3 SIGNS OF MARKET PEAK

                This afternoon, I attended a Stock Market briefing sponsored by my broker Citiseconline.com,Inc.It was a great experience to be at the presence of such a huge crowd of investors and the first talk was conducted by Citiseconline's head of research Ms.April Tan. What she discussed was the reasons why she considers our market to be quiet relatively cheap at present because a lot of investors are concerned that our market might have reached its peak since it is trading in the upper band of its channel. Well here are some reasons that Ms.Tan gave as a sign that our market hasn't peak yet.

1. CORPORATE EXPANSION = CREDIT EXPLOSION = HIGH INTEREST RATE

First, during a market peak, we can see that corporations have been expanding massively creating huge credit for them to finance their expansion thereby pushing the banks to lend money at high interest rates given the limited supply. High interest rates is a way of the central bank in regulating the unsustainable growth of the economy and inflation. But as we know our interest up until today is still very low standing only at 3.1% showing us that the economy's growth is still sustainable and healthy.

2. EXPENSIVE VALUATION

During a market peak or a bull market peak, stock prices become expensive relative to their fair values. This is not the case in our market today because the PSE is trading only at 15.8X PE compared during the last bull market in 2007 where the market has traded 18X PE and considering that the market is now at an all time high.

3. INVESTING IN THE STOCK MARKET BECOMES "IN"

This simply means that the market has been so popular that everybody has literally cashed all their money at the bank and dump it at the market. Kidding aside, this is truly the case during a market peak because the average daily value and turnover of the market will rise significantly. But our market today has still a lower turnover value compared to 1997 which is at the height of the Asian Financial Crisis. Another thing worth considering is that TRUST FUNDS, which play a big role in the financial markets, has not been placing a significant amount of their position in the market yet compared to the previous bull market.

So simply saying, are we in a bull market? Yes, definitely we are. And will this bull market end soon? That I don't know BUT one thing is for sure, the Philippine market has still some energy to go higher and higher. Enjoy the raging bull my friends. I hope that you learn something out from this blog.