First Metro Asset Management Inc

Uncharted waters by Gus Cosio

8:30am Thursday 8 March 2012

The decline in Philippine stocks yesterday was not as violent as the drop the previous day. I think saner emotions have prevailed. While I do not discount further possible declines, I am not one to hastily conclude that the rally in the PSEi has ended. I think that we are in a very healthy consolidation phase.

What I like in general is the staedy flow of domestic investors into stock either through direct involvement in stock trading or through investin in equity funds. Last night, I conducted a seminar on mutual fund investing here in Cebu, and the venue was packed. These were mostly young professionals who are looking for ways to invest their savings. Of course, there were also middle aged business owners who have recently learned of the benefits of gaining exposure in the equity markets.

I remeber that in my earlier posts when tis blog started, I avered that if people with savings in this country did not put some funds exposed to the equity markets, they are doing themselves a disservice. I still feel the same way today. While our market has moved sharply higher over the past two months, I am still optimistic of future growth. I was asked in an interview on the ANC last Monday about what I thought about the Philippine stock market entering into uncharted territory. I said that entering uncharted territory is normal for stocks. That is where a good stock should go. aggregately, that is where a stock market go because it is precisely why people get involved in stocks – to see stock prices higher. When stocks like AEV, AEV and DMC traded past 20 pesos two years ago, they entered uncharted territory, and where are they now? Again in uncheted territory. When SCC traded at 110 pesos, people again thought uncharted territory, too high a price. Today SCC is trading above 220, doubling its price in less than two years.

Uncharted territory is where pioneers go. It is where entrepreneurs blaze the trail because they have vision. I believe many both locals and foreigners see a vision for the country. That is why new issues will be coming to the IPO market, and when you think of it, an IPO is an attempt into uncharted waters. Will these enrepreneurs be fazed? If they had been in great fear, they would not have unlocked tha values in their companies.

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First Metro Asset Management Inc