The Philippine Stock Exchange Composite Index ended 2021 virtually unchanged, down 17 points from the 2020 close. The year turned out to be a roller coaster ride. In another sense, we started the New Year 2021 with the hope that the worst of the pandemic was behind us when in fact 2021 became the year of “you ain’t seen nothing yet.”
I will admit though that the stock market was generous to me this past year. The IPOs were profitable if you followed these great words of wisdom…. “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.”
However, on October 11, 2021, I said, “Standing by what I said in my column ‘The PSE going forward’” on September 15, 2021. “I see the PSE index at 8,200 around end 2021 or early 2022.” That prediction/forecast/crystal-ball gazing turned out to be a complete SCoaMF (look it up) which is why it is important to remember “Every hand’s a winner; And every hand’s a loser.”
The cycle change to “Economic Chaos” happened on January 20, 2020 and as I previously wrote, we have a “Panic Chaos” cycle coming about March 14, 2022, so be prepared.
The problems that the global economy is facing now go way beyond the headline “inflation,” “supply-chain disruption,” and, of course, “Covid.” We talk about “temporary” and “systemic,” meaning the difference between short and long term. But all that is meaningless. “Temporary” and “Systemic” are nonsense terms that are used by we the “experts” to camouflage the root causes.
Let me give you a silly example. I wanted to buy my wife something special, a candy that she particularly enjoys that is not easily available in the Philippines. The only place I can find to buy it is from one of the membership stores that delivers but that naturally charges a fee. So in order not to pay a ridiculously high total price for the candy, I order other items that I really do not need to justify the delivery cost.
The high net cost for the candy is both “Temporary” and “Systemic” but in fact is a result of the “root cause” that I am not willing to drive 10 kilometers to the store.
Ever since we walked out of the Garden of Eden—or climbed down from the tree, depending on your worldview—government is usually the “root cause” of our problems. Natural disasters? Ok, volcanoes erupting are “Acts of God.” But who thought it was a good idea to build a city (Pompeii) with 20,000 people at the foot of Mount Vesuvius? And 600,000 still live in the danger zone today.
2021: In the spring, Sri Lankan President Gotabaya Rajapaksa banned chemical fertilizer imports and mandated that all agriculture switch to organic. By early September, Sri Lanka crop yields had fallen 19-25 percent, causing prices of sugar, rice and onions to double. Tea production fell by 50 percent, erasing 5 percent of the country’s export income. Inflation skyrocketed.
November 21, 2021: “Sri Lanka revokes ban on fertilizers.”
High oil prices? Blame Putin, Covid, and Opec. Or maybe, “Oil And Gas Discoveries Plunge To Lowest Level In 75 Years—Oil and gas firms are currently having their worst year for new fossil fuel discoveries since 1946.” The International Energy Agency told governments this past May that all investments in new oil and gas fields must stop in 2021 if the world is serious about reaching net zero emissions by 2050. Better be worth it.
The area around Pompeii became very prosperous due to the desirability of living on the Bay of Naples for rich Romans. It wasn’t worth it.
E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.