Izzzz baaaacccckkk!

Dear faithful readers and visitors,

I'll be back to my posting ways soon...

My last post was November 23, 2010. Today is January 28, technically.

I've been busy and in the midst of some changes; but, once this is behind me, I shall resume my posting schedule, which is once a week.

The market has made a lot of noise (not) last December up to today. Now the index is below 4,000 if I remember correctly.

Sentiment has turned sour (for the local scene), I'm sure. But it's just how money is in the world.

Once upon a blue moon, money was in this side of the world. Now, it's going back to the States. If you haven't read the news, "hot money" was at an historic high in the Philippines last 2010.

These are just funds which pour into investments, usually paper investments like stocks. That's why everything was going up last year. So, you can say that the stock prices went way ahead of the companies' ability to earn and make money.

So what does it mean to us Juan dela Cruzes?

Now, we local folks with only a few bucks joined the ride last 2010 thinking that the joyride would never end. Well, local folks, the rug has been pulled under our feet.

Let's say foreign fund invested 1,000,000 pesos in Stock XXX. You on the other hand, invested 10,000 pesos. Assume for an instance that the stock price is at Php 1.00.

The foreign fund wants to liquidate his/her entire position. If the posted buyers for Stock XXX at a certain price point is only at 100,000, then the foreign fund will sell all the way down just to satiate the 1,000,000 position. That's why falling stock prices are painful for small fries like you and me, suwertehan din minsan, kung nakapost ka sa magandang presyo..

So when foreign funds are exiting the country, there is indiscriminate selling. Consequentially, us locals will just see our paper gains disintegrate to more realistic levels.

Good long term, bad short term I suppose. Will happier days return? Perhaps towards the latter part of the year.

I mean everything's going up, primarily in the transport sector, not only in terms of prices but also in attempts to blow them UP.

If the transport sector charges higher fares, then it's natural that food costs will also increase since food is delivered port to port, manufacturer to outlet via transportation. Transportation is the backbone. This would then start a cascading of price increases.

As one broker friend once told me, inflation is a given.

The crucial thing though is that people will get used to higher prices, but it will take some time.
And when they do, then corporate profits start trickling in, and eventually stock prices get propped up.

But you know what? Having worked in the FMCG sector in the past, January is almost always the month when most companies announce price increases. Just in time for retail outlets to flush out all their 2010 stocks.

New year, new stocks, new prices.

Speaking of stocks.... let's backtrack a bit....

When you're a small fry in the stock market, it's best you protect your gains. A lot of so called experts will always tell you about money management.

But personally, money management is dependent on the amount you are investing.

Some experts forget that not everyone can invest more than P 20,000 in the stock market. So money management for the conservative stock investor will strictly be a one-stock affair. It won't be about how you apportion your funds.

Oh well. Enough for now.

I'm back! Thank you for dropping by.

Sincerely,

Guerilla Investing Blogger