Around the turn of the century—the 21st century (I’m not that old)—it became clear that I had seen this movie before. Maybe it was the hysteria about the Y2K computer situation. Remember when we were warned that airplanes would fall from the sky, as old computer operating systems could not figure out what to do with year 2000.
There had been too many instances of “end of the world” scenarios from the population bomb to nuclear war Armageddon over the past 50 years. When one or another did not come to pass, another gloom-and-doom came to the headlines. It is like those religious cults that are always predicting a particular date for the end times that have to keep moving Judgment Day forward into the future.
The realization came that the world must be put into historical perspective, a term that I have ranted and raved about for years. When I heard my four sons talk with some apprehension about current events, I could easily remind them that I had heard this before when I was their ages.
On June 24, 1812, the largest army ever assembled in the history of warfare up to that point began an invasion of Russia. This act of war was to compel Russia to stop trading with the British in an effort to pressure the United Kingdom to beg France for peace. Big mistake.
The disaster of the invasion did change the world for both France and Russia. Napoleon was no longer the military genius everyone thought and Russia realized it could effectively kick butt on a massive invading army.
Almost to the exact day 124 years later, Nazi Germany began its invasion of the Union of Soviet Socialist Republics with the same result. Russia wins and the other guy loses, changing the course of history. You might have thought that some general in Hitler’s army would have read about what happened when Napoleon invaded Russia. Historical perspective.
The bible says that “What has been will be again, what has been done will be done again; there is nothing new under the sun” and that is true if you take the time to look to the past.
Since January, when the Philippine Stock Exchange Composite index (PSEi) reached an historic high above 9,000, the stock market has been going down. According the experts, the reasons for this decline—in no particular order of importance or chronology—are as follows: the weakness of the Philippine peso, the Philippine inflation rate, fear of a US interest-rate increase, fear of a Philippine interest- rate increase, an actual US interest- rate increase, Philippine tax reform, US-China trade war, the potential of war in Korea, profit-taking, the elections in Italy, a “White House cabinet shake-up,” and “risk aversion.”
That is 12 different reasons for each of the 12 weeks (eight down) of stock trading thus far in 2018. Some may find this hard to believe, but there was stock trading on the PSE prior to 2018 and we have seen this all before.
In 2017 the PSEi was higher every month with the exception of three months of slightly down or sideways movement. We had one month when the PSEi dropped by 1.3 percent. Otherwise, it was a one-directional upward market.
But the key to the deal is the same thing happened in 2014 going into 2015, 2012 into 2013, and 2007 into 2008. And after each of these large one-way yearly up moves, the PSEi went down. This was before the reasons mentioned above were in the headlines. Historical perspective. What goes up must also come down.
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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.