9:30am  Wednesday    Philippine Stock Exchange Index  2593.52

I am struggling with the other kind of fear.  When we speak of fear and greed in markets, greed normally connotes that you are buying stocks with abandon because you are sure that you will make a lot of money.  On the other hand, fear implies that you are selling your portfolio without consideration for value because you are afraid that you will lose everything.  It takes a different sort to move against psychology like this, and that is why we have great investors like Franklin Templeton and John D. Rockefeller who gave substance to their word when they said “buy when there is blood on the streets,” and we all know they made tons of money.  The other side of this adage is – “when things look great, it is too late.”

With all these ideas being processed in my mind, I am afraid of being frozen to inertia in this slowly moving rally.  I seem to be trying to veil this procrastination with the thought that I am just being patient.  However, when the market is slowly moving away from you, it may be pretty risky to simply wait for the correction. This is the fear that I am facing these days – the fear of not doing anything.

I think that it is time to look at longer term trend in both prices and earnings.  It will be quite timely because 2nd quarter earnings will soon be reported.  If I look back on how prices behaved over the last 3 months, there were in fact several consolidating moves in prices.  This was in mid and late April as well as in the 3rd week of June.  There was also a mild pull-back at the end of June into the beginning of July.  Unfortunately, I was looking for a deeper correction which is not likely to happen yet because the great majority of investors appear to be very light in their positions and have yet to load up on their portfolios.

With this in perspective, my gut feel tells me that headline stocks such as Ayala Corp. (AC), PLDT (TEL), and Globetelecom (GLO) are still cheap today compared to its own long term trend in price.  Consumer stocks like GMA7 or GMAP, Splash (SPH) and Pepsi (PIP) are also worth the bet at these prices.  Banks like Metrobank (MBT) and PNB will likely show higher earnings down the road because of low interest rates and steady earnings from OFW remittances.  Jollibee (JFC) which is usually expensive will likely maintain its value and move better as the year wears on.

I think the appropriate strategy the next few days is to add to positions with stocks that are showing firmness in price at these levels.  It appears to me that investors are steadily putting these stocks to their bottom drawers which means that support will be rather strong should prices even go down. Very few investors have the inclination to sell or pare down portfolios because interest rates are very low and there is no point in having all that cash lying around.

I had said in earlier posts that the trend is your friend.  It is useless to fear when friends are around.  Well, friends should really stick together.  In my case, I will stand by this friend because market signals are showing that this trend will be around for quite sometime.


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