If you think your stock portfolio has been beaten to a pulp, wait till you hear what technical analysts have to say about whether we’ve already seen the worst.
“Has the PSEi reached the bottom? Hell, no,” said Fitz Aclan, head of investment strategy of the trust department of Banco de Oro.
Fitz gave his inter-market analysis and fearless forecast at the Chart Analysis Forum Tuesday night at the PSE trading floor in Ortigas. Fitz is one of the founders of Absolute Traders, the group that organized the forum.
Three hours seemed quite a long time to digest his two-word answer to the burning question of the night. The CAF wrapped up at 11 p.m., but the crowd remained somber and thoughtful until the very end and a side comment from a young trader was all too revealing. “Cut your losses,” he said.
That probably means some traders were likely pinned down by the current market plunge. For an active investor, especially a technical analyst who prides himself with being able to see the signs early on, that’s like an obstetrician-gynecologist who misses the normal delivery date by a month.
The chart looked like someone’s going down the staircase of doom (Snorting at myself here. Don’t ask me what a head and shoulder formation means). If technical analysts are to be believed, things are still bound to get worse before they get better.
“There are still downward pressures…Oil is still trending up. When oil starts to show a reversal, that can be the trigger that we should be watching out for,” Fitz said.
Fitz, Bonner Dytoc and Danny Go who started AT along with technical wiz Arnold Diaz, encouraged traders to look at the market on a long-term perspective. They say those who want to make a quick buck are easily disheartened. The serious ones are those who stay and use the lull to sharpen the saw.
“Now is the time to educate ourselves, to practice and to look at the broader picture,” said Danny Go.
Booming stock markets attract aggressive traders and Buffett-wannabes. In 2007, when the market rose 40 percent, everyone wanted a slice of the action. Someone said the PSEi would go up to 4400 in 2008, which sparked a lot of interest in stocks. Just when the herd was coming in, the bear came lumbering out and the herd scattered.
Alcuin Papa, a member of AT, and a Philippine Daily Inquirer reporter, said Absolute Traders peaked at 80 to 100. My rough estimate was 60 in attendance Tuesday night.
If you fancy yourself as an active investor, AT said keep in mind that the bears are out and the strategy should be to stay in the sidelines and keep exposure to a minimum. If you see a buying opportunity, use money that you can afford to lose and preserve your capital so you can play another day.
And pray that the real bottom is not too far away.
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19 Feedbacks on "Has the PSEi reached bottom?"
ACN
“Has the PSEi reached the bottom?”
No one knows.. not even those TA or FA experts.. not even Madame Auring or Dr Xavier.
Exerting effort to predict the market is a futile exercise.
levity
hi salve. is short selling allowed in PSEi? they say it’s the only way to profit when markets go down
Salve
@ACN, Sunlife CEO Henry Herrera, who is also an actuary and does both FA and TA, told me yesterday after I asked him whether the PSEi had hit bottom: “Who knows? I don’t care.” The basic message is that when your investing timeframe is 3-5 years, peso cost averaging works best. Will write a longer piece on that today.
Regards.
Salve
@levity, the PSE guys have drafted the rules for short-selling, but just between you, me and the lamp post, market participants are not so hot about those rules. The general reaction is a snort. Tell you more after an interview with Citisec this afternoon. Take care!
Ludwig Mark Rosete
@Salve,of course the market is not so hot about it because they belong to the 90% of the population who has the 10% of wealth. Well I’m very anxious at short selling to be allowed at PSEi because I want to be one of the 10% of the population who has the 90% of the wealth(I’m one of WB wannabe’s). Going down is faster than going up. I want fast but not easy money. There’s a difference between the two. I have little experience in the stock market but I would agree that it’s time to educate ourselves. I’m willing to lose a little and gain education how to get that hard but fast money than easy but slow money like mutual funds. Risk is not good or bad, it’s part of the game. Just have fun investing guys.
ACN
“The basic message is that when your investing timeframe is 3-5 years, peso cost averaging works best.”
I agree! PCA works!
Unless you have other funds coming in for stock investment, it is wise to stay out of equities. my 2 cents worth
Tarantrader
I’ve read the rules of the proposed short selling program for the PSE. If they haven’t changed the rules, it’s a whole lot of work to subtly tell you it may better off not to short sell. The proposed short selling here is so unlike short selling in the US where it’s as easy as pressing the enter button. Of course there are certain issues there with conditions on shorting but generally it’s as easy as buying a stock.
With us, not only do you have to deposit either the amount you want to short or the certificates of the stock that you plan to short, but you also have to wait for your certificates to clear for a minimum of 2 trading days. By such time, it may be too late to short.
Our PSE has to observe carefully how other markets are doing it. They already know that less than 1% of our population engages in stock trading. They have to exert more effort in educating the public to convince them to participate in the market.
Ria
I was just looking at my portfolio this morning and boy, the cost of the stocks I bought is almost half of what it cost last year. Man we had a good one last year didn’t we?
Anyway, I just bought additional shares. Considering that stock and cash dividends have not stopped coming, it isn’t too bad really.
pinoy investor
my stock is up 40%. you can still make money by picking good stocks. if you’re brave and can hold for 2 yrs, it’s a good time to buy. prices are ridiculously low.
Tina
Fitz you make us proud!
ACN
stock portfolio: 50% in dividend paying stocks, 50% in Mining and Oil.
don2x
if there are service guarantees on online trading particularly during major maket moves, then stock trading might become mainstream. just read the horror stories of online traders during downtime that usually happen on major market moves. those who want to get out cannot get out while those who want to get in cannot either. it is really nerve whacking and frustrating.
ACN
don2x, it depends on your online broker.. some of them can process your trade (just call their hotline) even if there system is offline.
don2x
acn, there are few online brokerage in the philippines and from what i read in other forums the issue of website downtime during heavy traffic on major maket moves has not been resolved. some even blamed the pse system to be unreliable. sure some online brokers have hotline numbers but ii is usually busy or just keep on ringing on those critical times.
ACN
in that case, it is ideal to be an investor rather than a trader.
mzkukuro
Bought GLO for 1295, now its 1135. Honestly, I’m very much tempted to buy more.
Other stocks I’m very much tempted to buy are: ALI, BDO, and AT. But I’m still waiting for the right time to buy. I dont think it has come yet.
ACN
mzkukuro, i’ve been buying GLO, TEL and EDC also for cash divs..
i’ve started taking MEG din dahil sa sobrang bugbog nito. Come on brokers! Dump MEG pa! =D
“be fearful when others are greedy, be greedy when others are fearful” — may addendum ako dito sa line na to.. “but make sure you have fresh funds coming in” hehe
don2x
some choose the contrarian approach, buy low sell high. some use the trend is your friend aproach, just waiting until the trend is confirmed.others use buy and hold strategy.in this fast changing environment, there is no clear line separating the investor and trader.both use similar strategies depending on their personal preferences.
crawlinginddark
Hopefully, everything will start to do well after the U.S. elections! =)
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