Investing in Philippines: October 2010

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Sunday, October 31, 2010

Another video about Stock investing: Citiseconline's Corporate AVP


As I browse further I discovered yet another video. I am not paid in posting this video in my blog nor I am promoting to you Citiseconline but I just want to share the idea of stock investing in the Philippines. That even a nurse or a plain housewife can start investing through online stock broker with a minimum capital and know how.



If the above video doesn't work click here.


An introduction to the Philippine Stock Trading in Video

While net surfing to find other blogs where I can promote my blog I stumbled into an old video about Philippine stock market.

Hope we pick some points about the nature and the ins and outs of stock investing and trading.




PSE's trading threshold in the New Trading System



                                                        source: http://www.cartoonstock.com
 
As you may already know, The Philippine Stock Exchange has a new trading system called NTS. It replaced the old system which has been serving the PSE for more than a decade. In any new program we experienced some glitches for the first few weeks of its operation but as of today I think all bugs and glitches are quite fixed and hoping that it would boost trading in the Philippines.

Saturday, October 23, 2010

Ways to be debt-free


                                source: http://antipinoy.com/

This is a follow up on my previous blog "What it means to be debt-free" if you haven't read it yet click here to read it.

So you decided to be free from your debt but your wondering how in the world can I do  that? So this topic will be  in parts since it covers a lot of things.

Let's discuss the very first step. Step one is accepting that you are buried in debt.




                                              source:http://interacc.typepad.com/synthesis/


I know you are lost why to be debt free one should accept that one is buried in debt. Just like any other addictions, the first step towards freedom from it is to acknowledge that one is addicted to it. Accept the fact that you are in debt. Most people will have a hard time doing this because of pride. They would say "no I'm not buried in debt, I'm just behind my payments don't worry money is coming".

It is sad that most Pinoys would just say that. They don't want to accept their situation thus they are always in denial mode. And so doing in order to cheer themselves they buy. They go shopping and go malling and when they see something they've always wanted they buy it and charge it to their credit card.
                                               source: http://blog.beliefnet.com/onecity/

Or if they are upset they escape by going somewhere else like going to a resort or watching movies just to forget that they are buried in debt. I remember my brother's comment about how so many people have the guts to get a loan to pay up another loan just to have money to spend, he says "Basta at least sumaya sila sa inutang nila."

So the very first thing is really to accept that you are buried in debt. It creates that realization inside of you that you have to do something about it.  That one must be responsible for it and not escape and show the world that everything is okay because it is not okay.

                                            source: http://www.selfishprogramming.com

Ever seen movie scenarios where the Dad or Mom secretly works in a night shift low paying job to support their family after losing their job while their children are acting like rich kids getting this and buying that. That is so pitiful and yet the parents keeps on denying it but in the end everything is ruin.

So remember step one: ACCEPT THAT YOU ARE BURIED IN DEBT.

 vv

Thursday, October 21, 2010

Citiseconline Platform 1: Stock Qoute


     source: http://aprevision.fortunecity.com


As promised I am making a post regarding the features and navigation of the Citiseconline web page.

First we will try to tackle the quote tab of the Citiseconline page specially about the Stock Quote function.





The very first information you will get is seen in the color of the name of the company. When it is yellowish just like CHIB(ChinaBank) it indicates that the stock has no movement comparing today's last traded price form yesterday's. A green means its higher than yesterday while a red mean its lower than yesterday.

If you are already familiar with the BID and ASK columns you might notice the additional numbers beside each Bid or Ask data. Those are the number of bidders or sellers during the trade or those that are on queue. The Last 5 Trades are records of the transactions that affected the said particular stock for this matter CHIB was only traded 3 times. The number in the BUYER and SELLER COLUMN are assigned number for stockbrokers participating in the PSE. You can access that list here.

And lastly the vertical box on the side indicates all the information one needs when making a decision to buy or sell. It contains the price information during the trading hours like the OPEN, HIGH, LOW, CLOSE, and PREVIOUS. 

Also basic information about the stock also are in this box




Wednesday, October 20, 2010

My new segments in my blog: The online stockbrokers that I use


                                source: http://www.yourbrokerguide.com/
If you remember I introduced you to the online stockbrokers... if you haven't read that yet click here.

Okay so let me make some introductions first. One might ask me why online stockbrokers? What are the benefits?

Here are my reasons why I opted for online stockbrokers:

1. Online stockbrokers are cheap. Most only charge a commission of
    0.25% to 0.50% per all transaction. Most have no maintaining
    fee, and only charge a small fee for call trading assistance.

2. Online stockbroker's platform are easily accessible online and 
    they are secure. That is why they have to be accredited by both
    SEC and PSE.

3. Online stockbroker's web page are full of information and guides 
    to help you make that buy or trade

4. And lately after the PSE upgraded most have brought back the
   off-hours facility. No more early morning waking up for our stock 
   investors abroad to place their stock trades

Those are the benefits to name a few.

Now as promise I will be posting a series on how to navigate and use the two online stockbrokers I am currently using. I am using Citiseconline and First Metro Securities Brokerage Corp. to know more about these two click on them to go to their website.

Here is a story on how I ended up with these two online stockbroker.

                                     source: www.citiseconline.com
Citiseconline was the first online stockbroker I applied to. I learned about them through Bo Sanchez's book 8 Secrets of the Truly Rich. Long before I have always wanted to enter the stock market. I remember the days when my professor and dean in PSBA-QC would tell us about his masteral class challenging them to buy stock in the Philippine Stock Market and their grade in his class will be based on the performance of their stock investment. It scared me to take an MBA class because back then I really have no idea even how to buy a stock. Is it done just like going to the "sari sari" store asking the "tindera" to sell you stocks? I know it wasn't.

But in the end while working abroad and after mustering my courage to dive in an unknown territory I checked out Citiseconline's website and tried there 15 day or so free pass which I didn't even use because I really have no idea how to do the action in the stock market.  After nearly 6 months I inquired via email and a reply from Jenny Senining gave me hope of opening an account. I planned and I inquired like a little child so afraid to bring and placed my tiny money in to a strange place called "online stockbroker" but finally when I had a chance to get a vacation from my overseas work I made sure it is my first order in my list. Went Tektite to looked for the Citiseconline office and luckily Ms. Senining was there to assist me and that afternoon I funded my account and got may access after a day..that was late November last year.

And then ecstatic that I was I went to my account check this and that and place my first order. After the day nothing happened. After a week nothing happened. After a month still nothing happen. So I asked myself what's wrong with my bid? Then a new thread in the forum where I accustomed to share my ideas and advices opened. It was about stock investing. And from there on my knowledge grew leaps and bounds due to friends who share the same passion for stock investing. My humble thanks to our OFW friend who started that thread, "maraming salamat rich dad ninong :) "
 

I made my first buy on March 2010 and from their on I have been buying, then waiting till it profits around 5-10% net of cost before selling and sometimes when times are good I profit up to 40%



    source: www.firstmetrosec.com.ph

The reason why I opened another online stockbroker account is funds accessibility.

Being the online brokerage arm of Metrobank fund transfer from your Metrobank account to your First Metro Securities account is a breeze through Metrodirect. I am in the process of familiarizing myself about FMSB's online platform and will soon share here my experience in navigating and making the most of their platform.

Also the well known stock analyst Gus Cosio is in FMSB and his blog is linked to their website. With the latest announcement that FMSB can now accept off-hours trading I guess more and more Pinoys can benefit from it. Also to open an account you just need a minimum of Php 5,000.00, of which Php 2,00.00 is for your maintaining  balance for your Metrobank account and the Php 3,000.00  cash is available for stock investment.

What it means to be debt free?



We have been discussing stocks for quite sometime now and I would like to step back and talk about some issues that a normal person would like to tackle.

I was reading the blog Simple Mom regarding how she and her husband finally able to say to themselves that they are debt free. It came to me that most Pinoys are becoming like most Americans and that is living in debt. And with that I wonder if the same mortgage crisis happen in the Philippines when most Filipino families will become homeless because they are not able to pay their mortgage on their house.

One rule that me and some of my stock investor friends have always reiterated is to invest only totally free cash. There was one comment in one of my post asking how can one have extra money for investing when upon receiving her paycheck nothing is left. The thing is to be financially free or for this case debt-free is to have a discipline not only to master but also live on a day to day basis.

That is why I recommend Bo Sanchez's book Simplify and Live a Good Life. Being debt free is a goal which needs a plan. So right now sit down and look at your current financial situation. How many debts do you have? It could be a car loan, home loan, credit card debt, school loan, or any other loan you made out of emergency needs. List them down in the order of which is burdensome that is which one has a higher interest rate. As much as possible pay up first loans with higher interest and just give some to those that has a lower interest. This will save you from the dreaded charges that loan companies charge you.
                                     source:http://thedebtfreeusa.com
 

Start small steps towards your debt free life. And soon you'll realize the value of not owing anyone. There will be no more deadlines to catch. There will be no more allocations to be made for creditors now you can put those extra cash for investments that would generate more money for you till it comes that the money they generate will be more than your wages thus giving you passive income.

There are so many benefits from becoming debt free. How about you what do you do to become debt free and what are the benefits you enjoy now that you are now debt free. Share your thoughts.

Thursday, October 14, 2010

Even ME Can Invest in the Stock Market: ANNOUNCEMENT!

Got this announcement from my friend's blog regarding online stock trading. Check it our for more information

 

ANNOUNCEMENT!

What: 
Official launching of on-line trading, First Metro Securities Brokers (FMSB)
Where:
Le Pavillon, Metropolitan Park, Diosdado Macapagal Avenue, Pasay City.
When:
14 October 2010 at 6 o’clock in the evening

For more information, Please follow this link
http://guscosio.wordpress.com/2010/10/13/on-line-trading-launch/#comment-4678
Even ME Can Invest in the Stock Market: ANNOUNCEMENT!

Tuesday, October 12, 2010

Who is Manuel V. Pangilinan

He is not Mr. Sipag at tyaga and definitely the boxer know as "pambansang kamao".

To most he is known as MVP and to some Manny Pangilinan. I guess you have heard or read his latest moves on PX(Philex Mining) and LC(Lepanto Consolidated Mining) that made people in the investment circles say "Midas touch" of MVP when the two stocks surged in price when the news broke out regarding his gaining of major role in the two companies.
Mr. Manuel V. Pangilinan has been a director of PLDT since November 24, 1998. He was appointed as Chairman of the Board of PLDT after serving as its President and Chief Executive Officer from November 1998 to February 2004. He is the Chairman of the Governance and Nomination and Technology Strategy Committees of the Board of Directors of PLDT.

He also serves as Chairman of Smart, Piltel, ePLDT, Metro Pacific Investments Corporation, Landco Pacific Corporation, Maynilad Water Services, Inc., Philex Mining Corporation, Manila North Tollways Corporation, Medical Doctors, Inc. (Makati Medical Center), Colinas Verdes, Inc. (Cardinal Santos Medical Center), and Davao Doctors, Inc.
He sits on the Board of Meralco and is Chairman of its Executive Committee. Mr. Pangilinan founded First Pacific Company Ltd. in 1981 and served as Managing Director until 1999. He was appointed as Executive Chairman until June 2003, when he was named as CEO and Managing Director. He also holds the position of President Commissioner of P. T. Indofood Sukses Makmur Tbk, the largest food company in Indonesia.

Outside the First Pacific Group, Mr. Pangilinan is Chairman of the Board of Trustees of San Beda College. He also serves as Chairman of PLDT-Smart Foundation, Inc. and the Philippine Business for Social Progress, as Vice Chairman of the Foundation for Crime Prevention, a private sector group organized to assist the government with crime prevention, and is a member of the Board of Trustees of Caritas Manila and Radio Veritas-Global Broadcasting Systems, Inc.

In February 2007, he was named the President of the Samahang Basketball ng Pilipinas, a newly formed national sport association for basketball, and effective January 2009, he assumed the chairmanship of the Amateur Boxing Association of the Philippines, the governing body of the amateur boxers in the country. Mr. Pangilinan has received numerous prestigious awards including the Ten Outstanding Young Men of the Philippines (TOYM) Award for International Finance (1983), the Presidential Pamana ng Pilipino Award by the Office of the President of the Philippines (1996), Honorary Doctorate in Humanities by the San Beda College (2002), Best CEO in the Philippines by Institutional Investor (2004), CEO of the Year (Philippines) by Biz News Asia (2004), People of the Year by People Asia Magazine (2004), Distinguished World Class Businessman Award by the Association of Makati Industries, Inc. (2005), Management Man of the Year by the Management Association of the Philippines (2005), Order of Lakandula (Rank of a Komandante) by the Office of the President of the Philippines (2006), and Honorary Doctorate in Humanities by the Xavier University (2007). He was voted as Corporate Executive Officer of the Year (Philippines) and Best Executive (Philippines) at the 2007 and 2008 Best-Managed Companies and Corporate Governance Polls conducted by Asia Money.

Mr. Pangilinan graduated cum laude from the Ateneo de Manila University, with a Bachelor of Arts Degree in Economics. He received his Masters Degree in Business Administration from Wharton School of Finance and Commerce at the University of Pennsylvania.

Sunday, October 10, 2010

Stock trading vs. Stock investing



This issue has been lingering for sometime. Let me cast my thoughts on it and hoping it would clear some gray areas regarding the two. But first let's define them to established basis.


Stock trading/Momentum investing(from http://www.investorwords.com)
Buying and selling securities or commodities on a short-term basis, hoping to make quick profits.


Stock investing/Value investing(from http://www.investopedia.com)
The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the company's long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated.

The main difference of the two primarily lies on the strategy in achieving profitability. Trading is the act of buying and selling for quick profit while investing is more of positioning or buying at low prices and waiting for the stock to appreciate to profit.

In stock trading one watches particularly the stock's price changes against participants reaction to current trend. Price trends may be influence by current news within the company or in the Global or regional market in general. 

News like the entry of MVP(Manny V. Pangilinan) of TEL to PX(Philex Mining) and LC(Lepanto Consolidated Mining) raised their stock prices coupled by the bullish PSE market. I remember profiting 35% at my LC within two days of trading. A sudden change or better than expected performance of a company may also influence  its stock price. When the price of a stock is gaining momentum most investors suddenly buy that stock creating more price uptrend thus a surge of stock price in short period which may led the stock to be overbought and will suddenly drop when sellers are more than buyers...

Stock investing on the other hand primarily is about making the cost of the stock lower thus the concept of cost averaging come into the picture. Besides cost averaging investors look for companies with intrinsic value. Companies with long term potential but are currently undervalued are said to be one of the stocks with intrinsic value. The concept of intrinsic value was started by Warren Buffet. With this concept one must be patient enough to realize the expected value which mostly comes after 1 - 3 years or more.

Companies become better over time and as the company grows its value also grows. Fundamentally sound companies are one of the companies that one may consider as companies of value. These
companies may be one of the blue chips or maybe a small company that recently started but was able to withstand various financial crisis.

What now then is the best strategy when one enters the stock market?

The answer to this question depends on one's risk appetite.

Traders are seen as risk takers. Some may term them short term thus the terminology "going short" and other call them tsupitero or tsupitera. A common trait of a trader is establishing a comfort zone when trading and they ride the sudden uptrends and buying speculative stocks. Most establish a loss percentage of 5% meaning they sell their stocks if such is on or near the acceptable 5% loss level in order to invest their funds to a far better profit generating stocks. There is nothing bad with this idea since one enters the stock market to profit...only that this strategy is risky.

Investors or Value investors on the other hand has the patience to wait for that big price uptrend. They buy fundamentally sound stocks when they are or near floor prices. These people are happy when stock prices are falling(you might think their crazy) and they would always look for bargain. As time passes they accumulate and
make sure that the cost per share goes down as they buy more of the stock and when the stock price rises to up to 25 -50% that is the time they will release. It usually takes 6 months to 2 years or more thus patience is a key ingredient in value investing. At the same time one must be diligent enough to do research and analysis of the company before buying. 

The best way is to be both. One should establish a strategy to purchase some stocks for short term/profit taking  and establish some stocks to be for long term. To be able to fund one's long term goals one must have a continues source of funds which could come from short term trades.

Again rules to follow are the following:
1. Don't be greedy, moderate your greed when price of the stock is 
    near or on its TP(target price) sell and take profits
2. Research and investigate, when in doubt don't buy, trade at your 
    own risk
3. Cost-average
4. Always set aside emergency funds, always leave some free cash 
    for bargain buying
5. Only and only invest free cash

Saturday, October 9, 2010

Investing word of the day: Dividend


A friend in an online forum posted a question regarding dividend and I would like to explain it further.

This is from the Philippines's Corporation Code under Batas Pambansa Bilang 68(Source: www.chanrobles.com)

Title IV: Powers of Corporations
Sec. 43. Power to declare dividends. - The board of directors of a stock corporation may declare dividends out of the unrestricted retained earnings which shall be payable in cash, in property, or in stock to all stockholders on the basis of outstanding stock held by them: Provided, That any cash dividends due on delinquent stock shall first be applied to the unpaid balance on the subscription plus costs and expenses, while stock dividends shall be withheld from the delinquent stockholder until his unpaid subscription is fully paid: Provided, further, That no stock dividend shall be issued without the approval of stockholders representing not less than two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly called for the purpose. (16a)
Stock corporations are prohibited from retaining surplus profits in excess of one hundred (100%) percent of their paid-in capital stock, except: (1) when justified by definite corporate expansion projects or programs approved by the board of directors; or (2) when the corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, from declaring dividends without its/his consent, and such consent has not yet been secured; or (3) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation, such as when there is need for special reserve for probable contingencies. (n) 


In stock investing once a stock is traded in the stock market the company itself does have any power to control such that is why any stock has a market value. A stock's market value is dictated by how any sane investor values a company's stock and how willing one is to buy at such price. 

One might notice the likes of TEL(Philippine Long Distance Telecommunications) which has a par value of Php 5.00 but a market price of Php 2,736.00.








Source: http://technogra.ph
  
Now what is a dividend then?

source: http://www.etftrends.com

Though the company has no control on the price of issued stocks, one of the reasons why me and you buy stocks of such company is that we will profit from it. A company as stated in the Corporate law above has the power to declare dividends out of its unrestricted retained earnings. As an investor we look forward on returns from the company which we received in the form of dividends. 

So besides from the possible gain from price appreciation of a stock, me and you can hold onto the stock and wait for the company's dividends. 

The question now are the following:
1. How much is the dividend an in what form?
2. Who approves a company's dividend?
3. How often is the dividend?
4. How come some companies don't declare dividends?

Question number one:How much is the dividend an in what form?

As stated in the Corporate Law  a company can declare dividends up to its unrestricted retained earnings. What is "unrestricted retained earnings" you ask? If you have been browsing the PSE website and have downloaded any company's 17Q report you can check in the Equity section a caption entitled Retained Earnings. In simple terms it is the net income of the company accumulated over the years of its operations. The company can declare a cash dividend, a property dividend, or a stock dividend.


Question number two: Who approves a company's dividend?

The board of directors of the company approves the dividend declaration. In the case of a stock dividend a vote not less than 2/3 of outstanding capital stock is required to ratify such decision. The effect of stock dividend is only to increase the number of shares held by the shareholder but in the company's books only a transfer from Retained Earnings to the Capital stock occurred thus the market capitalization of the company remains the same. What one can gain from stocks arising from stock dividend is when such is sold in the new market price because it is as if you profited 100% from it.

Question number three:How often is the dividend?

Dividends are base on company's performance. If the company has performed well they can declare dividends and when not well there is a likelihood  that there will be no dividend. But remember what the Corporation law mentioned that is a company can declare dividends out of unrestricted Retained earnings. A company might suffered a loss in its operation  this year but if such has a positive retained earnings then the company can still declare dividends. Most companies declare once a year and some generous ones give 2 to 4 times a year

Question number four: How come some companies don't declare dividends?

Some companies don't declare dividends for the following reasons as stated in the corporate law:
1. When justified by definite corporate expansion projects or 
    programs approved by the board of directors
2.When the corporation is prohibited under any loan 
   agreement with any financial institution or creditor, 
  whether local or foreign, from declaring dividends without 
  its/his consent, and such consent has not yet been secured
3. When it can be clearly shown that such retention is 
   necessary under special circumstances obtaining in the 
  corporation, such as when there is need for special reserve 
  for probable contingencies.


Sunday, October 3, 2010

When in doubt dont buy a stock




I have been out for quite some time... so here am I again...


At times one may be hesitant and then let the day pass then we learn that the stock we are planning to buy just drop further or if worst bad things happen and the company started to go from one problem to another.

Back then the SEC(Securities and Exchange Commission) made an ad on all TV stations regarding the part of the public to know more about the companies that one may invest into. The message was" Invest: Investigate". That time a lot of Pre-need and insurance companies are closing one after the other and one has been all around the news for the alleged embezzlement of the officers of the company.

So I guess you are thinking then we shouldn't invest in companies anymore because they might close down run away with our money. The thing is as an investor one should always do what we call due diligence. What is "due diligence" then?

Wiktionary defines it as:

A legally binding process during which a potential buyer evaluates the assets and liabilities of a company.

Investopedia defines it as:
1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.

2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party. 


In a due diligence this is where audit and Fundamental analysis comes. But such is too hard to do so for ordinary investors like us we should always check their Financial statements that is filed to the SEC

At least we can check how is the standing of the company. 

Is it Liquid(by means of the Current Ratio or Working Capital Ratio which should be at less 1:1)? 

How big its Liability in relation to Shareholder's Equity(by means of  Debt to Equity Ratio that shows if such company is debt strapped that is the likelihood of control is to creditors)? 

Is it Profitable(by means of the Profit and Loss Statement), Is it growing(by comparing This year from last year which is commonly known as Fluctuation Analysis) .
Again that is why when picking stock to invest into one should make a background check on the company. Some stocks have not so good fundamentals and performance and thus they end up into what they call speculative stocks. Investors and players speculate that a good news about the company will make a short uptrend thus players buy it at a lower price and sell it once the price goes 2-5% up. They use volume to profit from such. But as an investor in which one looks at the long term benefits of an investment one should always do what we term "home work".


Again a reminder to do due diligence, invest in fundamentally sound company, invest only free cash, and trade at your own risk.


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Chitika