Common Sense Trading - A Blue Jeans Approach to Philippine Stock Market Trading

About a year ago, I stumbled upon his column in the inquirer. "Beg, borrow and steal" he said, and use the money to buy into mining stocks. He was of the belief that this would be the next big thing in the Philippines. He recommended a few companies, but I took note of one, PX. I remember PX, because its the only mining company our broker would recommend. At that time, it was the only listed mining company with actual production. The numbers tell a good story. PX was trading then at Php3.7. Around November last year, PX went above Php11.00. Last friday it closed at Php9.2.

The credit crunch is a story of mistakes that carry dire consequences. The burden it casts in its wake falls squarely on the shoulder's of the banks themselves. This makes for a painful, yet exciting time of learning. Crisis=Opportunity I've heard many times that the Chinese word for crisis is the same as the Chinese word for opportunity. It makes for a great illustration. Last year, when the picture was getting clearer, we began to see how much these American banks stood to lose. The first to feel the pain were the heads that had to roll. A blame game ensued. Not a few top guns fell from glory. Many faced embarrassment. A CEO here and a CEO there, was removed. But, of course, there had to be replacements. New blood, fresh and untainted was called upon to fix the mistakes of others. At the end of the day, the crisis was a great opportunity for companies to shake down and police their own ranks while bringing in fresh talent. Adversity is a good teacher Fool me once, shame on yo...

In this day and age, we see ironic things like a stock trader in the United States worried about pigs being stolen in China. There was "pignapping" in China, Kosovo declared its independence and the U.S. government is working on putting more money in the pockets of overspending Americans. News like this and more is readily available via the internet. Sometimes the funniest headline can be considered as a relevant concern for a trader. Take for example the "pignapping." Silly as it seems, the surrounding circumstances of the devastating winter in China and the falling supplies of pork can cause concern. The chinese are known to have a ravenous appetite for pork, some even use it synonymously with the general word, "meat". Depserate acts like a pignapping can give us an idea of how bad its getting and contribute to other factors to justify a conclusion that inflation in China is getting to be a real problem.

According to the TAs The market opened today (Feb. 22, 2008) below 3170 and continued to slide. Many TAs (technical analysts) have chosen the level around 3170 as their support level and are convinced that a fall below this will mean that the market will test its previous support close to the 2950 level. Bearish outlook More and more brokerages, analysts and columnists seem to be consistent with the opinion that we will see a bearish market up to the end of the first half of the year. The bright side is that I haven't heard anyone project our market posting losses by year end. Everyone seems to be in agreement that the Philippines will weather the global turmoil and come out stronger by the end of this year of the rat.

There are signs that local Philippine consumer spending may be going down. Less Traffic I'm sure I'm not the only one who noticed that traffic in our Metro's streets has been behaving nicely. Unfortunately, people traffic in our shopping malls have been reportedly low also. Lower spending in malls I heard that credit card usage was not rising sharply alongside metro manila mall sale periods. A rise in credit card usage is normal during periods wherein malls have big sales. People have been spending less money lately, at least as far as malls are concerned. Fearful metropolis Could this be the beginning of a trend where people start tightening their belts? Or are we just seeing a blip caused by the local political chaos? Not too long ago, an explosion in Glorietta was largely believed to be a tactic of the administration to divert the public's attention from attacks against it. Whether this be true or not, people are fearful that it may happen again. Whether the fear is ...

Everyone is thinking that the market will move down even more, probably closer to the 2950 level. I think I'll defer to popular opinion this time around. I agree mostly because everyone is becoming so picky with purchases. The numbers tell the story. Two months ago, these price levels would have put bargain hunters into a frenzy. Now, no more. I hear things like "stay short," "sit on the sidelines," "be cautious in your purchases" a lot nowadays. Yet, I still prefer to follow the uncommon sense of Mr. Warren Buffet. Times like these present the perfect buying opportunities to build a good portfolio. I just need time, patience, lots of good research and of course more money. :)