The Philippine Stock Market Index nearing is 4,400 while our the Philippine Peso exchange rate against the US Dollar is about to breach the P41 mark. In the next few days, this scenario might be realized if we follow the trend.

The bullish market is buoyed by good prospects for Philippine corporations and a bullish environment preceded such a sentiment. The market is reflected by sentiments, in reality.

The weakening US Dollar has also resulted to a strengthening Philippine Peso and a 40 to 41 rate by year end may actually be realized. The appreciation of the Peso will definitely have an impact on the huge OFW remittances as well as the exporters segment – both critical components of our economy.

On the other hand, it seems that the Oil prices are rising which will have inflationary impact (rising of prices). The good news is, a stronger Peso will somewhat cushion the rise in oil prices and in a way, help ease inflationary pressures.

My 2 cents.

The local stock market ended up in a historic high today at 4,245 points! Not only is our local index on a high, it’s on a rampage. The historic high was also achieved in a relatively short time.

Volume turn-over was about 4 Billion bucks which is pretty decent but not great. It indicates that many Pinoys are not as invested as they should be and I reckon that a big chunk of those invested are through off-shore funds. A good target for volume would maybe be 10B or more with the bulk being average Pinoy investors so that we can reap the economic impact of a very lively stock market.

While there’s much to celebrate, I wish to remind people that the stock market is really for long term investors and it should be consistent with their investment objectives and risk tolerance.

Further, diversification should always be practiced as this remains to be a really good tool for risk management.  As I read somewhere, one should enter the stock market at the sound of alarms, and leave it at the sound of trumpets — or something to that effect.

Life is short, take some risk — calculated risks; but remain prudent. Happy investing!

I was checking the local stock market earlier and wow, it seems to keep on going up and up! The measurement we use for the stock market is the Philippine Stock Exchange Index or the PSEi (check out PSE Website). In essence, it is like a basket of the biggest and most active companies listed in the stock market. You will see the likes of Ayala Corp, BPI, BDO, PLDT, SM, Globe, Megaworld, San Miguel, Metro Pacific, Jollibee, Metrobank, Universal Robina, GMA, ABS-CBN and a couple more companies. In essence, the performance of the stocks in an index is measured and they are given their reflective weights—some companies weigh heavier than the others so their performance will have a greater impact in the index as compared to the others.  To see a complete listing of the companies in the local index, visit the PSE Index Composition site.

For those who are not paying particular attention to the local market, you should. Why? Because it has been jumpin’ jumpin’ for some time now. Just for the month of September, the index started at 3,593.41 and in just a little over three weeks, the index skyrocketed to above 4,100! That’s an appreciation of over 13 percent in less than a month. Here’s more: The one-year growth of the index is unbelievable. As of Sept. 28, 2009, about a year ago, the index stood at about 2,800 and that equates to a surge of about 45 percent in a year! The local market is one of the best performing markets in the world for the said period. The markets crashed towards the last quarter of 2008 with the subprime crisis depreciating the index to a low of about 1,700, down from about 2,500 towards the end of September 2008. The current standing of the market today allowed investors to recoup their losses and still remain positive in their investments—that’s assuming they stayed in the market. I know the market scares a lot of people, me included. As to where we are heading to, one can’t really tell. Is it the start of a bull run or are we in a bubble? Analysts can claim both, but I’d like to believe we are fundamentally sound. However, I will not discount the possibility of a major correction—the laws of economics will always enforce itself on any market.

Before jumpin’ in the bandwagon of investing in the stock market, determine first if this is the right instrument for you. Can you withstand the volatility of the market that can be likened to going bungee jumping? While the market is doing a great performance today, it was not doing so well not too long ago. At the risk of sounding like a broken record—or a CD, or MP3 or iPod or whatever it is they call it nowadays—one must always determine the following: Investment Objective, Risk Tolerance and Time Frame. If you are still unsure about the factors I mentioned earlier, pause and give it further thought. Study more, research more and ask others. Do not just look at the numbers today as past performance is never an indication of future performance. Stop and assess your needs first and be prudent, be wise. “The prudent see danger and take refuge, but the simple keep going and suffer for it.”—Proverbs 27:12, NIV.