Although I can invest in US stocks and take advantage of the extensive choices and research that is available, and the flexibility of selling short and using various derivative instruments such as the options and futures, I prefer to invest in Philippine stocks because in the past five years it has performed better. As the graph below shows, had you invested in Philippine stocks 3 months ago, you would have now earned a return of about 50%. Compare that with investing in US stocks, where you would have just broken even.
Of course, the issue is this comparison still true recently. And the answer is yes, as the graph below shows. Had you invested in Philippine stocks five years ago, you would have at the very least broken even instead of losing more than 5% had you invested in US stocks. Comparing the performance in the last 3 months is fitting as it covers the period before the most recent peak of the market and the ensuing recovery currently going on.
Of course the two graphs are not compelling enough without some rationalization on why the above difference in performance will continue in the future. In my next blog, I will explain why indeed in my opinion this is true.