December 25, 2001

A Christmas View

Admittedly, over a month ago I didn't think much of a year-end rally. I reasoned out that the market giants SSS and GSIS promised to stay away from the market already. They'll be more prudent with our money this time, having figured in headlines relating to their bad investment decisions and their obscene salaries.

If these two institutions dipped their hands into the market as of late, I haven't really heard. However, I had failed to take into consideration that there are other fund managers out there who would be window dressing their portfolios. As far as our market goes, that's the only reason you need to chalk up a hundred point rise in one month.

And that's exactly what happened. Of course it helps that people are putting the US attacks behind them. Thus, most stock indices have already bounced back from their September lows. Actually in that respect, the Phisix is underperforming since it's still about a hundred points below the immediate pre-attack level.

Technically, it would have been attainable. But in the end, profit taking proved to be the more popular option as against pushing the market up. With the Christmas frenzy just around the corner, cash indeed was king. Backing up a bit, by December I was already convinced of that stark chage in investor sentiment. For sure, the market would be pushed up. It was just a matter of guessing up to what level.

Now just a week away from the new year, it's most probable that we would see sideways movement in the market this week with all the investors still in the province or abroad for the holidays. The logical next question of course would be the expectations for the coming year. Well, the closet doomsayer that I am, I believed that the recent rally would be terribly short term. While January may prove to be a rally month just to fulfill the charts, I'm still of the belief that sustained rallies should be anchored on better corporate bottom lines and hinged on economic recovery. The year's woes, from financial restructuring to bad debts to falling exports and of course rampant kidnapping, will not go away in a whim. So, while it is a rule of thumb that the market leads the economy by about six months, being the conservative fool that I am, I'd rather see the economy leading the market.

And these are my thoughts this Christmas morning. Do pray and attend mass later. God bless!