Stock-market investors are often the most patient and calmest people on the planet. I know that if you are an investor and are seeing your portfolio go down in value, you probably do not feel very calm. Yet investors have to weather global events, domestic confusion and, worst of all, experts yelling in their ear about what it all means.

The Philippine Stock Exchange (PSE) was down almost 8 percent for the month of January and that is difficult to take, especially in light of all the things that should keep prices going up: good economic numbers, high corporate investment, and good company-profit forecasts. And this Year of the Rabbit was supposed to be calm and peaceful. But through the past rough month, stock investors have stood pretty firm against the storm. Sure, there has been much selling, and it is unfortunate that the last weeks have seen most selling for people who bought near the 4,200 Phisix area. While the media say the downtrend is due to profit-taking, in truth it was loss-cutting that has pushed prices to the current below the 4,000 level.

However, patience is rewarded for those investors who sold quickly at the first support levels and are sitting in cash or holding shares that are still above their individual support price.

Yesterday the market had a nice rebound and although it is impossible to accurately say what will happen today and tomorrow, you can easily miss great wealth-building opportunities by underestimating the long-term strength of the Philippine stock market.

Many times in the past few months, this column has detailed the numerous reasons this market is destined for great price and value increases in the months to come. There is no reason to go there again right now. Thousand of words could be devoted, though, to telling all the reasons the market is destined for further losses in the weeks to come. But looking at some of the factors that caused the decline in January might be useful. You have heard some of this before but it does not hurt to revisit.Please remember that inflation is the silent killer of the economy and stock-market prices. And regardless of what anyone tells you, the only thing that fuels inflation in the Philippines is fuel prices. Since Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. was reappointed, the BSP has been more active in the peso market. It was my assumption that the BSP had stayed away from intervening with the peso with the very slight possibility that he would not be put back on the job. Since then, the peso has been allowed to strengthen against the dollar as it should. By the way, managing the peso is not an easy job. By buying pesos and selling dollars to lower fuel prices, pesos are taken out of the economic system and that has its own potential problems. I am sure at times that the BSP authorities lose some sleep over trying to figure out how to make it all work.

However, I believe that the fear—or, at least, slight confusion—as to what the BSP was going to do with the peso has had a damaging effect on our stock market. If this week is any indication, fear not, they have it well under control.

Another factor that has been hanging (and continues to hang) over stock prices is a sense of inaction on the part of the administration. While we cannot expect the government to be proactive all the time, it is a little disconcerting to feel as though the government is simply on the sidelines watching as events unfold. The much- publicized public-private partnership (PPP) program seems to be stuck on paper, as opposed to being put into action. That is not a good sign this far into the administration. Time is of the essence and investors want to see some action. Concerns about the Middle East that are being spoken of for a down market are sort of silly. This is a slow-burn situation that certainly has some worst-case scenarios. However, no one has a clue on how things will develop over the months to come and less of a clue (if that’s possible) as to what the final picture will look like and what it will mean for the Philippines.

Stock prices actually started down in November and that was due to profit- taking, as the index reached 4,300. The worrisome fall was obviously in January. However, there are some important factors about the trading to consider.

Trading volume is down. I am not talking about the overall market. I am talking about those issues that are not traded by the foreign money. The week ending January 14 saw buyers coming in to pick up stock at lower prices and prices closed well off their lows. However, the following week, the selling accelerated and the buyers walked away, causing prices to go lower.

The following week, volumes on the second-line issues dropped even further and prices held fairly firm. Monday and Tuesday of this week was when prices really dropped, with the index giving up some 3.5 percent. But yesterday, Wednesday, was a very interesting day of trading for reasons other than the market advancing some 60 points.Buyers were not posting their orders but letting the sellers feed into the market. When the sell postings were small, buyers took the initiative and pushed prices higher. Volumes were still low, giving an indication that the buying pressure may have subsided. I will not say that we are out of dangerous waters until the index goes back above 4,000. However, I will say that the type of trading activity that dominated the stock market for January (almost panic-selling) has changed over the last three days. Monday and Tuesday may have been a short-term selling climax and yesterday may show that buyers are ready to come back in with some strength. Every day is a new adventure on the PSE.

E-mail comments to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.