Tuesday, July 05, 2016

Breaking News: Adjusted PERs HIT 1996 Levels! Charts That Show This Time is Different!

Even if the Phisix remains at 7,850, you and I witnessing a monumental sign our time!


First news. The PSE adjusted the PERs of the 30 issue index yesterday. Perhaps they now reflect on the end of the year 2015 performance. And guess what? The average PER for the PSEi 30 have skyrocketed! They have now reached 26.06! This accounts for just a few points off the 1996 level at 26.14!

Worst, the market cap weighted PERs have equally soared to presently reach 26.84! (market cap weightings based on Friday’s numbers)

Déjà vu 1996!!!!!!!!!

Understand that stratospheric valuations don’t just happen. Or they don’t emerge from random events or from a vacuum. They are a function of prices rising INTENSELY FASTER than the earnings which underpins these securities!

They are SYMPTOMS of a disease. And that disease is nothing more than BSP (trickle down negative real rates or zero bound) policy’s induced malinvestments!

Also note that the credit bubble which has been financing these also represents a symptom. The progressing credit bubble represents the transmission mechanism of the said trickle down policy predicated on the Keynesian framework of borrowing from the future to bolster present GDP and eps!

All actions have consequences. And one of the repercussions has been to serially blow prices off proportions with reality! To consider, “fundamentals” have also been a product of credit based subsidies!

The other ramifications can be seen on the mounting imbalances in the balance sheets of the many listed companies, the dislocation from coordinative functions of the production structure of the economy (now weighted towards bubble industries), as well as the disruptions of brought about by asset bubbles on people’s spending and saving patterns and the reacceleration of CPI.

And what just will be the consequences of the blow off phase?

Second news: The fascinating and breathtaking “this time is different” perspectives have only been escalating as seen from the accelerating violent upside price actions of major issues comprising the headline index.

Had all this occurred in 2015, the PSEi would probably be at least at 9,000! We might even be at 10,000!

Note that ALL of the top 15 issues are presently undergoing violent price actions.

The difference is that the charts posted here are the MOST expressive of this time is different. These charts have SPEARHEADED the present ramp.

And curiously while the top 15 have been conducting their vertical renditions, the price actions of many of the next 15 issues appear to have STALLED!

Hence, because of this developing divergence, the headline remains at 7,800 despite the massive and passionate vertical pumps!

Here is the most outstanding chart of them all.

SMPH.

Perhaps SMPH may have found the Holy Grail! Not even 2013 have shown the same tenacity in the context of price actions.

SMPH from the long term perspective!

For the FIRST time EVER! This time is different?

Let me present to you the other awesome charts which highlights This time is different!


SM

JGS 
 
AC

AEV

JFC (the most expensive PER of them of all at over 50s)

MPI

Caveat emptor!

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