Gus Cosio says so

Ideas on the Philippine Stock Market

Feathers in my nickel

9:20am Thursday  16 December 2010

I continue to think that the trading range of the PSEi for the rest of 2010 will be between 4000 and 4250.  Again, there are causes for some worry although most of them appear to be external to the country such as continued concerns in Europe on account of Ireland and the lingering credit tightening in China which has heightened the jitters in the Hong Kong stock market.  I see these developments as good news for investors like myself since I was lucky enough to keep a comfortable cash balance since the middle of November.   I find myself in quite a fortunate place because I can see the sentiments of many investors.  I have always believed that it is cash available for investments which provide the fuel that drives the market.  Hence, I am quite relaxed to see the market ease up in this season particularly because many savvy investors have taken profits and have sufficient cash balances in their account.

There has been quite heavy profit taking in the large caps such as MBT, JGS, ALI, BPI, AGI, MEG, AC and SMPH as these issues accounted for 42 points of the 58 point decline yesterday.  Looking at these companies individually, all of them undoubtedly should perform better in the first quarter of 2011.  If you want to establish a core position for Q1 2011, I would choose among these big losers yesterday except for MEG.  I favor VLL or FLI among property counters because of their relative cheapness and better track record in delivering satisfactory finished units.  AC, ALI and BPI were not spectacular performers in 2010, but I think because they are in the MSCI Philippines Index, portfolios which would be building up in the first quarter will be taking these stocks in together with MBT, JGS and SMPH.

I would also be keeping an eye on MPI now that it is trading below 3.50.  While I will patiently wait for lower levels, I will probably take a position when I see the support getting stronger close to these levels.  In the mining sector, while I had taken some profit on PX, I will be looking to buy it back a little lower.  Since I pared down my position on ORE and taking some profits as well, I am looking to add to my positions since many have already taken their profits as well and will likely play the game again in this stock.  Essentially, I would like to keep myself involved in mining stocks for 2011 due to the slow but sure global recovery which will result to steady demand for commodities.  This means that I will continue to feather my NIKL nest and even consider taking trading positions in AT from time to time.

Again, I would like to express my sentiment that this market is setting itself up for a good year ahead that is why the recent declines do not make me nervous.  The data on OFW remittances for Jan. to Oct. 2010 which showed a 7.9% increase standing at US$15.5 billion only assures us that consumer spending in the coming months will remain robust.  Since consumption makes up 78% of our GDP, there is good reason to foresee that good economic growth will obtain at least in the current quarter.

So if things are moving north and the market recently going south, do we really think that this is the real direction?  I am looking up at the sky.

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December 16, 2010 - Posted by | Financial markets in Asia

22 Comments »

  1. hi gus,

    what’s your take with CEB, especially with the ongoing crisis with PAL?

    Comment by paulotan | December 16, 2010 | Reply

  2. do u have an acid test sir gus?

    Comment by cliffhanger | December 16, 2010 | Reply

  3. I totally agree with you. I’m invested in mining, banking and property sector.

    I would like your opinion on CEB and DGTL. Fundamentally sound but heading south.

    Thank you,

    Comment by thewingedpalate | December 16, 2010 | Reply

    • Same question for DGTL sir Gus, still holding some purchase at around 1.48. Think for averaging it down today at 1.41.

      Comment by zaizai | December 16, 2010 | Reply

  4. Smph:))yummy @ 10.4++

    Comment by Time2Buy | December 16, 2010 | Reply

  5. sir Gus whats your insight on JGS since they will be selling more shares???

    Comment by norman | December 16, 2010 | Reply

  6. sir Gus It’s been a long time since the market correction started that my portfolio was stagnant. Could you please advise me here or even just post comment in my small blog on what to do. I’m just a newbie and has been reading your blog even since I started last June. My portfolio is posted in my blog/diary… TIA
    Any other opinion is welcome also. Is it advisable for me now to average down or wait further ’til early next year before buying again?

    Comment by RmR | December 16, 2010 | Reply

    • RmR,
      I must reiterate that you need conviction to be in the market. You must also have the humility to take losses whenever you have to. Money management is as important as stock picking.

      Comment by Gus Cosio | December 16, 2010 | Reply

      • thanks sir Gus for that wonderful advice. I will ALWAYS keep that in mind. my day isn’t complete if i wasn’t able to check out your blog. God bless!

        Comment by RmR | December 16, 2010

  7. PS. I have some cash now but i’m having second thoughts whether to use it now or wait for further correction…

    Comment by RmR | December 16, 2010 | Reply

    • I suggest positioning yourself for 2011. Today is indeed “sale” day. 🙂

      Comment by Shan | December 16, 2010 | Reply

  8. wait till last week of december or first week of january

    Comment by sads | December 16, 2010 | Reply

  9. sir gus, i have this stocks of eei,dmc, aev, and vll, do u think they will profit at 1st quarterof 2011

    Comment by sads | December 16, 2010 | Reply

  10. Sir Gus, please comment on ORE, is it worth to just hold the stock and wait for nickel shipment next year …thanks

    Comment by Marc | December 16, 2010 | Reply

    • being a newbie in stocks buying on rumor is very risky for me, that’s the reason i did not bother to join the ORE bandwagon. mahirap pag napag-iwanan ka ng mga jockey at nung mga magagaling na sa stocks. that’s the reason why PX lang sa mining sector ang meron ako.

      Comment by RmR | December 16, 2010 | Reply

      • Good for you RmR, newbies should only take risks acceptable to them. It takes quite a bit of nerves to hack volatility in the market.

        Comment by Gus Cosio | December 16, 2010

    • Marc,
      I sold 2/3 of my ORE position at an average of 3.70 because I felt that I needed to generate cash in my account. If you recall my past posts, I always recommend that people generate cash from time to time in case the market goes down. Now that it is at 3.10 level, I am looking to buy the position back.

      Comment by Gus Cosio | December 16, 2010 | Reply

  11. Sir Gus,

    You said one must have the humulity to take some losses. May I know what your cut loss level is. I am experiencing some big losses in some of my holdings, although overall I am still ahead by a small margin.

    Comment by Nel | December 16, 2010 | Reply

  12. I agree with sir Gus, you must have conviction in every stocks you buy. Otherwise you will be easily swayed when stocks is in the consolidation stage adding therein the sleepless nights you may have. I am a newbie also having just started last June. I already paid my tuition for all the mistakes that I made.

    Tips for newbie, you must have conviction, the plan and the discipline to carry out your plan. Know the support levels and the resistance. Don’t be greedy (like me before) who want to possess all stocks that has rumors. Instead just focus to few which is quite manageable base on your available time

    Comment by Claire | December 16, 2010 | Reply

    • thanks Claire for sharing

      Comment by RmR | December 16, 2010 | Reply

    • Correct ka diyan Claire. You must really know the stocks you have bought. If you don’t do this better go to the Casino, you might have more luck there than investing in the stock market.

      Although I don’t agree with using pure technical analysis when dabbling in stocks, I agree with your statement about not listening to rumors. You should make your own independent judgment as to your buy and sell decisions.

      Not doing this and listening to rumors about perceived “inside information” is a sure formula to get burned in the stock market. As Warren Buffett said “With enough inside information and a million dollars, you can go broke in a year.” 🙂

      Comment by D' Intelligent investor | December 30, 2010 | Reply

  13. good insights Claire

    Comment by jofoler | December 26, 2010 | Reply


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