Stock News: Buy Asian Equities Now With ‘Blood on the Street’: Fund Manager

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Just got this news in CNBC 

source: http://www.cnbc.com

Many Asian stocks are trading at cheaper valuations than during the last financial crisis in 2008, according to one fund manager, who says now’s a great time to buy.

“I always go back to famous statements that people like Buffet and the Rothschilds have made about buying when there's blood on the streets,” Joshua Crabb, Director & Portfolio Manager, Asia Equities at investment firm BlackRock told CNBC on Monday. “Being greedy when others are fearful.”

According to Crabb, one in seven Asian stocks are currently trading below their 2008 price-to-book ratios. Crabb, whose Asia Pacific Equity Income Fund was down 8 percent year-to-date at the end of August, says he’s been buying equities despite recent declines.

“We're seeing a lot of value starting to develop now… Sometimes in the short run you have to wear a little bit of pain, but that's how you make the long returns,” says Crabb.

In terms of what’s cheap, Crabb says one in five stocks in South Korea are trading below their 2008 price-to-book valuations. He believes stocks there have priced in the bad news after investors punished the country, because of its export-oriented economy.

Crabb says Chinese stocks are even cheaper, with one in three below their 2008 price-to-book valuations because of fears of a hard landing.

He believes the problems in Europe and the U.S. could actually benefit Asian equities by helping to ease inflation concerns.

“The reality of this is that it brings inflation under control,” Crabb says. “If we look at the concerns Asian central banks have, a lot of it’s around inflation and some markets around property prices. With what's occurring, this is taking a lot of that pressure away.”

Despite Asian economies correlation to their Western counterparts, Crabb believes, the region has capacity for growth, as firms, governments and consumers have low levels of debt.

to read more click here.

Why do you have to invest?

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source: http://www.9negroup.com

They say this is the best time to invest in the stock market. Why is it the best time? It is because you are able to buy shares of a good company at bargain.


But you are confused.


The news is that the world market is collapsing with the Greek Debt crisis and the gloomy economic outlook in United States why do I say that this is a good time to invest?

source: http://www.hotslive.com

But before we discuss deeper into this I guess the best start for this is for us to define what really an investment is. 


Investment in simple term means a set aside money put in something that gives you back money. 


Simple but a lot of people still don't get the idea about this. A lot of people put money in a savings account and call it already investment. Yes the bank gives you back money by way of interest. I will call this sound investment if we are in the 70's or 80's where interest on savings are in the range of 5-10% but now I would like only to put money in a savings account for emergency fund purpose because banks nowadays pay 0.5-1% only even time deposit are within that small range.


That is why we have some alternative vehicles or funds where we can put money to give us back money. Remember the definition investment is a set aside money that will give you back money. That is why if you read my post about how I divide my earnings into 6 funds one of them is Investment Fund. We have to set aside money for this purpose.


Now let’s focus on investments. I will discuss some investment vehicles and how does these investments give back money.


Many say put it in small business like a computer shop, a taco shack, or a small food cart. Yes this is a good step to becoming into an entrepreneur but if you are inexperience and your funds are limited you might not be able to start it. So while accumulating enough money for the startup engage yourself in learning how such small business operate. Look at established small businesses around you and learn how they started, how they struggled and how they became and continually be successful amidst the economic slowdown. Business gives us back profit. What we can do with the profit is either to re-invest it to the small business, set it aside for another venture, or save it in a savings account for emergencies.


Some banks now offer what we call Unit Investment Trust Fund or UITF. The amount needed to invest in a UITF ranges from 10,000 to 100,000 pesos and has various holding period. UITF are investment funds, not a deposit that is why it is not covered by PDIC insurance, return depends on the performance of the stock these funds are invested. This is a way which you indirectly invest in stocks. You get what these funds earn.


Stocks are still one of the best investments. We earn either through dividends or price appreciation. But the problem is people wanted to profit right away. In times like these the best way to invest is to buy stocks of great companies at the lowest possible price and hold them until their price rise to about 30-100% of their price today. It may take long let say 6 months to 5 years waiting period and people always pull out their investments when their stocks are down and so they suffer the loss.


I am not saying invest now right away. Always make it a golden rule to know where you are putting your money. Ask but ask the right person. Ask people who did it and made money and still make money or still not pulling their investments at this very time of global economic crisis. It only means they know something that others don't know that is why they are still holding onto their investments even if price of their stocks went down up to 20-50%.


Also always remember to invest at your own risk. Investing is not a gamble; it is more of a discipline to be learned. That is the big difference between the true rich and the show off rich people. Find a truly rich person and learn from them. Bo Sanchez calls them "mentors', Kiyosaki call them "Rich Dad", and other people call them their "Idol". Go out and seek these people. Listen to them and learn. Apply what you learn from them in small scale and little by little make it to the big deal. If at first you failed it is good that you only use a small amount of your hard earned money and the bonus is you learned something out of that misfortune.


Life is a learning process and mistakes are part of it. So if you made a mistake don't worry as long as you learn something out of it.


So are you investing at this time of crisis? Well it's your call, it's up to you.

source: http://exploringthemind.com

Investing word of the day: Value Investing

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source: http://www.schloss-value-investing.com

I have been writing about this term just like in my post Stock Trading vs. Stock Investing and it is related to my post Investing word of the day: Market Price

Lets get a formal definition of these term from Investopedia.com

The strategy of selecting stocks that trade for less than their intrinsic values. 

Also I have been discussing intrinsic value in conjunction with value investing. Intrinsic value is the actual value of the stock after considering current results and future earnings and valuable events that will benefit the company and will make the company profitable in the near future.  

Now do you see why the likes of Warren Buffett take advantage when stocks of great companies like his very own Berkshire Hathaway Inc. (BRK/A) which currently trades at $110,300 per share buy when the market price of such stock goes below its intrinsic value?

source: www.bloomberg.com

In times like this Value investing is one of the best strategy one can employ. Yes the stocks are low so low that your regular monthly savings of 5,000 pesos can now buy 2 or more lots of stocks as compared before. It is a way of positioning one's self before the rise of such great stocks. Though it may take some time before these great stocks shine, their intrinsic values cant be ignored. 

Once these stocks pick up and rises traders will be running after it hoping to ride it but as for those who have purchased it when it was still so low we are seeing a 2, 3, 4, or even a 5 bagger profit on such stocks.

Starting early

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source: http://economictimes.indiatimes.com

Remember our generation?

For my friends out there who is within my age group do you remember when our parents ask you to save some of our allowance and deposit it in a bank? That was our generation, the saving generation. I remember my dad opening an account for me and my siblings and deposited 50 pesos(yeah back then that amount still has a value but now its just plain 50 pesos).

http://www.bpidirect.com/download

But why did our parents did such. To tell you the truth I don't really remember what happen to that account. The very first bank account which I really open for my own was with BPI when I was in college to handle the money my parents sent me for my education in Manila. For most of us our parents are from the provinces and the common notion to gain financial freedom is through savings which was still good at that time. When you are in a rural area savings are good emergency funds that you can pull out in case of emergency. But times has already changed.

Remember my post about how I allocated my salary to six funds?(click here to read that post) Yup these times ask for such action. It is not enough for us to save but we should as well set aside money for emergency, for investments, and other bunch of funds or baskets or envelopes if that is how you do your budget to ensure that when such is needed we can really pull out something.

That is why it is wise to start while young. 

Is it too late for us? I wouldn't say that it is too late but rather let us not waste time while we are at it. At the same time if you are a parent as well it would be nice if you can start your kids not only savings but also investing.  This morning I was cleaning some parts of our apartment's backyard where short grasses have grown. Some are easy to pull out  but some required my 100% strength to pull out. As I was doing manual labor I realize that the longer or deep the roots are the harder it is to pull. 

Why don't we make sure that the next generation, that is our kids, will have deep roots in savings and investing. Now most kids are more prone to materialistic lifestyle which they actually acquired from us. 

Why do you expect a child to save when you yourselves can't. Just like the old TV commercial that says "anuman ang ginagawa ng matatanda; ginagaya ng mga bata" (whatever adults do kids follow)something like that. 

It is a sad truth. We complain why kids today are so unruly, spends a lot, and into such profanity at an early age but in reality what we see is a reflection of ourselves. What you and I see is what we are in compressed form. 

So how are we going to correct this?

http://www.getxbox360.com/

Start early. There is still time. If you have a credit card debt, cut your credit card and stop buying unnecessary things. Little by little pay your debt and simplify your lifestyle. If you want your kid to stop bugging you buying the latest PSP or XBox you yourselves should stop buying new cellular phone every other two weeks. If you want your kids to save up only go once a month to your favorite resto which you usually go to for dinner every other day.

Start small, think big. Start early.

It doesn't have to be a sudden and major change because when you do that you will experience withdrawal syndrome. Cut your spending little by little.

I remember a story of a former alcoholic who nearly  lost his family. One day it just came to a point where he was so drunk that he didn't recognize his wife and kids when he went home. He hurt them. After the effects of the alcohol subsided he realize what he had done and wanted to change. He seek a friend's help who is also priest. His friend told him to spend a week with him. After talking to his wife and kids he bade farewell and spend the week with his friend.

First day was a shocker. When he opened his friend's refrigerator it was full of beer from the freezer to the vegetable drawer. Imagine how he was surprised(probably his friend is also alcoholic). But then his friend told him to grab as much as he can. He was hesitant at first but he got one. After that he accompanied his friend on his priestly work. 

source: http://www.myspaceantics.com

In the evening after dinner he ask his friend about the refrigerator full of beer. His friend told him drink as much as you can today but tomorrow and there after you take out one bottle until you finish all. With that he said okay and did so.

After a few days he started to noticed something. Since he has taken out one bottle every other day his craving for alcohol seems to dwindle down until he can manage to live a day with just one bottle. That is the time he realize his friend's point. Human nature dictates that it holds on to what is already established. That is why he has to take out that thinking or psychology little by little until he it is taken out of one's system.

Sorry for the long story but lets apply this to our saving and investing. Most of the people I meet who have known about my investing venture would ask "how much have you earn now?" expecting me to tell them I earn half a million pesos in six months. It could be possible if I am trading and speculating and if I have a chunk of capital to do so. But I opted to invest and trade a small portion rather than trade and speculate. Because when I trade and when the stock market is down surely I will get a heart attack.

That is why start early so that you can start at small amounts. When you add all this small savings and invest them in a long period this small amounts multiply. They don't grow linear but rather exponential because of compounding which according to Albert Einstein is Ninth Wonder of the World.

source: http://mariosingh.com

Start early; if you are at my age it is not too late but you have to start right away. If you are a parent teach your kids savings and investment. Teach them that when they own a stock they are part owner of the company or if they put their money in a mutual fund a portion of that fund's earnings goes to their investments.

Again I say, START EARLY!!! 

Going Fundamental: Balance Sheet what?

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source: http://live.regnumchristi.org

I know you might ask that to me. So I might as well dedicate a post regarding this document which usually fits in a piece of paper but has a very very important information about the company you might be thinking to invest in.

Balance Sheet is one of the set of Financial Statements I discussed in my previous post What are Financial Statements?

In order for us to fully understand the value of information we get in a Balance Sheet let me share with an equation called the Balance Sheet Equation:

Basically the above equation tells us about Balance Sheet. A Balance Sheet is a list of what the company owns, owes, and the net balance which it could claim as the real value that it owns.

It has 3 components:

ASSET are resources owned by a company and which have future economic value that can be measured and can be expressed in dollars. Examples include cash, investments, accounts receivable, inventory, supplies, land, buildings,equipment, and vehicles.

LIABILITY are obligations of a company or organization. Amounts owed to lenders and suppliers. Liabilities often have the word "payable" in the account title. Liabilities also include amounts received in advance for a future sale or for a future service to be performed

CAPITAL/EQUITY is the net amount invested by the owners or the amount that is attributable to the owners or in other words the owners' part in the whole company.

source: http://accountingquickbooksexperiences.blogspot.com/

Now why do we have to know these things about company?

One thing an investor needs to know using these information is the ability of the company to continue doing business which accountants term as "GOING CONCERN". No sane investor would put his or her money on a company that has no certainty of doing further business. If company has no capability to continue doing business it follows that its ability to generate income is already questionable.

Assets and Liabilities are further sub-divided to current and non-current(sometimes it is called long term). These sub-division allows us to compute ratios that will help us evaluate the company's ability to stay afloat in the short run(basically within a year) and its ability to further expand.


Some ratios derived from the Balance Sheet are the following:

Current Ratio is computed by dividing Current Assets by Current Liabilities. It indicates the capability of the company to pay currently maturing liabilities. 

Debt to Equity Ratio which is computed by dividing Liabilities by Equity indicates the leverage level of the company. A company with a high Debt-Equity Ratio is high risk because it shows that the company is more of owned by lenders rather than investors. It also post a risk of insolvency because the company is heavily indebted. 

Weakening the weak

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source: www.money.cnn.com

If you are reading The Millionaire Next Door by Thomas Stanley and William Danko(I am in the last few pages) this phrase might be familiar to you.

http://www.fotosearch.com

The chapter that brought out this phrase is about outpatient care of adult children of the affluent. Back in the Philippines if one is born rich or with a silver spoon we say they are lucky. The fact is there are a few lucky born rich kids who are able to stand on their own. Most would likely be under the roof of their parents even after they finish graduate school. 

Weakening the weak means instead of strengthening somebody by helping out by way of shouldering their first rental by the time they live on their own or continually giving money even if they already have their own family they instead grow dependent on that support which they expect to come. It is like your mother giving you money even if you are already working thus it creates that thinking of yours that it is okay to not save up because financial help is always accessible.

Bible quote of the Day: Matthew 13:44-52

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sources: http://commonmansbiblejourney.wordpress.com and http://list-of-birthstones.com

Jesus said to his disciples: “The kingdom of heaven is like a treasure buried in a field, which a person finds and hides again, and out of joy goes and sells all that he has and buys that field. 

Again, the kingdom of heaven is like a merchant searching for fine pearls.When he finds a pearl of great price, he goes and sells all that he has and buys it. 

Again, the kingdom of heaven is like a net thrown into the sea, which collects fish of every kind. When it is full they haul it ashore and sit down to put what is good into buckets. What is bad they throw away. Thus it will be at the end of the age. The angels will go out and separate the wicked from the righteous and throw them into the fiery furnace, where there will be wailing and grinding of teeth. 

Do you understand all these things?” They answered, “Yes.” And he replied, “Then every scribe who has been instructed in the kingdom of heaven is like the head of a household who brings from his storeroom both the new and the old.”

The gospel today talks about Value. What for you is valuable?

In stock investing we look for stocks of value by using Fundamental analysis. We research and study companies who has potential to be of worth in the coming months or years. 

But far more than knowing the value most people forget that when Value is being sought after one has to make the same amount or maybe near the same amount of sacrifice to obtain such valuable item which in case of the stock market is the stocks.

Far beyond the stock market what are other things valuable that you will sacrifice anything to obtain it? Probably your family, your wife, your work, your house, or maybe your collection. In doing so you on other hand sacrifice something to keep such valuable things that you posses and at times you have to choose because one thing is more valuable than the other like sacrificing your barkada nights to be with your wife, or sacrificing a out of town trip with your college friends to support your childs basketball game.

We have different things we value, we also have different standards when deciding which is valuable. But at the end of the day we must ponder upon if we have been valuable to others. God sees us valuable that He is able to sacrifice His son for us. 

Often times we forget this. There are times that God knocks on our hearts for a charitable work but instead say no to Him because we have been saving up money for that new phone, or we have set that date for your Boracay getaway, or maybe Harry Potter's last movie is out and you want to see it.

P.S. Would like to invite you for something that you might be able to share a little bit of your time, or your blessings, or your skills. There is a GK Build at Bulaklakan Quezon City this coming Sunday, July 31. For more details you can check my blog post at Share Your Helping Hand.

Zombieland attitude in investing

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Have you ever seen the movie Zombieland? 

Just watched it in my laptop awhile ago and it made me laugh. But along the movie if you were still able to catch it while laughing and freaking out at the same time on the chasing zombies I think you have the investor attitude.

Remember the rules? 

source: http://rasjacobson.wordpress.com/

Yup Ohio has a list of rules. Rule 1 and 2 are always mentioned. Rule 1 is Cardio while rule 2 is Double tap. How are they connected to investing you ask? Cardio means having the stamina to continuously run. In the world of investing you can't stop. You have to be on your toes because everybody is running thus you need a good cardio to last it. 

Double tap means being sure. Don't just check it once, check it twice or even thrice as long as you are sure of your buys or sell decisions.

How about rule 22: When in doubt, know your way out. 

 source: http://artzthings.com

In technical lingo set your cut loss price. Often times we are trapped in our wrong buys  and hard headed as we are we keep on holding that is why one should have an exit plan. A stock's price may be down but according to your analysis it would bounce back but for how long will it stay there? That is where you have to set that line called "cut loss" so that instead of losing you can divert your funds  to a better stock and then go back if the situation is already trending up to your expectations.

source: http://www.polyvore.com

Also in stock investing you must always "Limber up" that is rule number 18. You might need to make some small stretching to tackle the task at hand. Planning when to enter and exit and making necessary other action plans to pursue your target price. You could test it first by buying small shares then jumping into another similar shares before you finally do what you have been cooking up in your brain.

And lastly the best of the rules, rule number 32: Enjoy the little things. 

source: http://stores.ebay.com/tshirtbordello

Investing can be so exciting and sometimes so depressing. To keep you sane celebrate in the most simplest way to give yourself that feel good experience like eating a twinkie.

 

 source: http://iareawesomeness.wordpress.com

As my stock investor friends will say "pa-cheese burger ka naman" (treat as with cheese burger). Be happy and be victorious with the small things like a gallon of Selecta ice cream Ube flavor(Purple Yam my favorite) for  your family, a pizza with your friends, or a movie date with your special someone. 

So keep your eye open and be alert for you don't know when will a zombie in the backseat attacked you, this is rule number 31 which only means be ready for the least expected.

Using Bloomberg.com for your stock charts and info need

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Just discovered this lately. We can use www.bloomberg.com to check on PSE listed stock.

Juts like Reuters.com it has some information a stock investor like you and me need in deciding which stocks to buy. 

Go to www.bloomberg.com and in the search button type in the stock code of the company you are interested in and add a colon followed by pm

 

 source: www.bloomberg.com

You can customized the chart by adding overlays and indicators like MACD, Stochastic, Relative Strength Index(RSI) and compare such stock to other stock of interest or stock of same industry by adding the stock code plus :PM in the add bar in the stock chart section.

PSE's trading threshold in the New Trading System

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                                                        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.

Citiseconline Platform 1: Stock Qoute

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     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

Who are Stockbrokers?

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First things first. One cannot directly invest in the stock market. One has to have a stockbroker accredited by SEC and PSE. The stockbroker's role is more like a middle man between the seller and buyer of a stock or other debt or equity investment. These persons or corporations need to be accredited by regulatory bodies like SEC and PSE to ensure that the trading of stocks are not fraudulent and in accordance to the rules set by laws.

Stock broking is a matter of trust and financial responsibility. The qualities and credentials of the broker needs to be investigated properly due to the fact that you, the investor, would be handing over hard earned money at the hands of the stockbroker. An ideal stockbroker should provide a clear schedule of investment and the know-how to the investor to build an investment portfolio gradually.

A good stockbroker has a definite plan and does research carefully. To take appropriate decisions about stock market investing is not for the chicken- hearted.(odd phrase) An ideal trader does not feel nervous about the losses. He is the master in money-management techniques. As they say you can be a millionaire in a second and a poor man as well. A good stockbroker do two analysis of stocks, Fundamental and Technical Analysis. The first is an analysis of the company's financial standing and performance based on financial statements and reports. This includes various ratio analysis and turnover analysis that measures the company's stability and profitability in the long run.

Technical analysis on the other hand deals more on the trend analysis of the stock. The market changes due to changing forces and also based on demand and supply. A company might have a good financial standing but the buying market has different feel about it thus the trend on this particular company's stock might be on the upside or the downside. Stock values changes rapidly depending on how many are interested to buy or how many are selling. Knowing the trend gives a stockbroker knowledge when to buy and when to sell stocks to get the best out of it.

The advent of technology has made investing simple. Online stockbrokers who are accredited by the PSE can execute one's order upon keying it online. Security wise these online brokers wont be granted license without showing their ability to secure the investors information. Click here to know some of PSE's online stock brokers.

How much do you have now?

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One question you may ask me "I don't have any money, how can I invest?"

The people today has this mentality problem. People's purchasing power is  reduced to their salary and that they have been practicing what most call "Scarcity Mentality". In simple language people believed they cannot buy or acquire things or afford things because they think they don't have anything and that they look at what they have right now as very small. There is a bad effect of Scarcity Mentality. Whenever there is a sale or there is free item that goes with the item they wanted to buy they jump on to purchase it thinking that they got a good deal. The tendency on this is that one becomes an impulsive buyer. There is nothing wrong in searching or buying specially when it is on sale only that this becomes a habit. One may think that when there is a sale he or she must buy. Wise buying is not always buying because it is on sale; in the end one ends to be broke and from there one may brand themselves as poor and thus your mind programs you that you don't have any money to invest.

Number one rule in investing is investigate. Never ever jump into something that you don't know. Today's world has many means of getting information. We have the internet and print media to learn about where to best put our money. Second is invest only your excess. Many people end up losing all they have because they have invested all they have on stocks then suddenly lost everything due to financial crisis. Always only invest your excess.

So the question still stands, how much do you have right now? Many people think that you need a lot of money to invest in stocks but that is not correct. If you look around and check the newspapers or the investment news channels like CNBC you will notice that stocks are in the range of less than a dollar or peso to hundreds or thousands. With this in mind one can buy stocks base on how that particular market's rules. Some are sold in board lot just like in the Philippine Stock exchange where board lots ranges from 10 - 1000 depending on the trading value. So for example a stock trading at Php 50.00 may have a board lot of 100 making the total required investment to be around Php 5,000.00 only. Off course you have to open an account with a broker which requires a deposit of around Php 25,000.00 and up depending on what acount you are opening.

With that in mind you can see how much you are saving. I know you will say I don't even have left after I pay my bills. The problem with us is that we contend ourselves with whatever is left on our salary, we our satisfy first bills rather than satisfying pocket. I suggest you do the reverse. It seems impossible but when there is a will there is a way. 

In order to do this one must first look at his spending habits. One must segregate what are needs and wants. By doing this one can identify which should be given priority. Do this on a daily basis. Everytime you pull your wallet to make a purchase think if it is a need or want. In the process you will be able to control how you spend on the need or want. Master this until it comes to the point that you will not spend for wants anymore and from there you can start building your savings. Make a note on your savings. Writing your savings entices you to save more. Then after making a considerable savings ask yourself again if how much do you have now. Remember the amounts a I gave you  that is Php 25,000.00 and the stock value ranges of Php 1.00 - 50.00. From here you can visualize how near you are and that you have a money to invest in stocks or any other investment