Stock market gambling
The “indefinite” shutdown of ABS-CBN sets a dangerous precedent. Of course I am talking about the stock and not the company and its franchise for broadcasting. I will leave that to people more qualified than I am to speak on that issue.
The only hashtag that I follow is #Makemoney:feedfamily.
The trading suspension of ABSCBN shares might make sense that it stops unscrupulous traders from doing whatever it is they do to cheat the public. However, it destroys the investment value belonging to that same “public.” For share trading being suspended until ABS releases some sort of an announcement of what losing the franchise will do to its share value is ridiculous. My friend Frankie suggested that it might/ should be suspended until after the presidential election in 2022.
The company does not determine what the value of its shares should be; the public that buys and sells
those shares make that determination. The suspension should have had a time limit of a few days at the most. It is almost like the Philippine Stock Exchange took “my” shares—if I owned any—because I cannot sell them until the suspension is lifted.
As a side note, the share price of GMA7 was up 41 percent from its close last Friday before ending up 10.28 percent on Monday. I wonder if any of those “unscrupulous traders” had anything to do with, and made any money from, that price movement?
But life goes on without ABS-CBN share trading. The problem is that our stock market is still trying to figure out what to do about an unknown
Buying specifically as the price was going down or at the recent P15 bottom was absolutely a gamble not unlike at the closed casinos. A buyer was betting that the franchise would be renewed and that the price would then go back to at least P20-P22. The bet lost, simple as that.
and potentially scary future. The two questions are—what will the government do with the NCR quarantine and what will the economic effect be either way? Data on the number of cases, recoveries, and deaths are sketchy and late. And the biggest unknown is how much of a Covid-19 apocalypse is Cebu going to turn into?
How do you trade this type of market? Let’s use ABS as an example.
You could have bought all the shares you wanted on January 2, 2020 at P15 per share. The price hit a recent high on February 27 at around P25. The close last Friday was P14.78. What goes around comes around. If you bought at the bottom and rode it all the way up and then down, bought at the top, or bought on the downtrend from February 27, you got what you traded for.
On the weekly chart, buying above P16 made sense according to the technical indicators. Likewise, there were several technical selling signals during the week of the high ending February 28. I stated publically at the time when I bought at P18 and then sold at P21.
Buying specifically as the price was going down or at the recent P15 bottom was absolutely a gamble not unlike at the closed casinos. A buyer was betting that the franchise would be renewed and that the price would then go back to at least P20-P22. The bet lost, simple as that.
At the February high, the price did not break and hold the 200-Week Moving Average Line (Sell Signal). After the high, the price could not break and hold the 200-Day Moving Average Line, which would have been a Buy Signal that never came. Like crossing the street in heav y traffic, investing in the stock market is not a gamble unless you choose to make it one.