The City of Paris is representative of France. Bangkok is Thailand. London helps show the two millennia history of the British Isles. Maybe part of the tourism “problem” is that Manila is “The Philippines,” perhaps, in name only.
Foreigners coming to the Philippines are almost immediately comfortable—not because of Starbucks and modern shopping malls—but that over 100 million earthlings are able to hold at least a basic conversation in English. With nearly every global brand found at the malls and on the shelves of the supermarkets, the Philippines seems “almost like home”. But we know that it is not.
But this familiarity works both ways. Because the McDonald’s hamburger in Sampaloc, Manila, or Butuan City tastes the same as the burger in Chicago or New Jersey, we often tend to think that many things about the Philippines are the same as in the West. But we should know that it is not.
We have probably all seen stories when someone was driving and following the directions on his or her car’s GPS navigation system and drove into the river or down the railroad track. Stock trading in the West is about the same. Algorithmic or “black box” trading accounts for nearly 90 percent of the trading volume on the New York Stock Exchange. Please read that sentence again.
Ninety percent of all transactions on the biggest stock market in the world are done by computers. There is absolutely no human involvement in the trade, except by the people who designed the parameters of when the computer should buy or sell.
It is possible—in my opinion—that the smartphone app Waze was designed by the same people who do black-box trading. Coming down Sucat Road to the South Luzon Expressway (Slex) and wanting to go to Makati, Waze always says the best route is using the West Service Road, not the Slex. If the Slex was overrun by hordes of bolo-carrying zombies, it would still be better than using the West Service Road. But Waze does not know that.
Too many of the questions I receive can only be answered with: “It never worked on any other stock market. Why would it work on the local stock market?” Then there is “My brother-in-law in the US uses margin trading, borrowing money from the stockbroker to buy stocks. That’s what I want to do.” “Well, your brother-in-law pays 8-percent interest or less on the margin loan. You will pay 18 percent, plus value-added tax. In other words, if you hold for one year, your portfolio has to go up 9 percent just to break-even on your margin loan interest. Does that make sense?”
The burgers may taste the same here in the Philippines, but the stock market is very different.
Over the next months, I will be doing seminars about trading and investing on the “Filipino Stock Exchange”. There are particular strategies and analyses that honestly will only work here under the local rules and conditions that would not work anywhere else. But this is the stock market that we trade, and you need to know the differences and how to take advantage of it.
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E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.