Survive the “DIPS.” BE present at the “RALLY.” “ BULL market ” “ BEAR market” “ BULL market” “ BEAR market ” Keep your COOL. “ Strong Hands” If you bought at 2000 For survival:
Will the stock market keep on rising? 1. It depends: on the amount of money flowing in. 2. It depends: if the market can absorb the money. Is there money flowing in? Can stock market absorb the money? Money will flow in, if prospects are good Are prospects good? Yes, we have good economic outlook, business conditions Yes, if only more securities get listed, traded, Listed: More IPO’s needed. Traded: more “free float” in hands of public.
The flow of funds… to the stock market … is like a river in a valley.
Water level goes up, over time. Until it overflows the dam. Build a taller Dam, To capture more water, Raise the level of the lake. Funds “stay voluntarily,” in a stock market that is attractive. A DAM “traps” the Water
Investors sometimes pull out cash from the stock market … To spend on household. Jan 2007 to Feb 2011
Strong Hands = invest, and stay invested. They can pull out anytime. But they stay.
GSIS of South Korea = $270 bn Example of “Strong Hands” = SOCIAL SECURITY SYSTEM, GOVERNMENT SERVICE INSURANCE SYSTEM = $ 6 billion GSIS of Holland = $313 bn GSIS of Norway = $450bn GSIS of Japan= $1,370 bn
Are philippine stocks good to buy, for local residents?
Is money flowing out of other markets? Into the Philippines?
What is the outlook for Philippine stocks Investing Buy-and-Hold. * You could make more by frequent trading Probably the same as recent history Telecom stocks: 18% a year, for the last 18 years High Risk Low Risk Low % High % Food: 14% a year, for the last 14 years Bank stocks: 11% a year, for the last 11 years Bank Deposits: 3% Inflation: 5%
What was the history. What are the prospects? Pacific Basin Low-Risk, High Return High-risk, Low Return Investors study the FORECAST for this chart. Brazil, India, China Russia High-risk, Medium -Return Japan 10 15 20 25 30 35 40 45 % Risk Rate of return % 18 16 14 12 10 8 6 Canada USA Europe Australia U.K. World
Average of 22% a year. Might go up 50% within a year, might also suffer some -8% declines. Pacific Basin Brazil, India, China Russia Expected Returns of 22% a year Risk of 30% a year Either 22+ 30 or 22 – 30 Japan 10 15 20 25 30 35 40 45 % Risk Rate of return % 18 16 14 12 10 8 6 Canada USA Europe Australia U.K. World
The Philippines Economy Stock market BOND market Real Estate, Factories, etc INVEST- MENT
Forecast of IMF, quite positive, for a change.
Tokyo When do Philippine stocks move up? When money flows into the stockmarket. London New York LARGEST MARKET SECOND LARGEST THIRD LARGEST
Tokyo IN 1990s, strong funds flows into Asia 1995 - 97 London New York ASIA funds
Tokyo Pull out in 1998, but returned cautiously due to the strong ECON growth of the region. London New York ASIA funds ASIA funds Excluding JAPAN Emerging Market Funds
Tokyo Other parts of the world are in trouble? Move funds to Asia. London New York ASIA funds ASIA funds Excluding JAPAN Emerging Market Funds Russia India Middle East Rest of Europe Central America South America Canada China, Hong Kong, Taiwan, Singapore Thailand, Indonesia, Malaysia, Vietnam
When volume tells a different story, it is a case of divergence, which refers to a contradiction between two different indicators.
The simplest example of divergence is a clear upward trend on declining volume. “Price is moving up, BUT NOT FOR LONG.”
Volume as indicator Low Volume
Quick Surge UPWARDS. Water Spills over. Return to Lower Level.
Volume = number of shares or contracts that trade over a …. day. The higher the volume, the more active the security. Volume bars illustrate how many shares have traded per period. THEY SHOW TRENDS, in the same way that prices do. If volume is starting to decrease in an uptrend, it is usually a sign that the upward run is about to end.
Reversal pattern at peak of high volume LOW volume: the rally loses steam Reversal pattern at peak of high volume