Philippine Stock Market Research

September 9, 2020

Classic Market Crash Signs

It has been a while attending Analysts Briefings and meeting fellow analysts.  Here, we get to not just get info from the host listed companies but get to talk shop and know what’s going around in the circle. 

One of the occurring and favorite conversation we have is about signs when the market is peaking.  That gives us a good laugh every time.  Let me share you our banter on that.

  1. Simultaneous IPOs

This one’s a big sign.  For some reason, before a market crash is a string of IPOs.  I’ve been in the market since the Makati and Manila Stock Exchanges merged into the PSE, and this one seems to be spot-on.  It’s like the best time for underwriters to get the best IPO price before everything falls into shambles.

  1. Everyone’s Into Stocks

Everyone seems to be in the stock market.  From that, I mean various people from lawyers to doctors to engineers to entrepreneurs to housewives and others.  Sometimes in a restaurant or somewhere, there seems to a conversation about the stock market, how they made money and the next stock tip. 

  1. The Number of Day-Traders Spike Up

Ah yes, the glory of the day-trader lifestyle spreads.  This is more evident now especially with social media and on-line trading systems.  The selfies, the screenshot of gains, the advices, they wow us.  They’re usually young and emotional.  And with the number of day-traders spiking up comes…

  1. Stock-Tippers Emerge and Re-emerge

This is probably more evident in our time before, or it’s most likely that I’m outside this circle.  These are groups everyone follow for their stock tips.  These groups are always present, but they seem to grow and become more popular especially in a rising stock market.  They’re the “market sages” and…

  1. Everyone’s a Genius

Number 5 is my all-time favorite like chocolate.  “I told you it will go up!”  It’s because almost all stocks go up in a bullish market.  “You should buy blue-chips because they’re big and strong.”  “You should buy food and beverage stocks because everyone eats every day.”  I honestly get gas cracking up with these.

 

Now for the test, when you look back at the past quarter or so, did you see these signs coming?  These are what we saw on our own.  Let’s see MM, APVI, AREIT CICT.  Number 1 checked. 

Some friends who never did suddenly want to “invest” in stocks.  Number 2 checked.  Bulk of my new Twitter followers are proud day-traders. Even the older ones are.  Number 3 checked. 

At least four stock brokerages called the PSEi at 6,500 and higher by year’s end.  Number 4 checked.  I checked my Twitter again to see “market” comments.  I got gas.  My favorite Number 5 checked.  

We do have our own market indicators for us and our Stocks Research and The Bottomline clients, but we do look for these classic signs.  They’re obviously written in jest. 

This is written mainly to entertain our clients who we advised to unload last August 18 and have been patiently waiting for our stocks-to-cash ratio to rise to at least 41% to position again.  

These market crash signs may not be accurate, but they’re funny, astounding, classic and helpful. 

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