fuel for thought

A blogger named Steve Austin (of oilprice.net) wrote:

"It took only 5 months for the price of oil to plummet from $150 to under $40 in the second part of the year. Meanwhile oil consumption did not even decrease 10%."

If he has his facts straight, then the oil price will be back with a mighty vengeance. The low price is necessarily negatively affecting production capacity. Supply will keep going down at these low price levels.

He also said that oil is now being sold below the cost of production. That adds another dimension to the bad news for oil consumers. This means that many of the relatively small players will close down and the ones that survive will have less competition. Less competition puts less downward pressure on the price.

Let's enjoy this happy breather while we can. :) Hopefully by the time oil starts to surge we'll have more energy options at our disposal.

PSEi
As energy prices affect the outlook for stock prices, we should be mindful that the current strength seen in the PSEi is still very vulnerable. The low oil price is one of the factors that has allowed the market to climb back ever so close to the 2000 level. Let's not forget how devastating the oil price can be.

Oil was traded recently at $42.30 (January, Friday 9 2009 - 03:20:17).

Fitch keeps RP's outlook at 'stable'

Another reason to bet on the Philippine Economy

The Philippines along with China and Indonesia were singled out by Fitch managing director James McCormak as the only countries that were not on Fitch Ratings' negative watch. 

watch of for these long weekends in 2009

The stock market loves its long weekends. Here are some to watch of for in 2009.


Araw ng Kagitingan  April         4-6       3 days
Holy Week                 April        9-12      4 days
Labor Day                   May         1-3        3 days
Independence Day     June       12-14      3 days
National Heroes         August    21-24       4 days
All Saints/Souls        October   31-Nov 2 3 days
Bonifacio Day            November 28-30   3 days

is megaworld at a bargain?

As one of the shinning stars of 2007, Meg was pushing past Php4 per share. It was last traded before Christmas at Php0.66.

It came quite a long way down. Is it at a bargain? Megaworld seems to think so. In a press release last year, they said that they expect P1.4 billion in sales revenues from its fifth Greenbelt-area project. It is dubbed the Greenbelt Madison. The 31-story building will rise along Salcedo St. in Legaspi Village, Makati City.

A couple of weeks prior to the press release on November 25. They bought back some 2,100,000 shares at 0.5028. After the transaction, 20,510,226,901 shares remain outstanding and 131,420,000 are in the treasury.

Does that mean that they put their money where there mouth is? I don't really think so. 2.1M shares is barely a drop of dew on a rainy morning and thus is not conclusive of their position.

Nonetheless, I personally like this stock. It's a company that appears to have had rode the wave of the sunrise BPO industry rather well. Do I think its at a bargain? Yes. I do.

what will happen to stocks for 2009

I do not see a coherent consensus of what will happen to the stock market in 2009.

What I have noticed are the following:

1. The world is watching the U.S. and China very closely.
2. The consensus is that there is no consensus

U.S. and China
The U.S. is where this all began. World markets have spent 2008 following the lead of American markets. My own opinion is that the some of the usual suspects will break away. As businesses begin to feel the real effects of the changes in the economic environment of the world and see clearly what it does to their balance sheets and income statements, confidence will be restored to where it should be. The fact is, America isn't the world and if America continues to suffer economically in 2009 not everyone will.

No consensus
There's talk of a rebound in the third quarter while there's also talk of the S&P 500 falling to 500 and staying there at years end.

How will the PSEi look by the end of 2009? I wish I could tell, but what I do know is that the Philippine economy is set to weather the storm in a manner far superior to the developed world. The long and the short is that the outlook for BPO is still strong, remittances are still poised to grow, albeit slower, the Banking Sector is guarded by regulations from the lessons of 1997 and the list does go on.

Thus, even if we can't see where the PSEi will be twelve months from now, we know that the Philippine economy is a logical bet in the long run. Stock prices are low so all we need now is some good intel on which ones are at a bargain and which ones are are cheap in reflection of their true value or lack of it.

last week went pretty low!

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.

is it the "great depression" all over again?

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.