Philippine Stock Market Research

Up 8 and Great

March 9, 2016

The PSEi and global equities markets are down year-to-date in 2016.  This is due to dropping crude oil prices, the weak global economy and fears of the upcoming US interest rate hike.  However, after dropping in January, equities markets staged a come-back that produced decent gains so far in 2016.  Back in January 29, we recommended the 2016 Defensive and Opportunistic Stock Portfolio to our clients.  They were made up of ten stocks with high cash dividend yields and growth rates.  We thought that in a worst case scenario, the high cash dividend yields will still produce actual gains that will outperform the 2016 projected inflation rate of 2.50-3% of the government, while the high growth component will boost the portfolio faster than the PSEi in the medium to long term recovery.  The result in the stock portfolio’s young age is favorable as it trounced the PSEi and even the ASI.

2016 Fund Jan-Mar vs PSEi

2016 Fund Jan-Mar vs ASI

Like the comic-book character Wolverine, stocks have a fast recuperative power from injury.  Even Warren Buffett mentioned that capitalism has that innate power.  So when markets are pounded down to the ground, strike, buy and compound gains and liquidity.  And when markets are high, cosmic and exuberant, take profits and create liquidity.  This is an ongoing process that we exercise and guide our good clients through the smoke of issues, criticisms, fear and depression.  These cannot put good stocks and even people down.

Another investment portfolio that we monitor is the 2015 Stock Portfolio we recommended last December 29, 2014 to our clients.  Down 3% from inception, this slightly outperforms the PSEi and outperforms the ASI.  It has a below par performance.  However, the optimistic thing about this investment portfolio is the still unutilized cash component of 50%.  As mentioned before, this was the defensive property of the investment portfolio.  It is a bazooka to be fired at the markets’ darkest hour.  When is that?  Well, it was headed there last January, but the markets recuperated through stimulus measures just like from China.  Are the markets headed there again?  There is a probability with the global economy still reeling from a deadly combination of high leverage and weakness.  When that bazooka is fired, it will boost the investment portfolio faster than the markets during the recovery stage.

2015 Stock Picks vs PSEi

2015 Stock Picks vs ASI

So now, the PSEi is just shy and below 7,000.  This is a critical level in our PSEi Bands.  It is the Central Value, our current value of the PSEi.  Just before elections and the global economy still weak, the question is, “is the PSEi worthy to be at Central Value or even above it”?  Does it deserve that level or even premium when other markets are downgraded.  The thing is, one should not be exerting a lot of effort answering this question.  Full effort is done on seeking value and minimizing risks in the Philippine stock market.


The Philippine Stock Market Research report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report.

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