It’s 2021, And The Philippine Stock Market Has Been Frustrating Since 2015

Updated: August 25, 2021

The stock market is a long-term investment. But exactly how long is long-term?

To some, it’s at least 5 years. To others, it’s 10 years minimum. And there are still a few who would say it’s 15 years or more.

When I became a registered financial planner in 2012, I belonged to the “at least 5 years” group. But in recent years, I’ve become more conservative and started saying that one should be invested in the stock market for at least 7 years; sometimes, I’d even advise 10 years.

The reason for changing my view is mainly because of how the Philippine stock market has performed since 2015. To be honest, it hasn’t been good for the equity market, though it’s not quite obvious from the PSEI chart.

The PSEI has made a lot of gains since 1995. However, it’s been moving sideways since 2015, which explains why a lot of stock portfolios and equity fund values of those who started investing in 2015 or later are currently red or negative.

For instance, if within the past 7 years, you bought a new VUL policy or started peso cost averaging on blue-chip companies, then your portfolio is probably showing paper losses right now, and it could have been red for several years already.

This is understandably frustrating.

Historical Performance of the PSEI from 1995 to July 2021

Note:

  • PSEI is the price of Philippine Stock Exchange Composite Index on Dec 31 of specified year
  • Gain/Loss is the % difference of the PSEI price between Jan 1 and Dec 31 of the specified year
  • 2021 PSEI price is from July 6

Looking at the table above, you’ll see that if you invested in the PSEI at the start of 2018, then by the end of that year, your investment would have lost 12.76% of its value.

And if you just started investing in the Philippine stock market or equity fund in 2018 (or later), then I will not be surprised if your portfolio is red right now.

In fact, if you invested 100k at the start of the year sometime between 2014 to 2020, then you’re probably thinking that it was a mistake to invest in the stock market.

Note: CAGR is the Compounded Annual Growth Rate from Dec 31 of specified year to July 6, 2021. This means your 100k is compounding annually by this much since you invested it. If it’s a red number, then it’s been losing money every year by that much.

From this table, you’ll see that if you invested 100k on the last trading day of December 2014, then in July 2021, that investment is only worth around 96k.

After almost 7 years of letting your money sleep in the stock market, the value of your stocks has actually gone down. Isn’t that annoying?

Another sad fact is that if you did peso cost averaging and regularly invested 100k at the end of every year, then your portfolio would only be positive if you started in 2012 or earlier.

What this table shows is that, for instance, if you invested 100k at the end of every year from 2015 to 2020, then you would have invested a total of 600k. However, after all those years, your investment is smaller and only worth around 565k on July 6, 2021.

And it will feel like you wasted your time and money by investing in the Philippine stock market.

Why did I create these tables?


During a recent online stock market investing seminar that I did, I mentioned that my stock market portfolio remained strong and positive despite the pandemic.

After my talk, I received an email from someone asking for the reason why his stock investments are so much worse despite diligently investing and doing peso cost averaging since 2014.

“Isn’t this supposed to be positive already after 7 years?” he asks.

I searched for a logical answer to his question, and that’s when I realized that those who began passively investing in stocks, equity funds, and even balanced funds in 2014 or later, are unfortunate victims of the sideways economy of the country.

I created these tables and did the calculations so I can have a better view of what’s been happening in the PSEI.

And as a result, I also began to understand why a lot of young investors are now taking their money out of the local stock market and pouring them into cryptocurrencies.

Furthermore, as probably triggered by the Gamestop short squeeze in January 2021, several investors I know also changed their focus and started investing in U.S. stocks and international feeder funds.

Lastly, even some of my friends who often trade Philippine stocks have slowly shifted towards global markets because of better trading opportunities in cryptocurrencies, forex, and U.S. stocks.

What now?

If you’re among those who had the initiative and courage to go beyond our local shores, then I want to congratulate you. You learned to adapt your financial strategies and adjust your ship’s sails to the wind.

But if not, then there’s no need to panic and sell, nor to fear that you’re missing out. The last thing that you should do is to dive headfirst into other markets unprepared.

The thing is… I believe that the PSEI will eventually rise again.

And you… we… we just need to be a little more patient.

There’s no need to sell your shares nor to stop investing. If you’re doing peso cost averaging, you can just continue so.

However, I would encourage you to expand your knowledge and learn more about investments and other such opportunities beyond our local market.

Explore how cryptocurrencies work. Discover global funds. Know how a feeder fund works. Check out what’s happening in the US stock market.

There’s a vast amount of free resources out there. Everything you need to start learning is available online. So, carve out time to educate yourself because as self-made millionaire, Jim Rohn, once said, “Self-education will make you a fortune.”

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3 comments

  1. Personally, I pray that I live long enough to see the Philippine stock market mature. There are positive signs that the PSE is getting there. A few years ago, First Metro bank created the FMETF, the first ETF (Exchange Traded Fund) to be listed on the PSE. That, for me, is the Philippine version of SPY an ETF based off the S&P 500 index. More recently, not one but two REITs have been listed on the PSE. The missing components are the ability to do short selling and the offering of exchange traded option contracts.

    Many folks have the misguided idea that short selling will destroy a market. It certainly does not but it will accelerate the elimination of bogus, poorly managed companies. Short selling, in the hands of those who know what to look for, is a tool to profit when a market declines. Nothing more, nothing less.

    Options trading is “my bag.” Once introduced here in the Philippines, there will be a period of some newbie traders using options for wild speculation. A few will make bank big time and of those few, there will be some who go on to promote the misuse of options. Options were created to control risk. Options will allow you to create a steady income in ALL market conditions. The buy &hope folks only make money if the underlying goes up or if the company pays a dividend. I care not, I am neither bull nor bear.

    With options, you can sell calls against a long stock or ETF position to earn regular income. PUT options may be purchased for protection or as a substitute for going short with much less risk. PUTs may also be sold short as a way to enter a new position. If the underlying does NOT fall to the strike price you have sold, you keep the premium you received as income. If your short PUT does get assigned, you have purchased the underlying cheaper than you otherwise would have. Sideways market, not a problem. I have entered a new position way too early in the past but I had “staying power” because we sold calls against the position to profit every month. With the advent of the new “WEEKLY series” options we can now create a regular weekly income from a position that goes nowhere.

    US investors are able to use options inside their IRA accounts simply by applying for option approval from the brokerage firm. The only restriction is NO uncovered position will be allowed in the IRA. A prayer will be answered for me when I see Beautiful Bride doing in a PERA account (and a cash or margin account) the same as I do in my US IRAs. That will be a time we can all say that the Philippine stock market has fully matured.

  2. It really depends on one’s strategy. If you are a dividend and long-term investor, market volatility is not an issue. In fact, you can use it to your advantage

  3. Like some sifted to trade usd stocks, be careful that some sre scam..if you review some comments like Unmarkets. Visit their website, you. Can see the comments and review .Accdg maybe anyone who are victim of that company pool together and so in posting what they did. Refusing to return our invrstment whether gain snd lost and be vigilant of their sister company

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