Stock Smarts Market Outlook 2014 (Part 5): BDO‘s Marvin Fausto - Marvin Germo

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Stock Smarts Market Outlook 2014 (Part 5): BDO‘s Marvin Fausto

By: Marvin Germo | January 29, 2014

We are now at the 5th instalment of our outlook series.  I’m sure everyone enjoyed the expert opinions of our guest analysts and I do hope the past articles have further help create a sense of conviction each time you click that button to buy and sell.

For this instalment, we have no other than BDO’s CIO Marvin Fausto.  I love Marvin’s conviction on selection and diversification and how he values investing for the long term compared to the daily volatility that the market brings. I’m sure the principles behind his analysis is something you can take home and use for your trading and investing.

My desire is that this series serves as a blessing to you, to help make stock investing a profitable venture as you move towards financial freedom.

Marvin Fausto BDO

1.  What is your outlook for the PSE this 2014? 

Outlook for the PSE is more of a consolidation and to trade within a range given the developments in other markets. This view is on the assumption that much of the gains have already been priced in by the market and that earnings are expected to be relatively weak for the year. Having said that however, one should not lose sight of the long-term potential of the stock market and use that as a tool to accumulate good companies and improve financial well being. Looking only at 2014 will dissuade investing and miss the opportunities long-term positioning offers. Thus, I view 2014 as an opportunity to invest and diversify in good companies.

2. Given that the FED disclosed that they would taper off Q.E., in your opinion what is the effect of this to our market? 

The FED taper would cause movements of funds away from emerging markets such as the Philippines and more towards the developed markets and thus will have a negative effect flow-wise. This we saw when the market declined
from the recent peak of around 7,300 to where it is trading now. To the extent that this development is being anticipated and thus being priced in the market will depend on the sentiment of the players. Thus it is important to stop being just a player of the market and instead be an investor and participate in this venture for the long-term. Should the market continue to weaken due to the FED tapering, investing and accumulating blue chip stocks could be the wise decision.

3. Sector to watch out for?

The sector to watch out for is property. The combined effects of low interest rates, strong property demand, strong remittances, and continued government infrastructure spending will benefit this sector and thus should help boost earnings for companies already operating with established track record.

4.  Will the PSEi again hit 7,400, if so what is the trigger for this to happen? 

With this market, anything can happen – even hitting 7,400 again. The trigger could well be the re-flowing back of funds from the developed markets to the country. As soon as the market discounts the tapering of the US FED stimulus, markets can react quickly. But if things move that way it has for the past months, my view is that it will be difficult to achieve that level this year.

5. Year end projection of the PSEI?

It is easy to make projections using certain assumptions. The difficult part is achieving those projections. My view is for the market to trade within a band  and consolidate within a 20% range.

Ayala Land

6. If there is one stock that you are bullish about, what would it be and why?

Ayala Land is the stock I am bullish on due to the strength of its future earnings and strong brand. Property sector should benefit from low interest rates and strong demand and ALI should benefit from that development.

7. Message to newbie and veteran investors alike for 2014?

My message is for newbies and veterans alike not to listen to projections. Concentrate on your plans and invest in the stock market certain amounts for your future financial well being on a regular and consistent way in blue chip companies with proven track record of profitable performance.  History has proven that predictions most often than not do not happen and can only lead to disappointments and wrong decisions. A well disciplined implementation of a plan of consistent accumulation on well diversified portfolio will reward over the long term.


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