ALTHOUGH many animals have the ability to hold long-term memories, humans may be the only species that clearly mark events in the passage of time. This is part of our genetic makeup that we do instinctively. We have the capability of looking at the world with what I call an historical perspective, and also with a current context. It comes naturally.
Suppose you had an old friend from college. Over a long time you have realized that this person always shuts down and becomes quietly serious during exams week. It is a pattern of behavior that you are able to recognize. This behavior, which might seem out of the ordinary, is absolutely normal and part of your historical perspective of this person.
Now, many years later, the person still does the same thing when getting ready for an important client presentation or a meeting with company executives. Sometimes, though, the same person acts this way when there is nothing that your friend is preparing for. Suddenly, the person goes quiet and you wonder why, needing to understand the change of behavior in terms of the current context. You discover that your friend has not been feeling well and is waiting for the medical test results to come back.
While intuitively understanding both the historical perspective and the current context, often we ignore both concepts when looking at the world through our intellect.
Take this silly example: Whenever the Philippine Catholic Church raises its head and voices about a social or political issue, many people simply go nuts. They start ranting about the separation of Church and State, and cannot understand why the Church becomes involved. Accusations of the Church having a self-interest agenda are made. But, look at the historical perspective.
Spanish Catholicism—as opposed to French, for example—was always intimately intertwined with government. Spanish colonialism was as much about the Church as it was about Spanish trade and military conquest. Church leaders were a part of major Spanish colonial government decisions. Pope Francis—a product of Spanish Catholicism—was deeply involved in Argentinian “politics”.
The “current context” may be that as the Philippine Catholic Church sees its influence wane, it seeks opportunities to reassert itself.
Throughout its history, Russia has never considered itself an integral part of Europe. This nation had been forced to constantly defend against invasions from Europe. Was it any surprise then, within the historical perspective, to see Russia react the way it did to Ukraine moving to become a satellite of European and American power?
The current context for Russian military action in the Middle East is to protect its economic interests against a Saudi-Qatar-Turkey oil pipeline through Syria. If you are going to understand Russian behavior, you must look at its history of frantically countering any European aggression from Sweden in 1142 to France in 1812 and Germany in 1941.
The historical perspective shows the patterns and cycles. You only had to look at your college friend’s behavior to know that the next exams were coming soon.
Understanding the Philippine Stock Exchange (PSE) is not different. The PSE composite index reached a bottom in January 2009 and started its move high the following month. For six consecutive years (2009 to 2014), the index closed the year higher. That came to an end in 2015, with the market down about 4 percent.
That is because of 1) the Federal Reserve, 2) China’s economy, 3) falling oil prices; 4) lower Philippine economic growth; and 5) global warming or climate change—whatever the hysteria about the weather is now being called.
But here is the historical perspective. The PSE and the Philippine economy run in approximately six-year cycles, as I mentioned before. Also, the perspective cycle shows a correlation with “Pi”—or 3.14—and “Phi,” or the Golden Ratio.
Both Pi and Phi, as basic mathematical structures, have been known since ancient times in one form or another. Leonardo Bonacci—known as Fibonacci—brought the sequential cycle aspects of Pi and Phi to the West in 1202.
I will not go into details on this, in case you think that I do my analysis under a full moon examining the entrails of dead chickens. However, the historical perspective of cycles is evident. As a side thought, there are several “special” PSE issues that follow one of these cycles. They are not “pump and dump” issues. They just suddenly rise from the dead, like zombies.
The question now is, what is in store for the PSE next after this six-year cycle? Let me check with
the chickens.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter
@mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.
