August 9, 2001

Are you scared yet?

For over a week now, we have been waiting for the market to give clearer signals as to the direction it will be taking in the short-term. We waited for such issues like PLDT, MER, MERB, BPI, AC, ALI and SMPH to weaken towards their respective support levels. We waited for the index itself to touch the 1280 level.

Now all of a sudden, that level has been breached, it just seemed vaguely possible. We believe a lot of the negative factors like the Abu Sayyaf terrorist activities in the south, the various scandals popping out left and right, and even the mind boggling budget deficit, have all been factored somewhat by the market. By factored, I mean we all know they're just out there, but we're numb already to a point.

That being said, we can really only point our fingers to the big foreign fund managers that have suddenly decided to liquidate their holdings here. And what timing to do so too. The market is well on its way to an 8-week downslide. Why they chose to dump their holdings now could be a sign of frustration or sadism towards us little investors. Well, that's what happens when you invest in a small-cap market. A little re-weighting of the porfolio and down goes the market.

So what's a good investment strategy? Personally, I think it's a time to buy. When you have big cap issues lingering dwelling in 8-year lows, there just has to be more upside than downside. Then again, I remember reading a commentary wherein we naturally believe things will improve in a year or so even if there are no fundamental reasons to do so. Well I have to admit, PLDT has never been a favorite. Not only is the IT community up in arms for the company's alleged monopolistic practices, there have been anomalies regarding the company's transfer of shares (remember Erap and Mark Jimenez?). Then again, as an investor, we have to recognize that PLDT, by virtue of its market capitalization is one of the few local issues that big fund managers will look at. Plus, it has positive earnings and cashflows for the first half of the year. That's a rarity among listed companies, given a backdrop of business closures and record unemployment levels. Obviously this means I bought TEL shares already. Yep, I did the same thing with AC and MERB.

What will you do?