FAMI Insights – April 2, 2020

Market Movements: Two Lessons in History The current movements in the market have been unprecedented: for days, we have seen the local stock market slide by as much as 10%, with trading being halted because of the magnitude and speed of its fall. Since January, it has fallen by more than 30%, enough to unnerve investors with their portfolios.  But for those who take the long view and take a few steps back, this is a limited buying opportunity, most especially for those that are buying for their long-term goals. From the market’s highest for the previous five years of 9,041, the PSEI is currently down by 43.46%. I remember some of my clients who have been fearful to go in at those levels: they said it was too high and would wait for the market to fall further. From this perspective then, this is indeed already the opportunity to consider going in.  Doubts, however, would creep in: would the market still fall further? How long would this down market last? Would we be in a recession? Have we reached the bottom? To be honest, nobody really knows, for sure. But one thing is certain: the markets do recover over time. And for those investors who have patiently took the time and opportunity to go into it, they are very much rewarded.  Whenever I have my doubts on the market, I always go back and remind myself of how the stock markets have performed in the past.  This is the PSEI since the late 1980s until today: The period of the Great 2008 Recession has been very apparent, with the index falling almost 60%. Had you invested even at the peak, you still would have made money even until today; and if you had invested even near the bottom, you would have gained even more.  I also look at the US stock market as it is older than ours. Here is the US Dow Jones Industrial Average since the 1900s: So even with the Great Depression of 1930s, two World Wars, the tech bubble, the Great 2008 Recession, and all other economic and world events, the stock market really does go up over time!  These two graphs alone comfort me in volatile times and market upheavals, grounding me that all would be well in due time.  As investors, we are tasked to periodically monitor the markets for any risks and opportunities that it allows. The times that we have now are unprecedented, and it may get worse before it gets better. But for the wise investor, it is a welcome time: a time to step back, look back in history and act with supreme conviction accordingly. First Metro Asset’s aim is to help you navigate the storm going forward. One can start investing online using the digital platforms available; whether via an app (Cliqq, GCash) or mobile banking facilities. It is essential to emerge from this situation and take advantage of the volatility and uncertainty—AND IT STARTS WITH YOU.  So now is very good time to buy into any of our equity and balanced funds even at small amounts – to accumulate more shares that would eventually go up in the long run.  We at FAMI have different funds for different investment horizons.  short-, medium-, and long-term. We have the Save and Learn Equity Fund (SALEF), Save and Learn Balanced Fund (SALBF), Save and Learn Philippine Index Fund (SALPHIN), First Metro Exchange-Traded Fund (FMETF), and the  First Metro Consumer Fund (FMCF), for these purposes. For conservative investors, you may look into adding to Save and Learn Money Market Fund (SALMMF) for funds that you would not need for the short-term; the bond fund or Save and Learn Fixed Income Fund (SALFIF) would also be good for those investors who are looking for an instrument that provides higher returns than ordinary savings accounts, for funds needed more than one year. Expertise & Investment Advice First Metro Asset has Relationship Managers and Investment Advisors who are there to give you sound, and prudent advice in these volatile times.  Thankfully, opening an account has been made easy to help provide more Filipinos to continually strive to be better investors. Speak with your advisor to discuss adjusting your investment mix, or taking advantage of opportunities when mutual fund prices are low.  We continue to provide you with timely updates and opinions as this situation evolves.    About the Author: Rienzie Biolena is a Senior Relationship Manager of First Metro Asset, managing institutional, retirement funds, and is active in giving practical literacy workshops and seminars. He is a Certified Investment Solicitor, an Accredited Investment Fiduciary of Pennsylvania-based fi360, a Certified Financial Consultant from Institute of Financial Consultant-Canada, and a Chartered Wealth Manager of the American Association of Financial Management. He is also an international member of the Financial Planning Association, the largest association of financial planners in the US.