Keith Collister, Gleaner writer

JAMAICA MONEY Market Brokers (JMMB) held its first investor briefing, branded 'Invest Talk' at the Terra Nova Hotel last Wednesday. At the well-attended briefing, its group president and chief executive officer, Keith Duncan, introduced their Global Research team led by Fayval Williams (including well-respected local economist Jason Morris) and the Online Equity trading facility of their stock broking subsidiary JMMB Securities. Mr. Duncan advised that both new offerings are designed to help JMMB in its central mission to empower its clients through increased access to information and trading capabilities.

One of the key presentations was an overview of the Jamaican stock market by JMMB's senior equity analyst, Keisa Ansine, who gave investors some tips on how to survive the current bear market.

Ms. Ansine argued that in contrast to two years ago when shareholders were looking beamingly at their stock portfolios, some of those same investors, having seen the lows of the stock market, are now looking to beat "the bear," while the rest have left the market.

IRRATIONAL EXUBERANCE

Ms Ansine argues that we have been in 'bear territory' since February 2006, when the main Jamaica Stock Eexchange Index had fallen 20 per cent from the peak of late April 2005.

Looking back over the last 10-15 years, she identifies a number of bear markets such as that of 1995 (a bear market lasting for no less than 15 months), preceded by a the typical sharp rise in prices in the three months leading into January 1995. The bear market of 1993 was also preceded by a sharp rise in prices during 1989-1992. The frequent dislocation between price and value when share prices rise faster than their value during a bull run, often due to expected growth rates becoming inflated, is sometimes called irrational exuberance.

BEAR MARKET SIGNS

One of the signs of the bear market, Ms. Ansine argues, is that the price correction leads to a fall-off in activity relating to new listings due to a lack of investor confidence, and market volume falls compared to prior year figures.

Currently, the market is ignoring the fundamental relationship between falling interest rates and rising stock prices, and diversification has failed to protect stock portfolios from loss.

BEATING THE BEAR

Nevertheless, in her view, the time-proven strategy of wealth expansion in this kind of market is to remain calm and frugal and look for value, assessing company prospects, and buy value when the price is right. Historically, it is better to buy in falling markets than during a rising one.

To succeed, one needs a strategy that merges market timing with value investing. Market timing means anticipating the action of the stock market and buying when the market starts to look up. Value means to buy when the intrinsic variables such as earnings, shareholders' equity, growth and the correct assessment of risk results in value.

Ms. Ansine argues it is best to merge a market timing approach with value investing because while the investor waits for the signal from institutional investors, he is at a disadvantage, as he is not invested and he cannot be sure that he will know when the time has come to buy.

BRUCE GOLDING SPEECH

Finally, the Leader of the Opposition, Bruce Golding, also gave a thoughtful presentation about 'The Future of the Jamaican Equities Market'. His principal concern was the lack of growth in the economy and particularly in the small business sector (unlike the U.S.), which he attributed largely to excessive bureaucracy. He argued that this lack of growth leads to a lack of jobs and ultimately reduces revenue for the Government.