“Be fearful when others are greedy, and greedy when others are fearful.” – Warren Buffet
More PSE and bloodbath stuff.
In GOT S03E09 episode, titled “The Rains of Castamere,” more popularly known as The Red Wedding, there was a scene wherein joyful music in the Frey halls turned to a sad one, and Catelyn discovered Roose Bolton was wearing chain mail (armor) beneath his long sleeved leather clothes. Of course Roose gets a slap while Catelyn and Robb et al, get arrows and get killed shortly afterwards. In short, Bolton was in the know, he was prepared, and he exited the hall at the right timing, before arrows started raining.
Check out this article from Interaksyon which says business owners, the famous surnames we know such as Ayala (Ayala Corp), Aboitiz (Aboitiz Equity Ventures, Shipping, etc), Concepcion (RFM, Go Negosyo) and Tancaktiong (Jollibee Group), sold some of their holdings even before the correction happened, even before the bloodbath began. They remind me of Bolton, being in the know. Being ready. And making a handsome neat millions of profit out of it.
How did they know it was time to sell? I don’t know.
Some started unloading portions and tranches of their shares a good two months or so before the PSE took a U-turn and headed back to sub-6000 levels. Did they know that Uncle Ben of the Fed will make such announcement 2 months from then on possible QE tapering? Or that China will fear a potential credit crunch? I can’t tell. Chances are they did not know too.
A quote from Warren Buffet, aside from the previous one on top, goes something like this: Value investors buy when the market is selling — they buy the panic. And they head to the fire exits while we are still partying, even before the fire starts, before the stampede – they sell to the greedy. Something to that effect. They are ahead of the pack.
One thing is for sure, these business owners know the values of their empires vis a vis market valuation, they know the prospects of their sales, projects and business opportunities, so more or less they have a figure of how much their company is worth in terms of capitalization and earnings. Match their own valuation with that of the stock market and they can easily see how much their share prices are overvalued (hence time to sell) or undervalued (time to load up more).
Or maybe sheer experience? Or maybe part of their investment plan is Sell in May (or prior)?
But external shocks affecting all shares, not just theirs, that is hard to predict. So what is our great equalizer, us mere humans holding spare loose change of their stocks? Us whom sadly are still holding on to these “ipit” issues while the owners have already disposed them (at least some of them). Corporate Disclosures, as part of Changes in Beneficial Ownership reports.
Such transactions are required to be disclosed to PSE, and PSE then shares the information to the public. Haven’t checked for all, but supposedly, we could see these companies reporting that their Big Bosses sold (or bought) x number of shares. See this sample for Ayala Corp. So we should have seen such disclosures two months ago. Did anyone check? Or do you monitor this as an investor?
Is this selling out of panic, fear about the fundamentals of their company and the economy? I doubt it very much. I think it’s just plain profit-taking and locking in of gains for the near term. Exercising their stocks options to buy at pre-determined likely lower prices. Expect them to slowly buy back. Question is, when.
Though a great equalizer, it’s really hard for small time players to monitor the disclosures to see whether the big bosses are selling and when. And selling does not necessarily mean a bad thing, it can be due to a thousand reasons. But in this case, for obvious reasons.
Chances are we ended up buying the voluminous shares they were selling. We ended up catching all the arrows while enjoying the feast, unarmed.
I’m not hinting of any betrayal here, okay? Except for Roose Bolton of course.