Phisix Record 8,000: Happy April Fool’s Day!

The PSE celebrates today’s 24th record high session and 10.5% gain for the year. 

From their press release

Our stock market managed to close higher despite the decline in major Asian indices. This resilience has been evident as local economic and corporate developments continue to positively influence investor sentiment

(table from Bloomberg)

Well, what you see depends on where you stand.

Asian equities was mixed today.

Benchmarks of Japan, Taiwan, South Korea, Australia, Indonesia and Vietnam closed down.

On the other hand, Hong Kong, China, India, Thailand, Pakistan and the Philippines have been up today.

So the reference to Asian indices really depends on which has been the basis of the claim.

Nonetheless, the general idea from the press release has been to paint--that not only has the Phisix outperformed the region--but that local developments imply that the Phisix will ‘decouple’ and will be immune from external developments!

In short, this time is different!!!

Yet let see how today record runs equates to “positively influence investor sentiment” (charts from Colfinancial.com)

We see the same operations to manage the index at work again. This session features another 'afternoon delight' pump marked by wild panic buying and price pushing which ultimately culminated with a “marking the close” to ensure Phisix 8,000 would be just a breath away!

It has been a five sector last minute price fixing: Four sectors exhibited a pump, while the service sector a dump (not in chart)…

The rush to 8,000 comes with only Php 7.72 billion. 

Curiously why the seeming desperation if this has truly been about "economic and corporate developments"?

Today’s actions essentially piggybacks on yesterday’s performance (aside from Monday's shocking actions)… 

In contrast to today, the market started strong yesterday. But the session saw a profit taking trend from the strong start going through the pre-runoff period. 

However, for the index managers, correction has not been permissible. 8,000  has to be met soon…so again the incredible last minute pump!

Index managers have become so desperate to reach Phisix 8,000 soonest!

And the same modus had been used for the closing of yesterdays’ session.

In terms of sectoral activities, another price fixing pump on big ticket issues representing four indices essentially offset some of the infirmities from the strong opening of the day.

Add to this Monday’s fabulous pump and dump which surely has been one for the books!

Market manipulation appears to be the major driving force behind the record Phisix. It's being implemented daily.

Yet the PSE lauds rising security prices in the assumption that such has been about “local economic and corporate developments”. 

But they never seem to give a thought that spectacular overvaluation, manic yield chasing and the rigging or massaging of markets has already underwritten the boom’s demise as discussed last weekend.

Said differently, record 8,000 has not just been about yield-momentum chasing hysteria that has been taking hold in the marketplace, but that the domestic stock market seems as being rigged right under the noses of the PSE! And instead of ensuring the healthy function of the markets to reflect on price discovery, PSE officials cheer on such impropriety and the transmogrification of the equity markets into a loaded casino! 

Let me quote again Warren Buffett’s mentor Benjamin Graham and David Dodd’s warning on why this new-era theory is fated to end in tears. 

From Graham-Dodd’s classic Security Analysis (bold mine)

The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory led directly to this thesis. If a public-utility stock was selling at 35 times its maximum recorded earnings, instead of 10 times its average earnings, which was the preboom standard, the conclusion to be drawn was not that the stock was now too high but merely that the standard of value had been raised. Instead ofjudging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell but even upon the price at which it would deserve to sell. This fantastic reasoning actually led to the purchase at $100 per share of common stocks earning $2.50 per share. The identical reasoning would support the purchase of these same shares at $200, at $1,000, or at any conceivable price. 

An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world. It was only necessary to buy “good” stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic. Countless people asked themselves, “Why work for a living when a fortune can be made in Wall Street without working?” The ensuing migration from business into the financial district resembled the famous gold rush to the Klondike, except that gold was brought to Wall Street instead of taken from it

To repeat with emphasis:

The results of such a doctrine could not fail to be tragic.

Phisix Record 8,000: Happy April Fool’s day!