Investing in Philippines: The DOW effect


Sunday, July 18, 2010

The DOW effect


Last week was a erratic stock market world.

For the first part of the week every market in the world are bullish and rally then in the end of the week there was this sudden plunge after the news about bad economic data from the US with the latest story of Goldman Sachs settlement with their case.

And if you have already notice the Philippines Stock Exchange has been trailing the US market specially the Dow. When the Dow is up the PSE is up, when its Dow is down the PSE is down except during second or third day after the Philippine election when Noynoy has the majority votes.

Should we blame the Dow for all our loses or should we take advantage of this indicator? We cannot do anything about the bad economic data from the US but knowing that the PSE trails the reaction of the Dow would be a great tool for us to predict what is to happen in our local stock exchange except if the reaction is further decline which is not good for any investor at all. So always choose stocks of fundamental sound companies and if such stock's prices are down it may be best to buy some to lower your cost on such. And when the stocks rises up again well you now got a lower average cost per share giving you better returns.

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