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

This was the chart for friday's trading. I was surprised that it went that low already. Anyhow, I don't think people are fretting too much over the market anymore now. It seems to be a foregone conclusion that it will go pretty low. I wonder how this week will be.

I've seen a few lines in the news saying things like its a recession like none other since the great depression in the U.S. Now that Japan has slipped into recession, it's coming closer to home. What will a trader do now? Looking at the numbers and seeing that the dow is falling below 8000, Asian stocks are down to a 5&1/2 year low and the PSEi is lingering below 2000. It's not a good thing for most people. But for the enterprising individual there are great buying opportunities ahead. Since most fundamentals have not swung so drastically as the numbers reflected in the stock market, there are already bargains out there. However, how the weakened global economy will change the way businesses are running in this country will be evident only after around six or seven months. I think this is why the consensus among investors and other stakeholders is that the real bottom has yet to come.

The PSEi has made a long drawn retreat for about a year now. The levels we see were far from just 12 months before. Many times I'd be watching the market and would feel like it was about to turn. It looks like we're still in the middle of a long way down. Nonetheless, the consensus seems to be that Philippine Stocks are largely oversold. The fact that bargain hunting is not too aggressive even at these levels speaks loudly of the attitude that prevails. The economy of the world is slowing and we are not sure of the extent that it will effect the Philippines. Common sense tells us that it is possible for the oversold levels we see to be great bargains today but expensive tomorrow depending on how the economy may change the story. However, I still think that these are the times the best investments can be made. I'm eyeing MWC (Manila Water Corp.) and FPH (First Philippine Holdings). MWC has a business that is fairly easy to understand and a sunny outlook even in a slowing wor...

The PSEi closed at 2006.21 points. Today's close was up 3.17 points from yesterday.

The numbers say it all. The world's appetite for equities remains low. The Philippines is no exception. When the PSEi dropped to around the 1600 level, it didn't stay there long. That looks to me like a lot of active bargain hunters trying to cash in on a level that is quite obviously highly oversold. With the world's appetite for stocks at very low levels, the opportunity for bargains is tremendous.

The PSEi closed today's trading session at 1,953.49 points. The psychological 2000 level was broken. I don't see this as a surprise and I don't think anyone who has been watching the market lately would either. We had it coming. While it is nice to see markets rise, I think that it is in times like these that the real opportunities arise. Not all who see the opportunity can afford to take advantage of it while not all who can afford to take advantage of it can see the great opportunity. Lots of stocks are cheap and getting cheaper. Caution is necessary as many stocks cheap for a reason. Finding the diamonds in the rough is the key. Common sense makes simple and strong business attractive, specially the ones we are very familiar with as Filipino Citizens. I like MWC, JFC, RLC, BPI, PX, TEL, SMC, BDO, ALI just to name a few...

The market is a scary place to be investing in now. As a result, those that have the guts or smarts as well as the money to invest in stocks have a good amount of time to choose what to buy. Because of the prevailing fear and uncertainty in the market, we cannot expect large sustained rallies quite yet.