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7:00 pm  Monday  3 October 2011

It is one of those occasions where it is difficult to make a comment on the equities market.  The sentiment in the market appears to be one sided.  Unfortunately, it comes from the side of the bears.  Even more unfortunately, it comes at a time when decent yields on investments are very hard to come by.

Market participants are overwhelmed with what is happening in Europe, and As I write, markets in Europe are down around 2%.  I would not want to venture a guess about where the market is going.  Most people in stocks are convinced that we are going south.  From an adage that I hold dear which says “the trend is your friend,” I would not want to buck whatever sentiment that is pervasive in the market right now.  Let me point out, nevertheless, that some stocks are very cheap especially from an earnings point of view and these are the stocks to watch when the market starts to turn.

Among the large cap, I would keep a sharp eye on DMC.  Analysts have not yet downgraded earnings, and the view that its PE is in single digit should at least merit a look.  Another is ORE which will end the year with 23 shipments.  My estimate of its PE is 5X for 2011 and 3X for 2011 earnings.  If these stocks drop some more, I should be prepared to back up a truck as they say in Wall Street lingo.  Obviously, I have a bias for mining stocks and I believe that they will be the treasures (pardon the pun) of Philippine stocks.  Last week, NI made an announcement of a partnership with Glencore of Switzerland.  I know that Glencore is one of the biggest commodity houses in the world, and as I dig up more interest in this Swiss company, I will share it in this blog.

Anyway, in a situation when the battlefield is being bombarded from all sides, the best alternative is to keep your head down.  That does not mean, however, that you should not be prepared to advance from the trenches.  The thing to do is discern when the enemy runs out of ammunition, then it would be safe to advance.  Our enemy right now is fear and an enemy is usually overcome when you have better knowledge of what lies ahead.  It is not a time to be a hero especially since we are talking real money here.  But there will be a time to be bold and you should be there to seize it.

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