Of Being Greedy

"Be fearful when others are greedy, Be greedy when others are fearful"
-Warren Buffet

This has been the first time I had invested in the stock market. After attending a 3 hour seminar on how to do it and how to analyze stocks, I realized it would be ok to try the riskier part out. With me being out of work for the next 2-3 weeks, I think it would be time well spent.

After logging on to citiseconline and after procrastinating for 3 days just observing stock trends, my fiancee and I decided to invest in a stock called PCOR, better known as Petron Corporation. It is the largest oil company in the Philippines with what we see as great potential for stock returns and a very high risk of stocks plummeting down to nothingness. But then again, as to what I have written earlier, we have observed for 3 days. Read the news and focused only on PCOR. We knew San Miguel was buying into it and this would increase its value. There were still some fluctuations though. Financial analysts warned of investing in it as its lowest value was at 7 pesos per share. Current trading is at 14.7. Almost double the original price. Which means if it would go down, you'd have nothing left but a negative peso on your portfolio. So we kept our fingers crossed, bought 1400 shares and watched as the ticker screen changed from yellow to green to red then green again. We bought it at 14.7 last Friday, December 18. The market closed for the weekend with a 7% increase on our PCOR stocks. Not bad for a first time investor right?

Come Monday, we had already made a thousand bucks. Come Tuesday that 14.7 was trading at 16. My fiancee and I decided if it would reach 16.26 then its time we collect our earnings and move on. We placed it up for sale at that amount and just about an hour or so of trading, voila, the stock was no longer in our hands and we had 2000 pesos to show for profit. We kept looking at the ticker screen though. The stocks still were going up. Then we thought to ourselves what if we did not sell it yet? Have we been too afraid too soon? Was it a wrong move?

Every now and then greed creeps in just when we think it does not exist within us. Like me and my fiancee, we were not content with the 2000 bucks we made, instead we were busy pondering if we could have made more money if we held on to our stocks more. I was reading the book "The Intelligent Investor" awhile ago. The great Benjamin Graham, the author of the book, said you need to always have a margin of safety when trading in stocks. When you say margin of safety, you should now when to stop and when to buy or sell. He buys from the pessimists for example and sells to the optimists. Thus making profit. He doesn't care if the stocks go up more, unlike us, he sets a target price, gets his earnings and walks away.

My sister went to the casino once with my cousin. They won on their first try at the tables. My sister wanted to leave but my cousin wanted to stay, and so they played on. Everytime they won, they played more, and then it was too late. They were loosing and had nothing left on their pockets. They had to call a friend to come pick them up for them to go home.

The lesson? Greed can be good sometimes, especially for the professionals who are trading in stocks. If you know how to predict its movements, then you know if your stock or go up or down. But if you, like us, are just taking your chances on a little bit of research, it would be wise to know when to stop.

It would be wise to know how to handle the greed for money.