First Metro Asset Management Inc

The Trend is your friend

11:40am Friday May 15, 2009    PSEi 2310.30   PHP/$ 47.64

Today is one of the strongest days I’ve seen in Philippine stocks.  Our market is up 2.03% at this time compared to about 1% and a fraction for the rest of the region.  The strongest issue in my radar today is Ayala Corp. (AC) which is up 4.7% as of this writing.  Everything seems to be up today and value traded up to this time is just about the usual level for this kind of market.

When I said earlier that the trend was your friend, I didn’t realize how friendly it was.  I like the market very much.  The Dow was up only 0.56% overnight, so this local market strength is not being influenced by the U.S. market.  As I look at the regional indices, everything is green with the Hang Seng now up by 1.94%.  Only Shanghai is down, but that’s only 0.3%.

The question that comes up in people’s minds is “will this rally last?” Honestly, that’s the question that hounds most market amateurs.  Professionals and veterans plunge head first when they spot a trend and keep swimming for as long as they feel that they are swimming with the tide.   What investors must not lose at this stage is perspective.  We are swimming up from the bottom and the surface may be quite a ways off. Don’t forget, in most markets, we are just coming off the bottoms. The overlying reason is because our markets got hit very hard for things that we were not at fault for.  There were no toxic assets here, remember.

We are merely working our way to fair values that are inherent in the companies listed in our market.  Nothing more nothing less.

Have a nice weekend.

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First Metro Asset Management Inc