Does Peso Cost Averaging Work? - Marvin Germo

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Pesp Cost Averaging

Does Peso Cost Averaging Work?

By: Marvin Germo | June 19, 2016

The Question

“Hi Marvin!  I have taken the courage to write to you after reading about your previous post about someone who asked for your advise because she followed an advise of a friend to buy DD.  My situation is somewhat similar but it was not bought just to buy and sell quick.  My friend told me to do Peso Cost Averaging on CYBR because he said it is a good company.  So that’s what I did, I started buying CYBR since January 2011 and since then I have been adding amounts regularly. However until now I have been losing money on a time that the market is going up.  I felt that my friend dupped me into buying it as I have just seen the stock drop several times already and no matter how much I add to the stock it just keeps going lower. I value the advise you give your clients and readers.  Does Pesos Cost Averaging really work?  Did a make a bad mistake investing in the stock market?  

I really hope you get to read this and I hope you could help me understand my situation better.  I hope to see sir you in Abu Dhabi for you seminar, I am just trying to make my schedules work out.  I hope you can come back here every quarter like what you did last year.

Jonmarc, Abu Dhabi, UAE  

Pesp Cost Averaging

Catch me in my live training events! (quick plug)

The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing.  I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.

Investing Insights (Dubai) – March 1, 2019
Stock Smarts Manila —  March 9, 10, 16, 17 & 23, 2019
Stock Smarts Cebu —  April 6 & 7, 2019
Investing Insights Japan – April 13, 2019
Stock Smarts Singapore —  May 18 & 19, 2019
Investment Conference 2019 – May 25, 2019
Stock Smarts Iloilo – July 6 & 7, 2019
Stock Smarts Cagayan De Oro – July 20 & 21, 2019
Stock Smarts Hong Kong – August 11, 2019
Stok Smarts UAE – August 30 – September 3, 2019
Stock Smarts Qatar —  October 3 – 6, 2019
Stock Smarts Taiwan – November 2, 2019

First of All

Hi Jonmarc!  Thank you so much for the email, thank you for the trust and the kind words that you have given me.  It’s you guys that make what I do more fun than what it already is.  It is my heart’s desire that my website helps you and that it would reach more and more Filipinos to be financially free!

I will say this as kind as it can be but do not rely on your friend when it comes to stock advise.  Your friend might be good and he may have the best intentions for you and he wants to help you out but you must take control of your financial destiny!  It is your money, your finances, so it must be you who should take care of it and make the right amount of research whenever you buy a stock.  That also goes to every guru, analyst, super trader or influencer out there do not just take their word for it you must know what you are buying.  I also would not even tell you to just take my word for it, I want you to study it and build your own conviction from what I teach.

Research at Night

I would suggest that before you buy and sell any stock is you must have done your research and you must know if this stock is a good company or not.  As what I mentioned in my 2nd book, Stock Smarts: Winning Strategies for Investing, I would suggest that you do all the research when the market is still closed so that you take the data as it is.  No hype, no market movement and no factors that may prevent you from using your emotions to trade.  I personally have done this for years and I have made it a habit no matter how busy I have become to make sure I do the right research before any trade.  Without any research I would not do any trade.

I hope that this blog helps give light to your questions!

Does Peso Cost Averaging Work?

My take on this topic is that it is not a very straight forward answer.  Why?  Because, Peso Cost Averaging just answers when and how frequent  you should buy the stock.  I know you have been investing for quite a long time already in this stock.  5 1/2 years just to see your stock hit low after low is very painful.  That is why, stock market investing is not just about investing for the long term but also buying the right stock.  A bad company will always be a bad company no matter how  long you hold on to it.

Peso Cost Averaging and Fundamental Analysis

Even if you are using Peso Cost Averaging you must know the fundamentals of the stock you are buying.  You must know if the company is actually making money or not.  That is one of the most basic pre-requisite before you even look at other parameters.  To tell you honestly, the stock has been losing money for the past 5 years.  That is a sign of a bad company.  That is a company that I personally would not touch and I would avoid as much as I can.

No matter how long term you are in the market, no matter what buying strategy you use, if the company is losing money for consecutive years, it may not have shot to go back up again until something changes in the company itself.  I will discuss more on the fundamentals of companies more on this blog and in my next books but if you have the time to attend our seminars I encourage you to do so.  

Peso Cost Averaging and where the market is headed

At this point, the stock is still in a very very very large downtrend!  As of this point, there are no signs of reversal yet.   The market is just reacting to how the fundamentals of the company really is.  So this is a case when both Fundamental and Technical analysis all agree with each other telling you to stay away from the stock at all costs.

Did you make a mistake?

Here’s the thing, I wont sugar coat it.  Yes it is a mistake.  However, don’t make mistakes like this define who you are as an investor.  Don’t let this one trade hinder you from your financial destiny.  Learn how the market works, use this as a stepping stone to learn how you can improve and be better in your trades.  Everyone in the market makes mistakes, even Warren Buffet does and he is considered the greatest investor of all time!  What’s important is you try to improve from where you are, I know things like this hurt but it is something I know you will overcome!

Don’t rush into things, take the time to learn, learn and learn.  You can never go wrong when you invest in yourself  Keep on reading, keep on learning, invest in your trading education.  Build your strategy and conviction because after all profit is just a by-product of all of these things.

I hope this helps you!

I hope my suggestions and tips above help you in your investing as it is my greatest desire to see you prosper and that you use the stock market to make you reach your dreams of financial freedom.  If you have questions about stocks, business and personal finance feel free to click on this link and I will try to answer your questions the best way I can!  God bless you!

I’m excited to share my 5th book overall and the 4th book in the Stock Smarts series, Stock Smarts: Breaking the Resistance – How to time your traders perfectly. The heart of this book is to teach you strategic ways on how to come in and buy and sell stocks in a way where you come as the market is headed up and come out as the market is headed down. The book is now out and exclusive via Marvin Germo Book Orders.
For more details and to order my other books: Marvin Germo Book Orders
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