Gus Cosio says so

Ideas on the Philippine Stock Market

If You are in the Philippines, you’ve got to be in stocks!

Philippine Stocks   10pm  Tuesday  June 2, 2009   PSEi – 2490.42   PHP/$  – 47.07

There are just times when money can be made with certainty.  The last four weeks should be counted among them.  As I was surfing the web earlier looking for ideas, I stumbled upon this quote from Shakespeare’s Othello: “Put money in thy purse.” Although, the character Iago says this in greed, I would like to refer to it in prudence.

The market has been kind to those who were daring enough to take the plunge.  A lot of money has been made.  Even those who sold too soon or those who came into the market relatively late have either made some profits or are looking to book some.

In the car on my way home tonight, my colleague asked me if the stock market was a zero sum game, i.e. the profit of one is the loss of the other.  I said I did not think so.  Trading stocks have an important element to it which is the element of time.  Within the time period you hold the stock, there could be dividends paid, so there is yield.  Also, the stock may come into some windfall and permanently change in value.   When price change is not the sole determinant of investment return, it is not zero sum.  Value is created.

I’m having trouble finding value in some stocks right now because I think that they’ve moved ahead of themselves.  Fortunately, even if you don’t sell now and get caught in a major price correction, there is always that possibility that the stocks you own would pay dividends.  Right now, I would really just buy stocks that are sure to pay dividends.

Looking at the nearby markets today, Hong Kong was down 500 points or 2.6%, Singapore was down 0.18%, Thailand declined  almost 1%, and Korea eased 0.16%.  One thing I like about people who play stocks in Hong Kong is their sense of money management.  Their market is up tremendously since this global stock surge happened, but every now and then we see this huge drop inthe Hang Seng Index.  These drops are healthy corrections and have the longer term effect of supporting the trend because taking profits constitutes a reduction in risk.

This Philippine rally had shown that it has firm legs, but those legs would be firmer if cash profits (in contrast to paper profits) were put away.  As Iago in Othello says, “put money in thy purse.”  That way when a correction comes, you’ll have more to play with.  I always thought that having a profit was a lot more fun than sitting on losses.

Be sure to have fun this week.

June 2, 2009 - Posted by | Financial markets in Asia

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