THIS is from the greatest stock-market trader in the history of the New York Stock Exchange, Jesse Livermore.
“It was the change in my own attitude toward the game that was of supreme importance to me. I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, ‘Well, you know this is a bull market!’ he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.”
The Philippine Stock Exchange started the current bull market rising rally in February 2003. Following a very deep correction in 2007, the rally continued again in October of 2008. It is likely in the next 12 months, the PSE index will reach at or near 6,000. That is the long-term trend.
What occurs in the meantime with all the ups and downs are merely “fluctuations.” What is important is “The Trend.”
A trend is defined as the “general course or direction” similar to how a river flows or the wind blows. Early Polynesian sailors were able to navigate over literally thousands of miles of sea by observing the way the open ocean moved in its natural trend.
In the stock market the saying is, “The trend is your friend,” meaning, that when you try to invest against the prevailing trend, you will probably lose money.
We face a problem, though, in that we look for what we want to see. If we want a share price to go up, we look at the daily, weekly, monthly fluctuations to justify why the price will go up and tend to ignore the trend, which says it is going to start or continue to go down.
People and institutions have trends also. That child who had a poor work ethic in high school is probably not going to improve much later in life, no matter how much he or she is encouraged or reprimanded. That is why every new employer wants to look at the past employment record as well as school transcripts.
Trends occur in relationships, too. We may all have been in one far beyond its expiration date hoping that the person’s words would be met with proper action.
The promises to do better are almost like the noise of stock-market fluctuations. They do not change the longer trend.
The government has talked almost consistently about several critical issues that must be addressed with action. Some have been prompted by conditions such as the power shortage and airport congestion. Others have been through their own initiative, such as the Public-Private-Partnership Program. Yet another, a stable mining policy, came from both pro- and anti-mining advocates seeking clarity.
However, through it all, the trend is clear. The government will move very slowly before any action is taken, if any, at all.
No concrete action has been taken in the last two years to anticipate and respond to a growing need for power. While promoting and pushing for a major rise in tourist arrivals, the Philippine airport infrastructure is virtually the same as it was before. We are hardly closer today to that mining policy than over a year ago when all new permits were put on hold, costing the country billions in foreign investment.
It is unlikely, if not impossible, to change a trend. The only thing that can be done is to live with it, go with it as best as is possible.
Regardless of how well private enterprise does during the next 12 months, no matter how high the stock-market advances, no matter how much better the Philippines seems than that part of the world burdened by the debt crisis, those parts of the economy the government is responsible for will not be better.
That’s the trend and it is not a friend.
Saturday, 12 May 2012
Friday, 11 May 2012
By Lois Calderon
ABS-CBN News Channel
MANILA, Philippines - The Aquino government sees the country's rising population as more of a boon, rather than a bane it was to the economy in the past.
They are investing more to feed the young population, educate them and keep them healthy.
The government says the effects of this will be felt around 2015 when the working-age Filipinos will make up majority of the country, accelerating economic growth. At present, the country’s population reached 92.33 million as of 2010, according to data released by the National Statistics Office.
"If we are to reap this demographic dividend, this particular sector, the lower part will have to have the skills to be productive participants in the future Philippine economy," Finance Secretary Cesar Purisima said.
Working and earning Filipinos are consumers too. Bangko Sentral governor Amando Tetangco says domestic, consumer spending helps the economy ride out the increasingly volatile global economy and markets, which caused a drag on exports last year.
To keep the economy being domestic-demand driven, people need the skills to get jobs, earn and keep spending.
"Growth in the Philippines has been driven more by domestic demand rather than foreign demand... Of course, remittances help finance consumption but we also have what we recently talked about - the demographic dividend - the young, economically active population like those guys in teh BPO sector. They drive consumption," Tetangco said.
Tetangco said the government is finding ways to make sure the poor won't be left out. He says including them in the financial system, giving them access to credit could help them become a boost rather than a drag to the economy.
"We're trying to reach the unbanked and the underserved or the excluded segments in the population," he said.
The government says other economies grew fastest when they hit their demographic sweet spots. It's hoping to get a double boost from the rising population, and including more of the population in the modern economy.
Tuesday, 8 May 2012
OUTSIDE THE BOX
AMERICAN songwriter and performer Kris Kristofferson wrote a song in 1969, “Me and Bobby McGee.” Part of the lyrics were: “Freedom’s just another word for nothing left to lose, Nothing ain’t worth nothing but it’s free.”
Global bankers and the European Central Bank (ECB) discovered over the weekend that the most dangerous people in the world are those who have nothing left to lose and are free to vote.
National elections took place in Greece and France. Why should we in the Philippines even care? Over the weekend and into Monday, we were more engaged with the results of the Mayweather-Cotto fight, awaiting a decision in Tulfo versus the “Santiago Tag Team” match, and preparing for another round of the People versus Corona versus Malacañang rumble.
In Europe it was the sovereign people versus the banks. The people won and the outcome of that contest is going to directly impact the Philippines.
France turned out its incumbent and somewhat conservative President Sarkozy in favor of socialist candidate Hollande.
France has been in a bind. It needs to reduce its budget deficit and put in place some “austerity” measures. It is really not austerity but some minor changes to their government giveaway programs—like raising the retirement age by a couple years. The other side of the rock and a hard place is that Germany expects France to go along with using French money to bail out the banks that loaned money to loser nations like Greece and Spain.
Hollande’s election slaps Germany in the face because he has said that he has no intention of honoring Sarkozy’s agreements with Germany on bailouts.
Greece is truly the country with nothing left to lose. Furious Greeks punished the two parties that have dominated politics for decades. No party has a majority of seats and the two-party coalition that brokered the bailouts was brutally hammered in the election. Further, two “extreme” parties, the ultra-nationalist New Dawn party and the ultra-leftist Syriza gained a combined total of nearly 25 percent of the vote.
The Greek government is broke. The Greek people are broke. Unemployment is well over 20 percent. The ECB Bank wants to loan Greece more money that they can’t ever pay back in order to protect the mainly French, German and American banks that loaned money to the Greece in the first place.
The ECB position on Greece is: “Your government borrowed a lot of money from the banks. The government wasted it. But you have to pay it back, otherwise those banks are going to be hurt badly. Instead, you people must now be hurt badly. Tough luck.”
The answer the Greek people gave to the ECB by its election is, “No way.”
On this news, stock markets across Asia fell. Crude oil dropped below $100 per barrel. The Euro currency depreciated against the dollar.
The potential fallout from these two elections has great implications.
The ECB has not pursued the same policies as the US Federal Reserve in loaning large amounts of money at virtually zero interest rates directly to the banks. Instead, the ECB has been increasing its lending and guaranteeing new loans to countries like Greece. These countries, in turn, have been using the bailout money to pay on their loans.
However, if Greece and perhaps Spain next, refuse to take the loans, then the ECB must do what the US Fed has done, bail out the banks directly.
Now we will have both the US dollar and the euro as being inflated currencies and an extended period of near-zero interest rates.
The problem is that the ECB has said again and again that they will not do this and the major stock markets responded negatively yesterday in fear of a banking collapse. The drop in the markets is in support of current ECB policy. But everyone knows that the ECB policy will not save the banks if Greece refuses the loans. The ECB, too, will turn to Fed Reserve-style money printing and the lowest possible interest rates.
You think all this recent positive publicity about the Philippines and others is mere coincidence? Not a chance.
The global financial press and media are controlled by large financial institutions. Anticipating the French and Greece election outcomes, they must find alternative countries to place clients’ funds. No one wants to invest in the European stock markets with the high uncertainty. No one wants to buy Spanish government debt at 6-percent interest.
Therefore, all this recent buildup of these alternative investment destinations like the Philippines is to condition their clients that these institutions have everything under control.
Foreign money will be pouring even faster into the Philippines in the weeks and months to come. Mark my words.
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