Teetering market

There are times when I feel bad and disappointed because I was right about the market. I know this sounds incredulous. It obviously defies conventional thinking and behavior. But believe me, I do.

This is because I’m always a market bull. I don’t particularly enjoy a bear or bearish market. This is why, even with my long years in the market, I still get “pinned down” (more vividly captured by the vernacular word “ipit”) in some stock positions in a tumbling market.

This is funny because I became a stockbroker for my supposed ability to think clearly under pressure. The only problem is that I’m also someone who does not easily give up, much less accept defeat too quickly. This trait runs counter with the reality in the market of not just being flexible but of being what I call “variable.” Or, as seasoned investors would put it, “to be ready all the time to reverse position at any point in the game of the market play.”

Thus, I have one characteristic that is essential in becoming a strong player in the market. But I also have another trait that goes against the market precept to be guided not only by one’s sense of conviction but by one’s pure sense of survival, with the latter as the domineering or ruling element all the time.

Don’t lament over this lack of psychological versatility like I used to before. Experts assure that this kind of psychological versatility can be acquired. More importantly, such deficiency is not necessarily a hindrance to one’s success in the market.

There are a number of investing styles that are proven to fit one’s psychological quotient, or PQ, as it is called—a claim that you can easily verify personally when you know or may have heard of “someone who you think is not any brighter and tougher than you” but is gainfully trading for a living or may have traded to financial freedom.

There are several books that you can read on this matter. Just browse the net.

Latest developments

Two weeks ago, I said that I agreed with one technical review on Wall Street that it was trading on a trend reversal pattern otherwise known as “Head-and-Shoulders Top.” I also agreed with the observation that it was in the process of developing the third leg of the said chart pattern at the time, too.

I also agreed with the added claim that our market was following a consolidation trading pattern known as the “box.” I ended with the conclusion that the outcome of such trading patterns in both markets would culminate within the next two weeks.

Hard to accept, too, my thesis went on as to say that while both markets might not be actually as how they were perceived by me, they were, nevertheless, expected to head down lower. The timeline for such eventuality should have happened last week.

My assertions drew interesting reactions. While many disputed my declared perceived market patterns, we ended up with the same conclusion. They could not see what I said I could see but just the same, they conformed with my ultimate judgment.

This made me remember the remarks of Dr. William Bernstein, the principal of an acknowledged fund management company for its good performance with its so-called “No-Brainer Portfolio” and author of two prized books—“The Intelligent Asset Allocator” and “The Four Pillars of Investing.”

He posited that “it’s human nature to find patterns where there are none …” but just the same, the human mind is mysteriously ingenious. As depicted in the movie “Mercury Rising”—whose storyline was about a nine-year-old autistic boy who became the target of liquidation and cause of death of his parents in which the hero (starring Bruce Willis) of the story got involved with for having inexplicably cracked a top secret cryptographic code that was, accordingly, so complex that no computer ever known could decipher it—the human mind is capable of knowing the right answer to complex problems.

Come to think of it, while the Dow Jones industrial average was trending on a head-and-shoulders-top pattern, it fell to as low as the technical bottom of such pattern as “it suffered its worst loss since the financial meltdown in 2008.”

And as feared, too, our local market broke down last week, as it equally suffered its biggest loss owing to the continuing complex economic and financial situation in the US and Europe.

Based on this recent experience, we are again reminded that the market may look something to someone else and may look differently as well to another, yet they may have similar conclusions in the end.

In addition, the world market, which includes ours, is still in no way yet capable to escape the humps and bumps of Wall Street.

Bottom-line spin

Speaking further of being right about my forecast on the market and yet be sorry about it, is the claim of experts that because of what they describe as “significant downside risks” in the global economy today, the future of “raw-materials demand will falter.”

The world economy is expected “to expand 4 percent [only] this year.” For 2012, it is not expected to expand to more than “4.5 percent.”

In this scenario, China, which is the current largest metals consumer, is going to experience a slowing down of its economic and manufacturing activities. This will certainly affect the demand for metals. With China, too, as our major market to our present metals output, it is not difficult to imagine that such unfolding development will have a very negative impact on the prospects of our mining sector.

What’s more, copper prices are forecast to drop to as low as $7,000 a ton as concerns grow about the global economic slowdown. The price of oil is expected to continue to fall at the low $80s a barrel as November deliveries are already falling into these levels.

The writer is a licensed stockbroker of Eagle Equities, Inc. You may reach the Market Rider at [email protected] or directly at www.kapitaltek.com