A Lot of Bull!
There is a lot of “bull” going around the market lately.
Quiet bull. Baby bull. Silent bull. Cautious bull. These are some of the bull tales that I heard in the past few weeks from market insiders. The good thing about these bull tales is that not everyone is convinced. These tales are mere “whispers” from key market movers. The public is still oblivious on what’s going on in the stock market despite the fact that the PSEi has moved form 1,200 to 2,600. A quiet run-up would give the market further room to expand. This will induce new funds to flow into equities.
I continue to receive emails asking when to sell the market. I guess, there is still no reason to sell the market. For now, the only reason to sell is to take profits. However, it is a weak argument considering that the odds favor the PSEi reaching new highs. Again, to quote Jessie Livermore: “In a bull market, it is the sitting that counts.” So sit tight and run your profits!
The only time to sell is when the ”bull” becomes a “bullheaded bull”. The Philippine Daily Inquirer (PDI) has not published any headline/front-page stories on the market. So on that note, we are still safe. Personally, I have not received any calls from long-lost friends asking me what stock to buy. Thus, the “housewife/doctor” theory has not been triggered yet.
Bank of P.I. (BPI – P58.50) + PSEi 2,617
Two things caught my attention last Friday. BPI rose 4.5% whilst the PSEi closed above 2,600.0 for the first time in 7 years. From experience, a strong move by BPI would normally signal a turnaround on either direction. If BPI continues its run on Monday, expect foreign buying to pour into the market. Note that at these levels, BPI is already trading nears its pre-1997 level prices. Again, these two milestones have gone unnoticed. However, these are key impetus in further re-rating of the market. For a bull-run to mature we need the banking and property sectors to lead the market. With BPI already off the blocks, it is a matter of time before other stocks chase the tape.
Republic Cement (RCM – P2.12); what now?
One of the best calls I made is on RCM. Since my post last Oct. 04, the stock has risen by 51% to P2.12. I do believe that it has more room to go. As mentioned, this is a value creating market. If “weaker” stocks like House of Investments (HI – P1.90), A. Brown (BRN – P1.58) have gone up significantly, there is no reason for stocks with very strong fundamentals not to trade nears its real value.
RCM has a market value of P15.26bn whilst Holcim (HLCM – P5.80) is valued at P37.0bn. In between these two identical stocks is P22bn in market capitalization. This means that for RCM to trade at par with HLCM, it should be priced at P5.20/share. This is a glaring valuation discrepancy that the market will have to correct soon.
Quiet bull. Baby bull. Silent bull. Cautious bull. These are some of the bull tales that I heard in the past few weeks from market insiders. The good thing about these bull tales is that not everyone is convinced. These tales are mere “whispers” from key market movers. The public is still oblivious on what’s going on in the stock market despite the fact that the PSEi has moved form 1,200 to 2,600. A quiet run-up would give the market further room to expand. This will induce new funds to flow into equities.
I continue to receive emails asking when to sell the market. I guess, there is still no reason to sell the market. For now, the only reason to sell is to take profits. However, it is a weak argument considering that the odds favor the PSEi reaching new highs. Again, to quote Jessie Livermore: “In a bull market, it is the sitting that counts.” So sit tight and run your profits!
The only time to sell is when the ”bull” becomes a “bullheaded bull”. The Philippine Daily Inquirer (PDI) has not published any headline/front-page stories on the market. So on that note, we are still safe. Personally, I have not received any calls from long-lost friends asking me what stock to buy. Thus, the “housewife/doctor” theory has not been triggered yet.
Bank of P.I. (BPI – P58.50) + PSEi 2,617
Two things caught my attention last Friday. BPI rose 4.5% whilst the PSEi closed above 2,600.0 for the first time in 7 years. From experience, a strong move by BPI would normally signal a turnaround on either direction. If BPI continues its run on Monday, expect foreign buying to pour into the market. Note that at these levels, BPI is already trading nears its pre-1997 level prices. Again, these two milestones have gone unnoticed. However, these are key impetus in further re-rating of the market. For a bull-run to mature we need the banking and property sectors to lead the market. With BPI already off the blocks, it is a matter of time before other stocks chase the tape.
Republic Cement (RCM – P2.12); what now?
One of the best calls I made is on RCM. Since my post last Oct. 04, the stock has risen by 51% to P2.12. I do believe that it has more room to go. As mentioned, this is a value creating market. If “weaker” stocks like House of Investments (HI – P1.90), A. Brown (BRN – P1.58) have gone up significantly, there is no reason for stocks with very strong fundamentals not to trade nears its real value.
RCM has a market value of P15.26bn whilst Holcim (HLCM – P5.80) is valued at P37.0bn. In between these two identical stocks is P22bn in market capitalization. This means that for RCM to trade at par with HLCM, it should be priced at P5.20/share. This is a glaring valuation discrepancy that the market will have to correct soon.
posted by jack galt at
11:41 PM
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