Further comment on the bloodbath of August 23

Hindsight is always 20/20. But still, we could have avoided some losses.

During the past weekend, widely circulating news in Bloomberg were already saying that it's probable that FED meeting minutes will show unanimous agreement on QE easing, and that everyone feels that reduction in the US govt's money printing will start in weeks (not next year). In this case, it is not important what date is actually inside Bernanke and Gang's heads, but only the sentiment of big funds, which in turn represent the short-term sentiment in our modestly-size stock market.

Monday could have afforded us 3 days of elbow room to reduce positions two days ahead of the actual release of the minutes, since the minutes could contain one of the dreaded scenario we've been mentioning since months ago.

However 2 days of massive rains and flooding + a holiday conspired. By the time our market resumed, the should-be loss have already accumulated to the minds of foreign masters, and the news on the FED are also already on our faces. Result: -6% poured in one accumulated shot, and almost 7% loss at one point in the trading day! In fact, at opening, most stocks presented only two options for current holders: swallow -5% upfront or average down. The foreigners are merciless in selling down. They dont wait intraday for rallies if exit is their decided direction. (Are we really that miniscule in terms of their portfolio spend?)

The frustration of being at the mercy of foreign funds is for another blogpost. The learning for now is to respect and always be aware of upcoming news overseas similar in nature to a previous one that already hurt us (in this case, that same news of impending QE easing hit us similarly hard, just a few weeks ago). This particular move (and corresponding news) is a sword that was on the top of our heads since June. Some of us just thought that Moody's can somehow neutralize it at least for our market.

Any, now, it's important to sense when will this selling be enough to these foreign funds. Would they really elect to divest all the positions in the Philippines? Will our Chinese compatriots really not use a cent investing during Ghost month? When's the right time to come in? The safest way is to stay on the sidelines and come back September9.

But I think bargains are bargains, and we must attempt to prop up and run our own market when the prices are right. When the prices are fair on the backdrop of our OFW's hard-earned remittances, on the promise of our growth, we should go in. I will gamble even if most will just choose to weather out Ghost month (which will be over in a few days). James K Nava's selection is sound. On top of that lineup, I will also add MPI and JGS (my original picks of the week) on the first page of my watchlist.

Gamble on the Philippines!