Saturday, August 18, 2007

-1000 in 2 and 1/2 weeks.

The PSE Index closed last August 17, 2007 at 2800 level. And the next morning (August 18, 2007 - Philippine time) , DOW Jones was up by 233.30 by to 13,079.80. The roller coaster ride in the stock market can drive people to be extremely fearful as to the depth of the correction. Clients and colleagues ask me when will the market stop falling and starting moving in an upward trend. Well, I tell them I do not know. The psychological factor is the one pulling the market down. One could read in the newspapers that the country's numbers are generally good and no bad news at all to start breaking investor's confidence.

At first, fund manager's report would say that 3,300 will be the support from 3,500. You can still see people smile and have a good night sleep. After it had breached the 3,100 mark, came the biggest single day loss of 188 points which drove investors to sell as a herd. Reports would say that the PSE@2, 900 level is already in an overly sold mode. And this maybe the bottom.

But by August 17, the PSE index has shed close to 1000 points in two and a half weeks. The mood is sober plus the fact that the storm was in sync with the global sell-off. You could hardly see jubilant investors who think that buying at this down time brings in opportunity. Whew, where is the bottom? I do not know, period. There might still be a bottom out there waiting for us.

I just hope that there will be signs of life. And by then, it is important to think twice before believing and entering the market. As long as I can sleep at night even during market swings, I will go ahead and gradually put money in equity. But if I am having nightmares while there's too much volatility in the market, I will put my buck in the savings account. At the end, I have the freedom to choose my immediate reward: either peace of mind or high returns.