August 10, 2003

Correct, Damn It

The funny thing is that every time the market corrects, the convenient reason by analysts is the coup. Well no, that's not exactly the case. It's been correcting because it has been overdue for weeks. These days in fact, I find that it hasn't been correcting enough. It's quite frustrating because I see the charts everyday. It's hard to be disciplined sometimes when you're in the heart of the action. But it must be practiced nonetheless. So grudgingly, I will put my checkbook aside for a month or two and hope that the Phisix falls by about a hundred points or so. Maybe then.

Imagine that. San Miguel performed poorly in the first half. Suspicious me thought that Danding & Co. will 'massage' earnings to provide him with an obvious platform should he decide to run. Maybe they'll make it more dramatic and pull off a record breaking fourth quarter run.

Much has been said about the country's low savings rate. About how a high savings rate is a necessary requirement for more rapid investment spending. But why would we save? Your RTB yields about 9%-10%. Well and good. That's why the government raised more than P70b from the latest issuance. But the higher risk investments yield less. BPI's premium fund for example only returns about 7%. We all know about non-existent returns for CASA. The stock market? That's arguable. When I checked, other funds also yield under 10%. Do we really expect these to be popular then? I wonder if the same case is true for our neighbors? Are the returns of their higher-risk investments lower than T-bonds? I'm too lazy to research on that now, so I'll pose the question to the audience. But enough about what it says about investor behavior. Imagine what that implies about the 'skills' of the country's fund managers? Hmmm...or could it be that management fees are too high? Perhaps financial firms need to be ravaged some more to squeeze out cost efficienies.

But as for me, the fool that I am, I'll take my chances with the stock market. Hello destitution.