Gunslingers of old and the market

Last week, I met with Roel Landingin, a long-time friend and freelance writer for international financial magazines, and had the good fortune of receiving a copy of the bestseller book “Flash Boys: Cracking the Money Code” by Michael Lewis.

The book is about what is now called “high frequency trading,” which is the method used by the new generation of financial traders for exploiting—or even creating—tiny lags in the movement of prices to make money.

Through this technique (aided by “co-location,” high speed computers and special trading programs), present day financial traders now have a different way of playing the market that—while it outwits other market participants—have, at the same time, brought about a whole new ballgame in the market’s dynamics.

In the process, this new financial cleverness to gain a certain edge is producing a new breed of market gunslingers.

Tribute

“Cool, clever and audacious” like the conjured image of market gunslingers in the book, this reminds me of a local market gunslinger of my time, and who I was very sad to find out is very ill at the moment.  He is Anselmo “Bombing” Trinidad Jr. of ATC Securities Inc.

He was a mentor to many struggling traders like me at the defunct Manila Stock Exchange.  Many learned from him how to parley with their wits at night to dabble with stock arbitrage in the US equity market as they double-tasked to follow him at the foreign exchange market.

He was a game changer and catalyst, too.  Other than stock trading, he brought interests in the rewarding activities of company takeovers of dormant listed companies and the business of backdoor listing.

These early initiatives somehow had its impact on present-day activities that are helping enrich the state of the local capital market, which has also led to the development of a new generation of dealmakers and market makers.

I might be one of the few who last partnered with him for some financial structuring and investment deal-making activities before he was stricken with his irreversible illness. But, I’m happy to note, that many are still around in the market whose professional lives I see, at one time or the other, had somehow shared a defining experience with him.

Old guards like Felipe Yap of F. Yap Securities Inc., I’m sure, would remember the time he was a “classmate” in playing the US market before.

Wilson Sy of Wealth Securities Inc. and Willy Ocier of Eastern Securities and Development Corp. may remember how they got their present-day inspiration in financial dealing or market-making activities.

Trading stars of their own right in the likes of Edward Lee of Citisecurities, Inc. and Choy Lorayes of Strategic Equities Corporation, were also challenged at the time by his market exploits.

My companion in the visit, Sonny Goquiolay of the former stockbrokerage firm Goquiolay and Co. could not help reminisce his time with him in speculative stock trading, from which he just earned again from the recent spike of speculative stocks.

Lastly, though an individual with some faults, like the star of the 1967 movie “Cool Hand Luke” that made Paul Newman a box-office star, I would always like to think of him as one who hanged on to life as a free spirit.

Bottom line spin

Last week, I also had the good fortune to attend the 2014 Midyear Business Economic Briefing of the University of Asia and the Pacific.

As one of those that came in very close with their forecast on the economy’s first quarter gross domestic product growth (GDP) results, I sought attendance to this briefing.  The half-day event was lined up with interesting topics, namely: The 2014 macro indicators; agribusiness for countryside development; tourism developments; creative responses to countryside income and population trends; and how to attain inclusive growth.

We don’t have enough space to discuss all of the various topics.  But for starters, let me share some of the insights given by the presenter of the first topic, Dr. Victor Abola, who predicated his subject with the caption “Is the Philippines heading toward an economic miracle?”

As he stressed, the domestic environment is very robust. There was double-digit growth in investment spending in five of the last six quarters.  There is also a resurgence of manufacturing activities through the coming back and heightened activity of Japanese and Korean manufacturers in the country.

Interest rates are staying low owing to an increase in the savings rate largely fanned by overseas foreign workers.

In 1990, the savings rate of East Asian countries ranged between 32.3 to 44 percent of GDP while the Philippines was only at 18.7 percent.  This changed starting 2005, with the Philippines eventually hitting 33 percent of GDP in 2012.

But to sustain rapid growth, he added, the Philippines should have an investment rate equivalent to 25 percent of GDP. The current Philippines’ investment rate is 5 percent short of that at the moment.

For the first time in 30 years, the national government’s debt-ratio has gone down.  In 2013, it was down to 49 percent.  This is expected to go down further to 44 percent in 2016 notwithstanding forecasts that infrastructure spending will reach 3 percent of GDP of 2014 and 5 percent of GDP in 2016.

External debt share to GDP has also been going down.  From 99 percent in 1985, this has gone down to 22 percent in 2013.  International reserves have likewise dramatically climbed since 2007, while business processing outsourcing  has grown annually by of 28 percent.

Don’t fail to follow the continuation of this review of the macro basics of the economy next week.

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