Before you go all “Joker” on me filling my inbox with ranting and whining, hear me out. Unless Santa Claus comes with his bag filled with Yamashita’s gold—or gets hit with a surface-to-air missile—the Philippine Stock Exchange (PSE) will end 2019 practically unchanged from January 4.
However, it has been a good year for several reasons. In the last 12 months we have gone from “My maids all became millionaires in the stock market” to eerie silence. Some stock market gurus might as well be posting cat videos on social media as their “guaranteed profit-making” stocks are now dust in the wind. Other experts have been spending their moment in the sun explaining why they are right and the stock market is wrong for not being substantially higher.
Sadly, they are like Noel Brown, director of the New York office of the UN Environment Program, who said: “Entire nations could be wiped off the face of the Earth by rising sea levels if the global warming trend is not reversed by the year 2000.” That was in 1989. But then again he said “could.” Unfortunately, stock market investors are not satisfied with could when it comes to their stock buying.
This factor makes PSE 2019 a good year because we needed a shakeout. Don’t misunderstand me. I have the highest respect for all of the gurus even if I think an individual or two is absolutely full of nonsense. They deserve respect for putting in the time and effort to make the analysis and for putting their credibility on the line every time they make a recommendation and share their analysis.
However, a loss of credibility can lead to greater success for the ones that have the fortitude to carry on.
The year 2019 also taught both experts and ordinary investors that an initial public offering does not operate like a hacked slot machine, throwing out money to any and all. As I have said for years, buy all the IPOs on listing day or buy none and wait. You may hit the jackpot. Otherwise, trade these issues just like you would any other based on the trend. The other positive is that companies and underwriters may be forced to be a little more contained with their drama as investors become more sensible.
The most important reason that 2019 was a good year is that stock prices ignored external factors like the Philippine economy and external conditions. We desperately want to believe ideas that “economy up; stock market up” and similar “truths” as with inflation. You might as well believe that a solar eclipse is from the sun being eaten by a bear.
It is possible that eons ago bears did eat the sun—just like the stock market firmly reacting to economic data—but it is not true today. In many parts of India, people still fast during a solar eclipse believing food cooked then will be poisonous. Don’t be like them.
In 2020, investors will hopefully not get on the wrong side of the market because of economic data and will wait to see how prices react to the data rather than jumping in with blind faith.
Finally I am hoping—if not yet hopeful—that 2019 was a good year because investors might have learned not to “buy the hype.” From casinos in Boracay to third-telcos, 2019 was not a good year for irrational exuberance about press releases and “inside” information. Onward and upward in 2020, which could be great.
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.