Early this week the PSE Index breached the 7,000-point mark
. Celebrations all around. The economy is getting better
was the consensus, as it was over the past few weeks, when the 6,000-point mark was breached, or a few more weeks back, when the 5,000-point mark was breached.
If you look at the graphs, you'd be amazed, even if you're quite cynical. Over the past fifty-two weeks the lowest the PSE Index
was was at the 4,000-point level. Simply said, in those fifty-two weeks, the thirty companies who comprise the index have seen their values increase - those thirty companies being the biggest, or most important, or most hyped-about, ones in the Philippines - leading to the 7,000-point mark being breached this Monday. The economy is getting better
was the consensus, and I did not understand why.
Well, yes, it's a barometer, but of what exactly? I was idle that Monday afternoon, so I decided to do some research. And man, was it intimidating. Also a bit boring, depending on how you look at it. Yeah, this is a warning: this blog entry could (would!) bore you to bits.
My dad has been encouraging me to attend one of those free seminars introducing novices like me to the world of trading stocks. However, he ended up explaining to me the most important parts one night, as we went home from work. In a nutshell: you buy shares of a certain company for a certain price; you hold on to said shares for as short or as long a time as you want; you sell if the price goes up, leaving you with a profit, or, maybe, sell when the share price drops and you're not willing to hold on to an investment that's losing money. It is, he says, like gambling, only you're not relying on sheer luck entirely.
These numbers - how much a share is, how many shares are sold - move around depending on how these shareholders feel. (Somewhere in the PSE website is all the complicated math. Even I can't recreate the equation with a calculator and all the information available to me.) If a company, one that's being traded publicly on the stock market has increased its profits, for example, then potential investors will be confident that buying that company's shares will give them a good return. That pretty much explains all the spin from companies releasing their financial information. Look, look, look - the company is growing! We are doing well. Trust us.
If something bad happens - say, if a company finds itself embroiled in a huge controversy, or if some sort of disaster strikes - investors get cold feet and start selling. All of these things push the stock market up and down. A few good weeks will lead you to the 7,000-point mark.
But there's no way you'd know all these things ahead of time in its entirety (unless, of course, you have insider information, which is pretty much market manipulation, which will get you hate mail) so you watch everything - the news, the ticker, body language, the water cooler, everything - to get an inkling of what might happen. But with all that you know, you'll still end up making a guess about what to buy and what to sell. So it's entirely possible that a rally in the stock market is on the back of speculation. Record profits! Buy! Buy! Buy!
You can, of course, sit back and wait for your shares to earn dividends - like your money in a bank, earning interest - but if you're feeling lucky, you can do all this swapping around.
No wonder being a stock brokers is, apparently, the most stressful job ever. You live in a paranoia-induced bubble or something.
So where does all the money go? Companies go public (er, allow their shares to be traded) so they could fund a planned expansion, say. This is a long game, a very long game. Say, a company's building new factories to produce more goods. You'd take a while to plan everything: plan the building, plan the equipment, plan the labor, plan the trade routes - and then you'll have to build and hire, and then you'll have to manufacture and package and deliver and advertise and sell. But if it all works wonderfully, then the shareholders will get a pretty healthy dividend. If, along the way, the company finds itself in a panic - and the shareholders sell, and things go haywire - then, well, things go haywire, and you will have to wait longer. Much longer.
Or maybe forever. I mean, it takes a looong while for something that you do to have a really profound impact on society, right? So long, in fact, that you can get bored and yank your money out and maybe get rich quick in the process, undermining everybody. Or maybe you're really just in it for a quick buck, and pull out your money at the slightest profit margin. The stock market: it is a pretty good indicator of where the economy is headed, but most of the time, it is hot gas and nothing more. So it's not something you exactly rely on fully.
The economy is getting better
is the line often bandied about by the current administration. (Yep, you did see this coming, right?) Another record high in the stock market, thanks to us!
While that constant self-selling annoys me, I'll have to give them credit: there is a fresh confidence in the Philippines. I've been to several events involving many big business people and you hear them talk about how figures are rising and how investors are getting impressed and how things are looking up for the country. Maybe it's because I've only been to these things now, but compare today to, say, seven years ago, when I was in college, surrounded by activist types of various degrees, and you know things are different.
But these numbers mean nothing to most of us. (Yep, you definitely see this coming.) You go out to the streets, you still see chaos, and kids forcing loose change out of you by wiping your windshield, and photocopied help wanted posters made soggy by the rain. You still have alleys full of housewives doing their laundry after mud and flood and trash entered their homes. You still have kids not going to school, and not going to work either, because their dad's farms aren't earning much. Call center agents not finding a way out. Taxi drivers not turning their meters on. Me, wondering if I'm just lucky enough to be the one observing rather than the one experiencing.
"Ang problema lang,
" my dad said on that drive home, "ay walang
Yep, that trickle-down thing. Whatever gains they get up there, it does not go down here.
Is it inequality? Well, definitely. Those thirty companies in the PSE Index - those thirty companies that represent the best and brightest of the Philippine economy - who owns them? Who works for them? How much goes to them? How much goes to everybody else? I am a petroleum company who raises prices at the slightest provocation, but rarely drops them. I am a telecommunications company who deliberately keeps my services at borderline acceptable. I am a media company who airs the broadcast equivalent of a beer house, without the beer. I am a manufacturer who gets the cheapest products to make cheap products that don't really do much. I'm not saying our companies are that - what do I know? - but the idea is, these companies will always be there just to give profit to whoever's in charge. Throw in the speculation, the search for a quick buck - you have news of the stock market hitting the 7,000-point mark, and it means nothing to anybody.
But yeah, you have some cases of these powerful people giving back - wait, that's too altruistic, it sounds impossible. Hm. You have some cases of these powerful people investing in everybody else. Roads are built, products are sold, services are provided, minds are broadened. But that, as we know, takes a while. Our economic gains today, those economic gains the government constantly boasts about - that credit rating upgrade, that record growth rate - how far back do they go? Whose efforts? Mine. Only mine. Not theirs.
Really? Well, it happened now.
Really? Really. Trust me on this one.
What about the recent findings that, despite our economy posting record growth under two administrations, our poverty rate remained practically unchanged
? Our population is growing exponentially, meaning there are actually more poor people. It's taking them longer to move up. It's taking them longer to get a job. A decent job, wherever that is, and not just some dead-end job.
I don't believe it.
I mean, yes, I know, it will take a while for whatever you do to have an impact, and whatever everybody else does to have an impact, so maybe before you call yourself the Great Savior of the Philippine Islands, you might want to sit back and make sure we really see what you're seeing?
I think the data's interpreted wrongly. You used the wrong data here. And here. And here. I don't believe it.
Perhaps, but really, all I'm saying is, maybe you should stop showing off until we can see what you see. The people who put you there are still expecting something, blindly, but really, there's nothing.
But there is something. Can't you see this? Pledges of investment! Bigger numbers! A fake magazine cover!
Are you even listening?
Uh, I'm sorry? Oh, right. I was preparing for a date. Another beauty queen. Gorgeous. Tall. You get the idea.