good long-term investments.
Re-assess your finances
If we haven't done so, this is the time to build an emergency fund (six months equivalent of our total spendings). This is also the best time to re-think of our spendings (let's limit it to the essentials). More importantly, this is the time to rethink of the benefits of long term investments (if we have money to spare for investments).
It's not downhill from here. Last night, I heard a bad news that US, UK and Japan will see further recession in 2009. Surely, it will have an effect on us all. The good news is that sooner or later, the economy will pick itself up as it always does in the past.
Life, like economy, is full of ups and downs. Let's survive (and while we're at it, experience and enjoy) the ride. Wisely.
Asian economy, particular our economy is always tied up with the US. I always watched business news and looked up American and Asian stock markets for comparison. So far, it seems everything is stable. Of course these are general trends, personally, we just buy what are only essentials.
BTW Nebz, why don't you looked up BPI's SDA option. You might be interested.
Oo nga. Dinalaw ko ung site ng BPI. Madami silang investment fund offers especially for long term. Hmmm...kapag nagkaroon ako ng pera, papasok ako sa kanila. Mag-iipon muna ako for now.
http://info.bpiexpressonline.com/
I benefit a lot from this post! I am not really good in economics, but because of 'Nebz Island,' now I understand!
[I shall return!]
aha!!!salamat nebz at akoy naliwanagan sa usaping fulos!!!!
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