The Philippine stock market's bull run to last 3 more years says the news. And the analysts may be right. But it doesn't mean its reasonable. The Philippines having upgraded its investment ratings and the masses just learning about investing in the stock market and foreign investors coming in to invest may drive the market up even further. But it doesn't necessarily mean its reasonable and that the Philippines is undervalued to make it a good buy.
The Philippine economy's tracker which is the index is composed of the 30 largest companies and conglomerates. And in my humble opinion, each one of these 30 (with the exception of a few) are so overbought and diluted that's its very expensive to invest today if we're basing its P/E ratio.
But ordinary people like us have no way to predict when its lowest point and its highest point. Nor would I like to try. So what to do?
I think the best way to handle the situation is to invest by cost averaging. Putting aside a fixed amount of money each month to invest in the Philippine index.
And then, focus on stocks with strong dividend payouts. Should recession come, you're safe with a steady flow of income from dividends. In which you can reinvest or add to your cost averaging.
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