When recession turns into recovery

Will the U.S. economy's recovery be good for the Philippines?

The Philippine economy performed well during the crisis, will it do even better during the recovery? I would hazard a resounding yes. Here's why.

1. We'll see an increase in demand for minerals
2. Our Business Process Outsourcing Industry will remain strong
3. OFW remittances will keep on growing

Number two and three, BPO and remitances, are the reasons why we are doing relatively well during this global financial/economic crisis. Those are no-brainers and have probably already been priced into the market.

Number one is what will shake things up. When demand for minerals increase, mineral rich countries like the Philippines have a great opportunity to make good money.

What does all this mean for common sense traders?
The languishing mining stocks will return to the new horizon. Before this global crisis, mining was under a spotlight. When the world pulls out of the recession and begins its recovery, I forsee a strong and steady increase in the value of local mining shares.
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Note though that PX is is oversold at its present nine-ish price. This is probably due to speculation over news of a new investor coming in.

a beautiful picture in hindsight

The past few months have been great for the PSEi. From 1745, the index climbed all the way to 2626 in the last three months.

That can make a lot of people excited. Not me though.

The obvious conclusion is that gains like that are NOT sustainable. I don't have to whip out my calculator and formula book to figure that out. This index cannot keep this pace up. As we haven't seen much of a correction yet, I think its coming. Soon.

Time to sell. Time to hold. Not a time to buy.

gmanews: RP bourse outperforms ASEAN stock markets

This is interesting. According to GMAnews.tv, the PSEi has done better than its neighbors. This really speaks well of our fundamentals.

Click here for the full article.

is it time to buy?

Markets around the world have seen good gains over the past weeks specially in Asia. When the numbers are in the green, there is always a lot of excitement generated. So with everyone wondering if its time to buy, i can't help but wonder the same thing myself.

I don't think its really the time to be buying quite yet. I would recommend that we still be cautious. I'll maintain my current strategy of small buys stretched over a long period.

Too much excitement
It's been a while since we've seen good numbers and I think this might cause the markets to get ahead of themselves. So far, the PSEi remains very responsive to the U.S. indeces so I remain attentive to what's happening over there. While the so called "green shoots" are emerging from the devastated American Economy, I don't think all the bumps are already behind.

Credit Card fallout
One thing I'm very concerned with is the Credit Card fallout that is hanging over the American Economy like the sword of Damocles. Even without very detailed specifics, we know that the American consumer uses credit cards for a very large part of their purchases. When a job is cut, credit isn't. So what happens when the droves of jobless start defaulting. We'll again see some ugly figures and have to digest them. It may not be such a big deal from a macro economic point of view, but something like that can really rattle the markets. It's coming and I would like to wait for that to pass before I make some big buys.

Waiting game is coming to an end
Over the past months, I've read and read and read about whether its a good time to buy. Most articles say the same thing. There is tremendous opportunity now. Timing and selection is the key. That kind of vague advice isn't really very helpful when it comes right down to making specific purchases but considering that around November 2007, the chorus of the blogosphere was sell, sell, sell and that the experts were saying similar things makes me feel good even about such vague advice. I sense that the time for waiting is coming to an end. The window of this "tremendous opportunity" will soon close.

is it a breakout?

When the index finally woke up from its sideward slumber, did it indicate that it was ready to trend upwards?

I'll leave that answer to the technical experts. See tsupitero.com.

What tickles me now is that the good numbers of our index are inebriating the investing community. Will it trend up? I don't know, but they're saying there's good chance.

when will it end?

The index may as well be a straight line. The trend has been sideways for so long, it's getting boring.

I guess we can just be glad we're not seeing the market values plunge like it is for most of the developed world.

"This will not be a good year but it will be more stable than 2008 and there will be occasional substantial bear rallies. Inflation is declining and another interest rate cut by the central bank is expected. " -Ron Nathan inquirer's "bearbull"