First Metro Asset Management Inc

DO BULLS SPECULATE?

1:40pm  Tuesday  4 August 2009   Philippine Stock Exchange Index  2886.96 (+1.83%)

“The more you chase money, the harder it is to catch it.”  Does that quotation describe how you feel?  This bull market has been going on since late March this year, and the ones that have not benefited from it are those who thought they did not want to chase the market.

In truth, our group had a hard time buying this market when the index was at 2100; nevertheless, we bought a little.  When it got to 2200, we were again stomped because no analyst was saying that the economy was out of the woods yet.  We bought again, but not in a big way.  The story went on as the index passed 2300 and 2400.  We kept buying albeit cautiously and in amounts we thought to be manageable.  Then, we thought that 2600 would be a resistance, and in fact, it appeared to have hit a wall at 2626.  It retraced to 2353 sometime in mid-June.  The market again showed hesitation above 2500 in late June, but in July, it ran like a fleeting gazelle over the plains.  It was tough to catch, but only if you waited for it to get cheaper.

When you get down to it, one reason prices continue to firm up is because stocks are cheap compared to other alternative liquid investments today.  What else can you do when the bank pays you next to nothing for your deposits?  In the money market, you get something like 3% net.  Big deal.  It is no surprise why investors are looking for more.

This bull is driving the market.  Some etymologists think that the term “bull market” was derived from the French term ‘bulle speculative’ which refers to a market bubble.  Some think bull is short for ‘bully’, in its now mostly obsolete meaning of ‘excellent.’  Whether we are forever blowing bubbles or are in search of excellence, time is a great equalizer.  So far time has been on our side.  At this stage in the game, I think the jury is still out and it’s anybody’s guess how this market will play out.  In time, we will know.

People feel that playing the market is akin to that of a blood sport.  The sight of blood makes a game a lot more engaging.  That is why they have bullfights.  I think that is why people think that bulls charge toward the color red when in fact it is they waviness of the cape that attracts it.

Anyway, I’ve noticed constructive activity on the large cap shares and I see no reason why people should not accumulate TEL, GLO, AC, and the rest of the headline issues.  There is a lot of value in them.  However, I think that we are at a stage when the best value for money are the  small cap issues with good fundamentals.  I’m still positive on EEI and ISM.  They seem to be sitting on a pile of cash and solid earnings.  We can start looking at issues like T, I , TUNA and COAT because these guys are producing real goods and services for both local and overseas consumption.  As the global economy recovers, the real producers should perform well.

There is still some juice to be squeezed out of this market.  Remember, the index components are made up of the large cap stocks.  If the index retraces, it will hit the large ones but not necessarily the small cap segment.  Over all, I’m happy to be in the market and will likely stay committed at this juncture.  There’s no sense just to keep money lying around when there is a raging bull that it can ride.

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First Metro Asset Management Inc