2014 Outlook, part 4

By Randell Tiongson on January 10th, 2014

It is such a privilege to be presenting the views of one of the most respected investment columnists in the country, Mr. John Mangun. I have been a fan of his columns for many years and it such an honor to present his views in my series.

 

The 2014 Outlook of John Mangun

Last year as the market was climbing to its historic high, I wrote that there were two possible scenarios. The Philippine Composite Index (PSEi) would climb to 8,000 and then go on to 10,000. Alternatively, the PSEi would fail to make 8,000 and then fall below 6,000. The second forecast became a reality.

The PSEI reached a high of 7,403 and then retreated to its 2013 low of 5,562.

If the PSEi can break and hold 6,000, then it is on track for a move back to its historic high in approximately 200 point increments. That move to the high will take from three to six months and I am inclined to believe it will be the shorter rather than the longer time frame.

However, if the market does not move above and hold the 6,000 level, then all bets are off and a fall below 5,500 is more than likely. But let’s be optimistic and assume for a moment that 6,000 is coming.

When the market reaches its historic high again, then the same scenarios as 2013 will come into play. We will go much higher or the market will move considerably lower, this year to below 5,000.

As there are many factors that lead us to believe that the stock market will hit or come near to its historic high, at that point there is concern that the 7,500 could be the top for several quarters in the future. Again, if the market cannot reach near 8,000, then we are going to see a strong decline to the 5,000. That is not a roller coaster ride you want to be on if it happens.

Normally, the positive economic and corporate results for 2013 should project a favorable stock market for 2104. This year I am not convinced for several reasons. This year, we will take it quarter by quarter and no longer. Therefore, if you are going to invest in stocks, do it now. Then reevaluate in three months. The first quarter of 2014 may be the best market action for the year.

 

Untitled-1Interest in the stock market first hit John Mangun when he was in his early teens, following the stock price action of major companies in the daily newspaper long before the computer.

In 1976, Mr. Mangun earned his license as a stock broker on the New York Stock Exchange as well as being licensed and registered for the Options and Commodity markets.

After working for two major Wall Street firms, Mr. Mangun went to England as head of foreign exchange trading for a British asset management company.

Upon his return to the United States, he formed his own investment advisory company administering to the investment needs of corporations and high-net worth individuals.

Mr. Mangun has actively analyzed and traded the Philippine Stock Exchange since 1989, making his first stock purchase (and losing trade) buying shares of San Miguel Corporation on Friday, November 24th, one week before the 1989 coup attempt.

He has been a regular newspaper columnist, writing about the Philippine economy, business, and stock market since 1996. His website is MangunOnMarkets.com.

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2014 Outlook, part 4