SUMMARY
This is AI generated summarization, which may have errors. For context, always refer to the full article.
If you had a truly meaningful Holy Week, you probably used that spiritual moment to similarly cleanse your stock portfolio of past sins.
You were perhaps on bended knees, promising never again to touch those comely “basura” stocks, which all failed miserably, one after another, trying to mimic the intra-day ceilings and overnight gap ups of a Double Dragon ($DD).
True to form, most of them were one-night sensations anyways. Whether it was a brief dreamy interlude with alluring A$MBer Heard (Johnny Depp’s girlfriend), Jessy $MEDiola, or local MILF $SUNshine Cruz, it is now back to market reality for most of us.
Just like Desert Storm Bradley got his quick reality check right after the Pacquiao fight, thanks to Mommy Dionisia’s storm surge approach.
In any case, we in our Traders Apprentice Pilipinas (TAP) Facebook Page like to assign popular female nymphets to our favorite stocks, $MEGan young and $SMPHinto being the most discussed. But lately, $MARCar Reyes has given our dear $MEGan a run for her money, if not a much faster run to the P5 level.
So for some fresh start, I might as well talk about the “art of stock picking” at a time you have all awaken from you one-night stands, and now more willing to pay attention to how the real market works.
My favorite quote of all time on this subject is by Richard Russell of Dow Theory Letters, “A bull market tends to bail you out of all your mistakes. Conversely, bear markets make you pay for your mistakes.”
Having been schooled by Jesuit pragmatists who promoted indoor basketball instead of sun drenched soccer, it is only too obvious that I prefer to be in the market when I cannot possibly make any mistakes, much less have to pay for them.
In my TAP FB group, now nearing 11,000 members inclusive of my clueless parents and in-laws, I scored some “bulalo” points when I predicted this Wave 5 rally way back in December.
In my Rappler article last December, assuming you weren’t entirely hooked on that “Vhong-Deniece-Cedric-somebody is clearly jealous” story, I pointed to this black arrow (see below) as exactly where we are at in our final leg up, Wave 5.
This chart was way back in December 2013, at a time the PSEi was so stuck in the elevator like poor Vhong Navarro.So this bull market we are now experiencing that is making many TAP yuppies and OFWs instantly wealthy had its origins way back 2009, post sub-prime crisis (i.e. bottom of the last blue circle).
Clearly, we are on the last legs of it before I may have to draw once again those dreadful blue circles. But for now, enjoy the Novellino wine and caviar.
But what stocks to buy? My short answer is what else, but TAP’s KRAKEN stocks!
KRAKEN what?
Okay, I have to admit, my stock picking gets better with the help of some spirits, especially vodka or in this case, some black rum, collectively imbibed during our TAP “backdoor sessions” by the poolside of some Makati-based sports club.
My minded started to work it out, the beast slowly climbing to my head, and right there and there, very much akin to Malcom Galdwell’s “Blink”, I came up with what I think are the PSEi stocks which would make it to TAP’s KRAKEN hot list. The “creme de la creme” so to speak.
And so here is my basis for what makes a KRAKEN stock, in this ebullient Wave 5 rally full of comely “basura-quality” wannabes.
2) KRAKEN stocks must be near their “all-time highs” or about to get there. These stocks are natural market leaders, so they must have been first off from that PSEi 6000 starting line.
4) KRAKEN stocks must have sufficient liquidity to attract not just punters, but also stable “long- term institutional” funds, especially smart foreign investors. Much better if the stock already has a solid foreign following, or about to get there, because sooner or later it is just that “hot” as a sector leader.
6) KRAKEN stocks are not just great moneymakers in terms of their actual operations. They also value their share price. They see “bodyguards” as a good way to protect themselves from PUNTERs. They want to be the next Gokongwei and see their share price performance a big component of that perception.
8) Also, do not buy KRAKEN if your style is jumping “in and out” of stocks like an ADHD noob trader. KRAKEN stocks are for those who know how to sit in the bus from BACLARAN to MONUMENTO, who take their time to eat “bulalo” and not some quickie burger.
So our TAP’s KRAKEN hot list is simply : $MMMDA! Got that? Specifically, $MEG, $MARC, $MPI, $DNL & $AGI!
And how have TAP’s KRAKEN stocks performed YTD since the list was launched in January 2014 in our TAP site?
Here is a simple chart, courtesy of a Bloomberg app:
From the above, we can see that $MEG (white), $DNL (blue) and $MARC (red) had the best runs vs. the PSEi. $MARC did an exceptional 70% rise while $MEG and $DNL did around 36% and 45% respectively.
$AGI being a holding company and more closely reflective of the PSEi composite, just performed at par with the index. $MPI which is still far off from its all-time high, did a little better.
My point here is simply; you do not need an over-night rented Ferrari to go from Baclaran to Monumento. You just need a good car, perhaps a CAMRY 3.5Q that can get you there fast enough but not crash, like what happened with those pre-Holy Week over-night flings. – Rappler.com
The author is managing director for Corporate Finance of the Center for Global Best Practices. He was connected with PNB Capital & Investment Corporation as president and CEO and with Punongbayan & Arraulo, where he set up the first P&A/Ernst & Young Corporate Finance practice in the Philippines in 2001. Tony is active on Twitter for stock market newbies: @Tony88981.
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