It’s been a long while since I last posted any market-related research. Frankly, I’ve missed creating reports that are actionable for readers too. Here are some observations that I have in our current Philippine markets. All views are independent.
1.) Blogging about the markets is not just simply voicing personal opinions but it is about viewing the world in a certain way and sharing it with others. It’s a communal activity, as Mr. Om Malik of the popular technological blog Giga Om would say. Hopefully all of you – my super-smart readers who have also become friends – will join me in this journey, and offer me advice, guidance and tips.
2.) Being wrong is as important as being right. What’s more important — when wrong, admit that you are wrong and listen to those who are/were right.
(If you find some views here that contradict, or agree with your own researched views, please kindly leave them in the comments. I’d love to create connections. These normally lead me to think of new ideas and new opportunities too. You can also choose to write an email to me: firstname.lastname@example.org )
We are continuously being bombarded with short, near term news and in the process, we are failing to think about the big picture. We cannot blame ourselves for our often twitching market views though, because as you can see in the image below, we are experiencing extreme volatility swings ever since the last 3 months.
Whipsaw Markets Illustrated
Perhaps most of my Filipino readers can attest that a swing in our currency USDPHP from 44 to 42.50 to 44.00 in just a few months, isn’t quite “normal”, but this has been true for all other Asian and major currencies. We have been swinging wildly back and forth. AUD went from 0.94 to 1.07 and was last seen trading at 0.9700 and currently swinging upwards at 0.9850 as of writing.
Thus, in my market research today, I’m going to try to stray away from my usual short term nature, into making a weekly analysis of how we have fared in the index, as we near the end of 2012.
Important Questions of Market Traders and Investors + My Answers:
1.) Should we stay cautious? Will we be seasonally stronger for December, just like all the other years? Is there really a December effect?
To answer this- I looked, tabulated and typed the closing prices of the monthly historical charts of our Philippine Composite Index from Year 2001-2011, using publicly available market data to see whether if November is a down market, on whether there are “seasonal” bounces during Decembers.
From the data I gathered, I found that strong rises from previous uptrends tend to have stronger Decembers or at least a sideways December, except if we are in a serious bear market (such as 2002 and 2008). From 2001 to 2010, we had only 2 bad decembers and 8 up december months, with three of them rising more than 5% in the last month of the year versus November’s monthly close.
So, if you ask me for an answer, based purely on data alone, we normally have good Decembers, and trying to buy stocks merely for that “December effect” has at least 80% chance of either breaking even or making money, rather than losing.
2.) What would be a good long-term (6 month -1 year) strategy to develop and what are some conviction stocks (fundamentals,technicals) to accumulate for 2012?
Right off the bat, I tell you I know nothing about what will happen for 2012, but the following are good stuffs I’ve been reading that can help in your decisions.
I don’t know the answers. If I knew, then I’ll be a trillionaire. What I can do is to help lead you to the insights that help you answer the questions yourself. Below is how I think.
Btw, all of my research makes use of public information. I just predominantly use newspapers and company reports disclosed in Philippine Stock Exchange. I don’t have any sophisticated broker reports etc.
Here are news clips I’ve read that can be useful:
Bullish Prospects in the Philippines
1.) Philstar Reports that GSIS To Hike Placements in Local Equities (From 10.5% to 15%, possibly next year)
2.) Philstar columnist Valentino Sy of PhilEquity Corner writes several reasons why Philippines has placed gold medal in current world markets.
3.) Check news headlines if I’m wrong, but I’ve read that BPO centers in the Philippines are expanding and hiring more this year. Definitely bullish prospects.