I've been so out of touch with the local stock market and more so with my blog for quite some time. There were some opportunities in the stock market but slowly, I am realizing that if you don't have the time, you just entrust your money to fund managers via mutual funds.
However, greed is preventing me from going the route of investing in mutual funds. Hehe.
I know I've got lots of things and ideas I'd like to share about personal finance; unfortunately, as I've come to realize, interest and time is usually inversely proportional.
On top of this, when I started this blog, I failed to plan ahead. I didn't come up with a list of topics to talk about. So there were periods of drought, as was the previous month/s. I hope that stops.
I've been out of touch that I didn't know (nor feel) the secondary offering of SMC. Prior to its closing, it was trading between 150 to 170. Since it was offered at only 110, it closed down today at 109.50. At one point it was at the low of 105.70. I do have faith that the share price will make a strong rebound; but, it will take some time, given the volume of shares that just made a tsunami in the market.
I also had plans of taking positions in LC (Lepanto, a mining stock) with the strategy of buying and forgetting all about it. I just didn't do it yet due to one, lack of funds hehe; and, two, I'm waiting for a good entry point (will I still get it?). I'm hoping it would.
I fear of recommending anything for the mere fact that I have not been actively monitoring stocks for some time now. Couple that with the lack of a good charting software, I'd be wary of touching anything that I don't plan on holding for a long time. So basura stocks, it may be time to say good bye and not good buy.
It's funny, during the first quarter, I was waiting for the market to rebound. Now, I'm waiting for the market to correct. Every time I'm about to make a decision, the market isn't cooperating. Mutual funds, here I come?
If there's anything I'd like to impart, investing in mutual funds is the easiest boring way to earn passive income.
See you soon and do constantly drop by. I hope your patience doesn't wear thin. =p
Showing posts with label Guerilla Investing on Stock Trading. Show all posts
Showing posts with label Guerilla Investing on Stock Trading. Show all posts
Thursday, May 5, 2011
Tuesday, February 8, 2011
Down..on your luck?
The market now has a direction: Down.
Last year, the PSEi went up by more than 30%. Now, we're down by about 10% already, if I remember the news correctly.
In between there were a lot of superstar stocks like Aboitiz Power (AP), Semirara (SCC), DMCI (DMC), among others, that went up more than 50%.
I don't know how many were able to enjoy the ride of the aforementioned stocks. If you're one of them, then congratulations to you!
While experts and pundits will say that stock selection is a skill, you still need an element of luck on your side.
Few - if not none - business books will tell you that luck is also needed to be successful in business. I think that applies also to stock trading (and not investing).
People of course will question the credibility of a business book if luck was somehow placed in the equation of success.
I say that luck is important because I've had experiences in the past when I bought a stock and then it just goes up. I've also had experiences counter to that of course, i.e. for no reason it goes down. And when I say "going up" or "going down", it's more than 10%.
Mostly these are small to medium companies that get jockeyed for what reason, I don't know.
Of course, this is not to say that you if you are "unlucky" in stocks you should choose to avoid it completely. By unlucky, I mean if you have only made money 1 out of 10 trades you've made.
You don't have to stress yourself by choosing what to buy. Go to a professional and get yourself a mutual fund or UITF.
The commission, fees, charges that you get billed for are well worth the stress.
Until the next post!
Last year, the PSEi went up by more than 30%. Now, we're down by about 10% already, if I remember the news correctly.
In between there were a lot of superstar stocks like Aboitiz Power (AP), Semirara (SCC), DMCI (DMC), among others, that went up more than 50%.
I don't know how many were able to enjoy the ride of the aforementioned stocks. If you're one of them, then congratulations to you!
While experts and pundits will say that stock selection is a skill, you still need an element of luck on your side.
Few - if not none - business books will tell you that luck is also needed to be successful in business. I think that applies also to stock trading (and not investing).
People of course will question the credibility of a business book if luck was somehow placed in the equation of success.
I say that luck is important because I've had experiences in the past when I bought a stock and then it just goes up. I've also had experiences counter to that of course, i.e. for no reason it goes down. And when I say "going up" or "going down", it's more than 10%.
Mostly these are small to medium companies that get jockeyed for what reason, I don't know.
Of course, this is not to say that you if you are "unlucky" in stocks you should choose to avoid it completely. By unlucky, I mean if you have only made money 1 out of 10 trades you've made.
You don't have to stress yourself by choosing what to buy. Go to a professional and get yourself a mutual fund or UITF.
The commission, fees, charges that you get billed for are well worth the stress.
Until the next post!
Wednesday, October 20, 2010
Mine's Here!
Dear readers, thank you for being patient. As promised last week, I am back with a new post. I'll just make some stock market commentaries, a short review of my stock trade forecast, and another long term stock you may wish to add to your portfolio.
I hope stock market enthusiasts have made money in the recent weeks. For the others who don't know or care about the stock market, maybe it's about time you did. I'm not surprised that most haven't.
Continue stocking up on the stock market...
Based on this news piece from the Inquirer,
"THE Philippine Stock Exchange estimates that less than 1 percent of the Philippine population invest in the stock market, but exactly how many people are we talking about?
Based on the latest headcount, that figure may be about 400,000—slightly less than the holiday foot traffic at SM’s most populous malls. This number covers the active retail investors, defined conservatively as those who trade at least once a year.
By demographics, local stock market investors usually are aged 30 to 50, majority of whom are male. About 35 percent of them are Chinoys, according to the PSE. "
And, if you're worried that maybe it's too late to enter the stock market, perhaps the last paragraph of Dean Somera's post would calm your nerves. If you don't want to go to the link anymore, basically this is the meat of the entire article -
"With the oversubscription of the CEB IPO and very positive public reaction to the SMDC SRO, market outlook is encouraging. And, if the market bulletin of one stockbrokerage house is correct when it said that current “foreign participation is only about P50 billion monthly versus the P100 billion monthly in the 2007 rally,” it seems that there are more money available to bolster current market momentum and direction."
With regards the CEB IPO, according to a news article in Inquirer, the local portion of the offering were "all sold". Some more "praise release", I suppose -
"This will be the largest IPO by a low-cost carrier in the Asia-Pacific to date. Its parent firm JG Summit expects to raise as much as P23.3 billion ($539 million), without having to exercise an option to sell even more shares.
The IPO is one of the largest ever conducted in the Philippines, and the largest Philippine IPO in US dollar terms."
Now, the question is, what will these IPO takers do on listing date? Sell the shares for a quick buck or hold it for the long term? My oh my, Php 23 Billion, then there's that transaction between Mang Inasal and Jollibee worth Php 3 Billion. These piles of cash should go somewhere!
I sure hope I get to be the kind of entrepreneur Mr. Sia is.
Reviewing my recommendations...
These recommendations were made September 24.
1. Atlas doing a correction - I was right. What I was wrong with was that after the correction, it went even higher to hit 18.32. Then again, I did say that,
"But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50."
2. DGTL - I was right that you should not choose DGTL. This stock tanked after a gap up...
3. APC - And I was wrong with APC, as it also tanked on Monday, September 27. It opened higher than the Friday's close only to close lower than Friday. Then a week later, it just broke out to 0.86... only to fall back down to 0.76.
4. MPI - It didn't correct. I was anticipating a correction but it never made one. So if you're a long position trader, then I'm sure you're (still) happy with this stock.
The market didn't correct in the one to two weeks period I said after the Sept 24 post but this week, the market has taken a breather. This is a good respite so that people "late in the game" can still come in to participate in the stock market. The correction has been slow in force, and I suppose that's a good sign, rather than a one time steep correction.
Long term stock
I've said that I look at holding long term growth stocks based on common sense and reading the news. These are the primary reasons why I chose Atlas and Metro Pacific.
One stock that has caught my attention is DGTL. I don't know much about fundamental analysis so I won't try to be a genius and interpret their FS. What I know is that part of their business is the Sun Cellular brand - which recently claimed that they already led the other cellular networks in postpaid subscribers.
If you pass by any Sun Shop, you'll note that there are many people queuing in line to transact business, be it to pay bills or to apply for a postpaid line. With just a Php 250.00 monthly bill, anyone can get a postpaid line from them.
The story for DGTL at least for me is something like Cebu Pacific. Cebu Pacific has certainly come a long way. It took years to build but their business has certainly paid handsomely for its principals. Similarly, Sun Cellular was once a small player in the local duopoly of Globe and Smart. Look at where it is today and you'll know that in 1 to 2 years time, DGTL may fly the way PLTL did in the early years of this century.
The two problems with DGTL is
(1) their landline business, which probably pales in comparison to PLDT. Nonetheless, their venture into broadband internet should provide ample opportunities for growth.
(2) playing in a mature industry - the telco industry. The only thing these guys are doing is eating away at each other's market share. I doubt there's much growth in this sector, compared to the mining industry.
Some dark horses
GLO, a battered telco stock has recovered much from its low of 773, more or less, this year. A part of me is telling me that GLO may come out as a surprise by 2011. GLO is a dividend stock and is also an Ayala company. Ayala companies are known to give value to shareholders. They recently announced a share buy back program for AC.
Why GLO? Have you seen the number of people flocking to Globe business centers? Their aggressive marketing seems to be paying off. A company that invests in marketing will certainly see results. I think that they have a chance at eating at Smart's share of the postpaid business (and not Sun).
Another dark horse is ORE, which is why my title is "mine's here". M-ORE on this in the next post. ORE, unlike GLO, is a purely speculative play. If you consider Atlas to be speculative, then ORE may already border on gambling for you.
Until then!
I hope stock market enthusiasts have made money in the recent weeks. For the others who don't know or care about the stock market, maybe it's about time you did. I'm not surprised that most haven't.
Continue stocking up on the stock market...
Based on this news piece from the Inquirer,
"THE Philippine Stock Exchange estimates that less than 1 percent of the Philippine population invest in the stock market, but exactly how many people are we talking about?
Based on the latest headcount, that figure may be about 400,000—slightly less than the holiday foot traffic at SM’s most populous malls. This number covers the active retail investors, defined conservatively as those who trade at least once a year.
By demographics, local stock market investors usually are aged 30 to 50, majority of whom are male. About 35 percent of them are Chinoys, according to the PSE. "
And, if you're worried that maybe it's too late to enter the stock market, perhaps the last paragraph of Dean Somera's post would calm your nerves. If you don't want to go to the link anymore, basically this is the meat of the entire article -
"With the oversubscription of the CEB IPO and very positive public reaction to the SMDC SRO, market outlook is encouraging. And, if the market bulletin of one stockbrokerage house is correct when it said that current “foreign participation is only about P50 billion monthly versus the P100 billion monthly in the 2007 rally,” it seems that there are more money available to bolster current market momentum and direction."
With regards the CEB IPO, according to a news article in Inquirer, the local portion of the offering were "all sold". Some more "praise release", I suppose -
"This will be the largest IPO by a low-cost carrier in the Asia-Pacific to date. Its parent firm JG Summit expects to raise as much as P23.3 billion ($539 million), without having to exercise an option to sell even more shares.
The IPO is one of the largest ever conducted in the Philippines, and the largest Philippine IPO in US dollar terms."
Now, the question is, what will these IPO takers do on listing date? Sell the shares for a quick buck or hold it for the long term? My oh my, Php 23 Billion, then there's that transaction between Mang Inasal and Jollibee worth Php 3 Billion. These piles of cash should go somewhere!
I sure hope I get to be the kind of entrepreneur Mr. Sia is.
Reviewing my recommendations...
These recommendations were made September 24.
1. Atlas doing a correction - I was right. What I was wrong with was that after the correction, it went even higher to hit 18.32. Then again, I did say that,
"But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50."
2. DGTL - I was right that you should not choose DGTL. This stock tanked after a gap up...
3. APC - And I was wrong with APC, as it also tanked on Monday, September 27. It opened higher than the Friday's close only to close lower than Friday. Then a week later, it just broke out to 0.86... only to fall back down to 0.76.
4. MPI - It didn't correct. I was anticipating a correction but it never made one. So if you're a long position trader, then I'm sure you're (still) happy with this stock.
The market didn't correct in the one to two weeks period I said after the Sept 24 post but this week, the market has taken a breather. This is a good respite so that people "late in the game" can still come in to participate in the stock market. The correction has been slow in force, and I suppose that's a good sign, rather than a one time steep correction.
Long term stock
I've said that I look at holding long term growth stocks based on common sense and reading the news. These are the primary reasons why I chose Atlas and Metro Pacific.
One stock that has caught my attention is DGTL. I don't know much about fundamental analysis so I won't try to be a genius and interpret their FS. What I know is that part of their business is the Sun Cellular brand - which recently claimed that they already led the other cellular networks in postpaid subscribers.
If you pass by any Sun Shop, you'll note that there are many people queuing in line to transact business, be it to pay bills or to apply for a postpaid line. With just a Php 250.00 monthly bill, anyone can get a postpaid line from them.
The story for DGTL at least for me is something like Cebu Pacific. Cebu Pacific has certainly come a long way. It took years to build but their business has certainly paid handsomely for its principals. Similarly, Sun Cellular was once a small player in the local duopoly of Globe and Smart. Look at where it is today and you'll know that in 1 to 2 years time, DGTL may fly the way PLTL did in the early years of this century.
The two problems with DGTL is
(1) their landline business, which probably pales in comparison to PLDT. Nonetheless, their venture into broadband internet should provide ample opportunities for growth.
(2) playing in a mature industry - the telco industry. The only thing these guys are doing is eating away at each other's market share. I doubt there's much growth in this sector, compared to the mining industry.
Some dark horses
GLO, a battered telco stock has recovered much from its low of 773, more or less, this year. A part of me is telling me that GLO may come out as a surprise by 2011. GLO is a dividend stock and is also an Ayala company. Ayala companies are known to give value to shareholders. They recently announced a share buy back program for AC.
Why GLO? Have you seen the number of people flocking to Globe business centers? Their aggressive marketing seems to be paying off. A company that invests in marketing will certainly see results. I think that they have a chance at eating at Smart's share of the postpaid business (and not Sun).
Another dark horse is ORE, which is why my title is "mine's here". M-ORE on this in the next post. ORE, unlike GLO, is a purely speculative play. If you consider Atlas to be speculative, then ORE may already border on gambling for you.
Until then!
Friday, September 24, 2010
Stock up on Stocks!
My Dear Guerilla Investing readers, thank you for being patient and coming by every so often. I've been busy with my 8-5 that I just couldn't find time to blog the past two weeks. For this week's post, I'll take a break first from my post about using credit cards to comment about the recent activity in the stock market.
I'm happy and surprised about the way the stock market has been performing since my last blog post. It's made a new historical high already and everybody seems to be in euphoria expecting the index to track higher and higher.
A local brokerage report anticipates the PSEi to go to about 5,100 by 2011, then there's another report by a foreign brokerage house that the PSEi will go beyond that to about 6,000 or more.
In fact, as a testament to the growing interest in the local stock market, Credit Suisse will open business here, to quote an Inquirer news item -
"Zurich-based global financial services group Credit Suisse is setting up a stock brokerage in the Philippines, reflecting the resurgence of foreign investor interest in local equities, which are now trading at record highs."
Exciting and interesting times are indeed ahead.
You can bet that a lot of the financial institutions - banks, insurance companies, brokerages - will earn big bucks in the year to come as interest by the investing public gains momentum. The momentum will surely boost the financial houses' trading gains.
Local Flavor
I've always maintained that there are now more local investors compared to years past; and, while foreign "hot money" is needed to elevate the stock market and perk up trading volume, we don't have to rely on them as much as we had to in the past.
Check out this piece of news -
Since the start of the year, the PSEi had gained by another 1,000.64 points or about 33 percent, making it one of the best performing bourses in the region. In 2009, the PSEi rose by 63 percent but mostly on thinner trading dominated by local investors.
While the volume was thin in 2009, our index still rose 63% - mostly due to local investors. Now imagine, with hot money flowing into the country then most likely the PSEi will make history again and again in the coming months, if not years. With the hot money coming in, the peso will also most likely appreciate.
This scenario is similar to the years 2006 - 2007, in my opinion.
Don't be too greedy
Right now, the market should be poised to correct.
All the index bellwether stocks have already gone up a mile and the second liners have also ran their course. The basura stocks are gaining momentum, which to my memory usually precedes a market correction.
Most of the counters gaining recently were the mining stocks, with one of my recommended stocks - Atlas Mining - leading the way (prior to Lepanto, that is). Even some mining stocks with no "stories to tell" (at least to me) went up like CPM, NI, and ORE. PX has since sputtered a bit after hitting a 2010 high of 17.
Atlas Mining may also correct in the week ahead. While I've recommended that this is a long term hold, you may do well to join the profit taking for your trading positions, if any. But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50.
My other recommended stock may also be teetering on the brink of a major correction. I'm pointing to Metro Pacific or MPI. I'm closely monitoring it.
What I missed though was the major major (hehe) run-up of Lepanto Mining. I really felt bad that I was not able to join in, but I felt better when I read Mr. Gus Cosio's blog post last September 22, and I quote -
"Unfortunately, I was not able to take advantage of the big move in LC. I don’t mind because I do not flatter myself that I can spot every stock that moves."
I realized that I'm never going to be able to join in all the "gravy trains" of all the stocks. I just have to make sure that I'm able to gain a trading profit and always remember to cut losses, should the case be needed.
Trading Stock Focus
Mining stocks may really be one way to boost your portfolio. A report just came out recently that minerals outputs went up by 50%! Imagine that.
When the blue chips and second liners have made their uptrends , there's bound to be trading opportunities for the smaller stocks. Two stocks I saw that may be good to trade are APC and DGTL. APC suddenly went up near the closing hours for no reason and is pointing to an apparent breakout from its recent downtrend.
As my experience tells me, breakouts are always good trading opportunities and usually run their course for 3 days. With Wall Street trekking triple digits this Friday, I'm sure APC will have a follow through buying on Monday. Keep your fingers crossed, mine are.
On to DGTL. DGTL made a nice move on Thursday close. Then followed it up on Friday after news came out with Sun Cellular claiming the lead in postpaid versus giants Globe and Smart. The stock swung wildly, going up and down and up.
I checked the chart today, there's a gap up on Friday. On Monday we will know if DGTL will continue going up, or it was just a one day wonder. Gap ups, as far as I can remember, are a positive sign.
Between APC and DGTL though, I'd choose APC.
Of course, I'm assuming that if you, dear reader, plan to trade any of the two stocks, you have at least three to six months of trading experience.
You need at least some trading experience to know how to time your entry and exit points.
I can't teach you how to time, as I'm still learning the skill as well. It won't be perfect, so don't fret if you don't buy at the lowest price and sell at the highest price. If you do, then chances are, it's greed that's driving your motive.
Some guerilla tips on trading
For those who don't have as much experience, I proffer the following guerilla tips on stock trading -
(1) You don't have to buy the stock at the open. I've noticed that the time between 10AM to 11AM is a window of opportunity to buy a stock at a better price.
(2) Compare the buy up and sell down volume. If there's more sell down, it can mean two things - the insiders don't want it to go up yet; or, it's just a one day wonder. Better choose fear over greed. There'll be other stocks to trade anyways.
(3) Look at the quality of the buyers. Who are the brokerage houses buying? Of course, you will have to expect that if these are small stocks or basura stocks, there will be no foreign stock brokerages buying that stock. Try to know if the brokers are familiar names.
I think I've said too much already. Remember, the market is most likely going to correct soon since the blue chips and second liners have already started tapering off their gains. The second sign is that the small stocks have really gone up so much. I can't point to the exact date of the correction, but it will happen next week or the week after, so tread carefully.
As I always say, appreciate the risk, then appreciate the capital!
I'm happy and surprised about the way the stock market has been performing since my last blog post. It's made a new historical high already and everybody seems to be in euphoria expecting the index to track higher and higher.
A local brokerage report anticipates the PSEi to go to about 5,100 by 2011, then there's another report by a foreign brokerage house that the PSEi will go beyond that to about 6,000 or more.
In fact, as a testament to the growing interest in the local stock market, Credit Suisse will open business here, to quote an Inquirer news item -
"Zurich-based global financial services group Credit Suisse is setting up a stock brokerage in the Philippines, reflecting the resurgence of foreign investor interest in local equities, which are now trading at record highs."
Exciting and interesting times are indeed ahead.
You can bet that a lot of the financial institutions - banks, insurance companies, brokerages - will earn big bucks in the year to come as interest by the investing public gains momentum. The momentum will surely boost the financial houses' trading gains.
Local Flavor
I've always maintained that there are now more local investors compared to years past; and, while foreign "hot money" is needed to elevate the stock market and perk up trading volume, we don't have to rely on them as much as we had to in the past.
Check out this piece of news -
Since the start of the year, the PSEi had gained by another 1,000.64 points or about 33 percent, making it one of the best performing bourses in the region. In 2009, the PSEi rose by 63 percent but mostly on thinner trading dominated by local investors.
While the volume was thin in 2009, our index still rose 63% - mostly due to local investors. Now imagine, with hot money flowing into the country then most likely the PSEi will make history again and again in the coming months, if not years. With the hot money coming in, the peso will also most likely appreciate.
This scenario is similar to the years 2006 - 2007, in my opinion.
Don't be too greedy
Right now, the market should be poised to correct.
All the index bellwether stocks have already gone up a mile and the second liners have also ran their course. The basura stocks are gaining momentum, which to my memory usually precedes a market correction.
Most of the counters gaining recently were the mining stocks, with one of my recommended stocks - Atlas Mining - leading the way (prior to Lepanto, that is). Even some mining stocks with no "stories to tell" (at least to me) went up like CPM, NI, and ORE. PX has since sputtered a bit after hitting a 2010 high of 17.
Atlas Mining may also correct in the week ahead. While I've recommended that this is a long term hold, you may do well to join the profit taking for your trading positions, if any. But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50.
My other recommended stock may also be teetering on the brink of a major correction. I'm pointing to Metro Pacific or MPI. I'm closely monitoring it.
What I missed though was the major major (hehe) run-up of Lepanto Mining. I really felt bad that I was not able to join in, but I felt better when I read Mr. Gus Cosio's blog post last September 22, and I quote -
"Unfortunately, I was not able to take advantage of the big move in LC. I don’t mind because I do not flatter myself that I can spot every stock that moves."
I realized that I'm never going to be able to join in all the "gravy trains" of all the stocks. I just have to make sure that I'm able to gain a trading profit and always remember to cut losses, should the case be needed.
Trading Stock Focus
Mining stocks may really be one way to boost your portfolio. A report just came out recently that minerals outputs went up by 50%! Imagine that.
When the blue chips and second liners have made their uptrends , there's bound to be trading opportunities for the smaller stocks. Two stocks I saw that may be good to trade are APC and DGTL. APC suddenly went up near the closing hours for no reason and is pointing to an apparent breakout from its recent downtrend.
As my experience tells me, breakouts are always good trading opportunities and usually run their course for 3 days. With Wall Street trekking triple digits this Friday, I'm sure APC will have a follow through buying on Monday. Keep your fingers crossed, mine are.
On to DGTL. DGTL made a nice move on Thursday close. Then followed it up on Friday after news came out with Sun Cellular claiming the lead in postpaid versus giants Globe and Smart. The stock swung wildly, going up and down and up.
I checked the chart today, there's a gap up on Friday. On Monday we will know if DGTL will continue going up, or it was just a one day wonder. Gap ups, as far as I can remember, are a positive sign.
Between APC and DGTL though, I'd choose APC.
Of course, I'm assuming that if you, dear reader, plan to trade any of the two stocks, you have at least three to six months of trading experience.
You need at least some trading experience to know how to time your entry and exit points.
I can't teach you how to time, as I'm still learning the skill as well. It won't be perfect, so don't fret if you don't buy at the lowest price and sell at the highest price. If you do, then chances are, it's greed that's driving your motive.
Some guerilla tips on trading
For those who don't have as much experience, I proffer the following guerilla tips on stock trading -
(1) You don't have to buy the stock at the open. I've noticed that the time between 10AM to 11AM is a window of opportunity to buy a stock at a better price.
(2) Compare the buy up and sell down volume. If there's more sell down, it can mean two things - the insiders don't want it to go up yet; or, it's just a one day wonder. Better choose fear over greed. There'll be other stocks to trade anyways.
(3) Look at the quality of the buyers. Who are the brokerage houses buying? Of course, you will have to expect that if these are small stocks or basura stocks, there will be no foreign stock brokerages buying that stock. Try to know if the brokers are familiar names.
I think I've said too much already. Remember, the market is most likely going to correct soon since the blue chips and second liners have already started tapering off their gains. The second sign is that the small stocks have really gone up so much. I can't point to the exact date of the correction, but it will happen next week or the week after, so tread carefully.
As I always say, appreciate the risk, then appreciate the capital!
Friday, August 27, 2010
Outlast... Atlas
Don't try to decipher the title. There's no meaning attached to it.
After saying don't touch Philex, it seems to have bucked its trend, at least temporarily. Volume was quite strong, looking at the chart. It's been going down for almost a year already, with intermittent bear rallies that salvage its share price. I suppose that at 9.25, it had gotten to a more tolerable PE ratio (I don't have it, but I suppose the share price is now closer to it).
So time to buy? Perhaps as a trading buy, yes. I can't point my finger and say, "Oh, PX is going back to 20."
Atlas Mining on the other hand, fell through the 11.00 roof. Tsk tsk.
As a trader, I'm frustrated with how Atlas performed this week.
If for long term holding, the stock should be a good one to hold, of course with one caveat - that they continue to earn money. That's why I said that Atlas should still be considered a speculative buy for the investor. When I said investor, it was someone who took a long term view.
Readers of my blog would know that I differentiate a trader from an investor. Trading is short term; investing is long term.
Trading Atlas?
Given my crude chart courtesy of PSE's website, support for Atlas is at 10.50. I think there may be some trading opportunities for it, so that should be a good entry price next week. The selling pressure should ease and hopefully, the buyers will regain their momentum.
If the PSE wants to attract more traders and investors, they should improve their charting program. I'm sure there are people out there who'd appreciate that.
One of the tools I always look at is the buy up vs. sell down volume. While this is taxing as you have to monitor it daily, it gives you a good grasp of the momentum of the stock. More sellers may mean bearishness, profit taking, etc. I don't buy when there's too many sellers because it means a lack of faith in the stock.
If the stock is continuously being bought up, then by all means join the party!
This style is only applicable to traders who tape read. If you have a day job and can't do that, then at least have a reliable stock broker who can do it for you. Usually, this can happen if your stock broker is also a trader. I'm sure he or she uses this tool too.
News also came out recently about the increased mining output of the Phils. This is certainly good news for the industry. I believe that this is an industry that can provide new avenues for economic growth.
Until the next post!
After saying don't touch Philex, it seems to have bucked its trend, at least temporarily. Volume was quite strong, looking at the chart. It's been going down for almost a year already, with intermittent bear rallies that salvage its share price. I suppose that at 9.25, it had gotten to a more tolerable PE ratio (I don't have it, but I suppose the share price is now closer to it).
So time to buy? Perhaps as a trading buy, yes. I can't point my finger and say, "Oh, PX is going back to 20."
Atlas Mining on the other hand, fell through the 11.00 roof. Tsk tsk.
As a trader, I'm frustrated with how Atlas performed this week.
If for long term holding, the stock should be a good one to hold, of course with one caveat - that they continue to earn money. That's why I said that Atlas should still be considered a speculative buy for the investor. When I said investor, it was someone who took a long term view.
Readers of my blog would know that I differentiate a trader from an investor. Trading is short term; investing is long term.
Trading Atlas?
Given my crude chart courtesy of PSE's website, support for Atlas is at 10.50. I think there may be some trading opportunities for it, so that should be a good entry price next week. The selling pressure should ease and hopefully, the buyers will regain their momentum.
If the PSE wants to attract more traders and investors, they should improve their charting program. I'm sure there are people out there who'd appreciate that.
One of the tools I always look at is the buy up vs. sell down volume. While this is taxing as you have to monitor it daily, it gives you a good grasp of the momentum of the stock. More sellers may mean bearishness, profit taking, etc. I don't buy when there's too many sellers because it means a lack of faith in the stock.
If the stock is continuously being bought up, then by all means join the party!
This style is only applicable to traders who tape read. If you have a day job and can't do that, then at least have a reliable stock broker who can do it for you. Usually, this can happen if your stock broker is also a trader. I'm sure he or she uses this tool too.
News also came out recently about the increased mining output of the Phils. This is certainly good news for the industry. I believe that this is an industry that can provide new avenues for economic growth.
Until the next post!
Friday, August 20, 2010
At last, Atlas!
Dear readers, so sorry for not having been able to post anything for quite some time. I've been stumped at work and just couldn't find time to update my blog. The title of this entry, "At last.." is a sigh of relief that now I'm able to update this blog again.
At last also refers to a recent mining stock that flew, unlike other basura mining stocks which overpromise and underdeliver. Since I love pun, I suppose "At last" was a good word play for Atlas Mining, which in the previous two weeks broke out from its consolidation phase in the 9.6 range to reach a high of 12.20, if I'm looking at the chart of Atlas (Ticker AT) of PSE correctly.
However, the run-up has died down a bit and it's just at 11.12. Running out of breath?
Without over-analyzing the chart, I think a little bit of logic is in order. Atlas Mining had been consolidating, meaning, trading within a range with seemingly no direction, for close two to four months already. Given this, there are people who, in trading parlance are called "weak hands", sell at the first sign of trading profits.
Other than the weak hands, I think there's a need to also coin a new term, "tired hands", which to me means and refers to people who got tired of holding a stuck (as opposed to a stock) and letting go even if the trading profit is downright absurd.
I think that Atlas Mining still has legs to go. They actually reported some good numbers for the first half of this year. Atlas probably won't be covered by the more prominent stock brokerage houses as these would probably go for big names like the Ayalas and Aboitizes of the world. From their press release,
"Atlas Consolidated Mining and Development Corporation (Atlas) is pleased to report a
P460 million net income for the first half of 2010. This result shows significant progress
given the P1,169 million loss incurred at the end of the last fiscal year. The second
quarter net income is also nearly triple the first quarter income of P164 million"
Atlas should be still be treated as a speculative stock with huge growth potential for a risk-appreciative investor's portfolio. However, the entry price can be tricky. At this point, the stock price is well off of its high. Personally, I hope the stock does not fall through the roof of 11.00. If it falls down, then in my belief, the stock has reversed its trend already, and you can buy cheaper, but not necessarily right away. You will have to wait it out. Why?
This week's daily chart looks nasty and next week should be a good proving ground for this, going up? or going down? I don't know. I just hope that the cliche,"history repeats itself" does not hold true. I'm pointing to the fact that late last year, it broke away from a range, zipped to 12, then crashed back to earth. If history repeats itself, then Atlas will go through yet another consolidation phase. Maybe you'd have an early Christmas if you buy Atlas in the 4th quarter. If you're a trader, then wait-and-see would be better.
I'm not flat out recommending this stock as it can just become a stuck again as company performance wise, they have to show more consistency. At least, there's a good story to go around, from a net loss, they're swinging into profit again.
This is unlike another listed mining company, Philex. Philex is a good company but a bad stock to trade. The stock just seems to be dying a slow death in terms of share price. So don't touch it.
I've learned my lessons with most mining and basura stocks. With the stock market going up and up, you're better off trading quality stocks than buying the basuras. I suppose that's why most of the money now are in the second liners like Metro Pacific, Megaworld, etc. However, with the new administration, I hope that the government can work with both the mining companies and the local government so that a mining renaissance can happen here.
After all, the country can't purely rely on BPOs as the growth engine for its economy. Medical tourism and mining should be growth areas in the next 6-12 months.
P.S. I'm glad I recommended Metro Pacific, which to me, is a stock you can hold until you grow old. Again, provided the management team is always competent. I look at Metro Pacific as a stock you buy because of the company and its potential. As most investors say, "buy the company, not the stock." When I recommended it, it was not based on studying their FS nor its chart. It was purely out of common sense. (MPI also has interests in FOUR hospitals)
Sometimes people get lost in the "fundamental analysis" or "technical analysis" of a stock that they forget common sense. Of course, it's also a matter of asking yourself, how long will you hold the stock for?
As we speak, Metro Pacific has a TV commercial in CNBC (or was it Bloomberg? or both?). So watch out as the company draws interest from big foreign brokerage houses. A company with that much marketing muscle presupposes a lot of room for growth in the company's performance.
So until my next post, appreciate the risk, then appreciate the capital!
At last also refers to a recent mining stock that flew, unlike other basura mining stocks which overpromise and underdeliver. Since I love pun, I suppose "At last" was a good word play for Atlas Mining, which in the previous two weeks broke out from its consolidation phase in the 9.6 range to reach a high of 12.20, if I'm looking at the chart of Atlas (Ticker AT) of PSE correctly.
However, the run-up has died down a bit and it's just at 11.12. Running out of breath?
Without over-analyzing the chart, I think a little bit of logic is in order. Atlas Mining had been consolidating, meaning, trading within a range with seemingly no direction, for close two to four months already. Given this, there are people who, in trading parlance are called "weak hands", sell at the first sign of trading profits.
Other than the weak hands, I think there's a need to also coin a new term, "tired hands", which to me means and refers to people who got tired of holding a stuck (as opposed to a stock) and letting go even if the trading profit is downright absurd.
I think that Atlas Mining still has legs to go. They actually reported some good numbers for the first half of this year. Atlas probably won't be covered by the more prominent stock brokerage houses as these would probably go for big names like the Ayalas and Aboitizes of the world. From their press release,
"Atlas Consolidated Mining and Development Corporation (Atlas) is pleased to report a
P460 million net income for the first half of 2010. This result shows significant progress
given the P1,169 million loss incurred at the end of the last fiscal year. The second
quarter net income is also nearly triple the first quarter income of P164 million"
Atlas should be still be treated as a speculative stock with huge growth potential for a risk-appreciative investor's portfolio. However, the entry price can be tricky. At this point, the stock price is well off of its high. Personally, I hope the stock does not fall through the roof of 11.00. If it falls down, then in my belief, the stock has reversed its trend already, and you can buy cheaper, but not necessarily right away. You will have to wait it out. Why?
This week's daily chart looks nasty and next week should be a good proving ground for this, going up? or going down? I don't know. I just hope that the cliche,"history repeats itself" does not hold true. I'm pointing to the fact that late last year, it broke away from a range, zipped to 12, then crashed back to earth. If history repeats itself, then Atlas will go through yet another consolidation phase. Maybe you'd have an early Christmas if you buy Atlas in the 4th quarter. If you're a trader, then wait-and-see would be better.
I'm not flat out recommending this stock as it can just become a stuck again as company performance wise, they have to show more consistency. At least, there's a good story to go around, from a net loss, they're swinging into profit again.
This is unlike another listed mining company, Philex. Philex is a good company but a bad stock to trade. The stock just seems to be dying a slow death in terms of share price. So don't touch it.
I've learned my lessons with most mining and basura stocks. With the stock market going up and up, you're better off trading quality stocks than buying the basuras. I suppose that's why most of the money now are in the second liners like Metro Pacific, Megaworld, etc. However, with the new administration, I hope that the government can work with both the mining companies and the local government so that a mining renaissance can happen here.
After all, the country can't purely rely on BPOs as the growth engine for its economy. Medical tourism and mining should be growth areas in the next 6-12 months.
P.S. I'm glad I recommended Metro Pacific, which to me, is a stock you can hold until you grow old. Again, provided the management team is always competent. I look at Metro Pacific as a stock you buy because of the company and its potential. As most investors say, "buy the company, not the stock." When I recommended it, it was not based on studying their FS nor its chart. It was purely out of common sense. (MPI also has interests in FOUR hospitals)
Sometimes people get lost in the "fundamental analysis" or "technical analysis" of a stock that they forget common sense. Of course, it's also a matter of asking yourself, how long will you hold the stock for?
As we speak, Metro Pacific has a TV commercial in CNBC (or was it Bloomberg? or both?). So watch out as the company draws interest from big foreign brokerage houses. A company with that much marketing muscle presupposes a lot of room for growth in the company's performance.
So until my next post, appreciate the risk, then appreciate the capital!
Thursday, July 22, 2010
The New Trading Rules of the PSE
On July 26, Monday, a new trading system takes over the PSE. I was still a baby (or probably still being made) when the existing system was already in place so I don't have any reactions - positive or negative - towards the new system. All I know is that there is silent (?) dissent from some brokers and traders about the new system due to its impact on day traders and traders in general.
The new trading rules are available at the PSE. Of course, reading through the report will test a bit of your patience if you're not someone who likes to go through all the details. Personally, what I found interesting and quite important is the change in the fluctuation table. Specifically, the board lot used to look like this -
By Monday, the board lot will look like this -
Notwithstanding the obvious difference in graphic layout, you will notice that the price fluctuations are a lot lot smaller now. For example, before, a stock with a price of 20 pesos would change every 25 centavos, such that a typical stock posting would look like this -
Bid Ask
10,000 20.00 20.25 5,000
Now, with the new system, a stock with a price of 20 pesos would look like this -
Bid Ask
10,000 20.00 20.05 5,000
What's the relevance?
Well, from an amateur stock trader's standpoint, depending on your broker, you already have a small profit with just ONE fluctuation if you were trading under the old system.
Now, assuming it's the same stock, you'd have to wait FIVE fluctuations just to get to the price of 20.25 for a profit with the new system. Further adding to the "difficulty" in making a buck is that there will be trading price limits based on what they call the Dynamic Price Threshold.
If I understand correctly, a stock will be frozen (i.e. temporary trading halt) once it hits its lower or upper Dynamic Price Threshold. Based on the information I got from Citiseconline.com -
- Dynamic price threshold (lower) = last traded price - (last traded price multiplied by the dynamic tick)
- Stock A dynamic price threshold (lower) = 5.00 - (5.00 x 0.05) = 4.75
I don't know why it's called a dynamic tick or if there's any connection to the dynamic duo, but this would make trading a bit, well, harder.
Without going further into the other details of the new trading system, this is the big question - Will the PSEi resume its uptrend come next week? The timing, at least to me, is off-putting. The ghost month is just over the horizon and based on my limited trading experience, is one of the bear months of the local market. It usually lasts until October before mounting what is known as a Santa's rally.
More importantly, will chart reading still be useful? I mean the price ranges now are different from the ones before. Will the prices of before be of any relevance to its future price action?
All these questions will be answered in the next few months, as old traders find ways to do new tricks and new traders probably adopting a wait-and-see mode.
I suppose given this, the market will most probably move sideways. I am not sure since I'm no fortune teller. Well, nobody said change was easy. I just hope that this is for the good and the new system would increase liquidity and volume of the market. If you think about it, volume would certainly pick up since based on my example, a trader will have to buy five fluctuations of a stock just to get to his profit target price.
Let's hope for the best.
The new trading rules are available at the PSE. Of course, reading through the report will test a bit of your patience if you're not someone who likes to go through all the details. Personally, what I found interesting and quite important is the change in the fluctuation table. Specifically, the board lot used to look like this -
| PRICE | MINIMUM FLUCTUATIONS | BOARD LOT |
| 0.001 to 0.0024 | 0.0002 | 1,000,000 |
| 0.0026 to 0.0050 | 0.0002 | 1,000,000 |
| 0.0055 to 0.0100 | 0.0005 | 1,000,000 |
| 0.0110 to 0.0250 | 0.001 | 100,000 |
| 0.0260 to 0.0500 | 0.001 | 100,000 |
| 0.0525 to 0.1000 | 0.0025 | 100,000 |
| 0.105 to 0.2500 | 0.005 | 10,000 |
| 0.2600 to 0.5000 | 0.01 | 10,000 |
| 0.5100 to 1.000 | 0.01 | 10,000 |
| 1.020 to 2.500 | 0.02 | 1,000 |
| 2.550 to 5.000 | 0.05 | 1,000 ** |
| 5.10 to 10.00 | 0.10 | 1,000 * |
| 10.25 to 25.00 | 0.25 | 100 |
| 25.50 to 50.00 | 0.50 | 100 |
| 50.50 to 100.00 | 0.50 | 100 |
| 101.00 to 250.00 | 1.00 | 10 |
| 252.50 to 500.00 | 2.50 | 10 |
| 505.00 and up | 5.00 | 10 |
By Monday, the board lot will look like this -
Notwithstanding the obvious difference in graphic layout, you will notice that the price fluctuations are a lot lot smaller now. For example, before, a stock with a price of 20 pesos would change every 25 centavos, such that a typical stock posting would look like this -
Bid Ask
10,000 20.00 20.25 5,000
Now, with the new system, a stock with a price of 20 pesos would look like this -
Bid Ask
10,000 20.00 20.05 5,000
What's the relevance?
Well, from an amateur stock trader's standpoint, depending on your broker, you already have a small profit with just ONE fluctuation if you were trading under the old system.
Now, assuming it's the same stock, you'd have to wait FIVE fluctuations just to get to the price of 20.25 for a profit with the new system. Further adding to the "difficulty" in making a buck is that there will be trading price limits based on what they call the Dynamic Price Threshold.
If I understand correctly, a stock will be frozen (i.e. temporary trading halt) once it hits its lower or upper Dynamic Price Threshold. Based on the information I got from Citiseconline.com -
The Dynamic Price Threshold** is computed as follows:
- Dynamic price threshold (upper) = last traded price + (last traded price multiplied by the dynamic tick)
Example:
If the last traded price for stock A is 5.00 pesos and it has a PSE defined dynamic tick of 0.05 then:
- Stock A dynamic price threshold (upper) = 5.00 + (5.00 x 0.05) = 5.25
I don't know why it's called a dynamic tick or if there's any connection to the dynamic duo, but this would make trading a bit, well, harder.
Without going further into the other details of the new trading system, this is the big question - Will the PSEi resume its uptrend come next week? The timing, at least to me, is off-putting. The ghost month is just over the horizon and based on my limited trading experience, is one of the bear months of the local market. It usually lasts until October before mounting what is known as a Santa's rally.
More importantly, will chart reading still be useful? I mean the price ranges now are different from the ones before. Will the prices of before be of any relevance to its future price action?
All these questions will be answered in the next few months, as old traders find ways to do new tricks and new traders probably adopting a wait-and-see mode.
I suppose given this, the market will most probably move sideways. I am not sure since I'm no fortune teller. Well, nobody said change was easy. I just hope that this is for the good and the new system would increase liquidity and volume of the market. If you think about it, volume would certainly pick up since based on my example, a trader will have to buy five fluctuations of a stock just to get to his profit target price.
Let's hope for the best.
Thursday, April 8, 2010
Trading with Caution Next Week
It's another long weekend this week coming from the Holy Week-end. For out of town trippers who took their long vacation last week, they should be rejoicing because soon, domestic travel will hurt their pockets due to the imposition of VAT. If Singapore is a fine city, then the Philippines is a taxing place to live in.
So if this is the case, then this will put a crimp on MPI, although not directly. I am recommending MPI as a long term buy but of course this is just my opinion. You should consult your own financial advisor. Investments have risks, whether you invest directly in a stock, or through mutual funds.
Recently, the stock market rose to a new high due to the increasingly bullish outlook... and supposedly an improving economy. The latter is hard to say but the DOW is going up so that could have been the inspiration for our stock market's recent incredible run. I'd still recommend taking a wait and see approach to buying any stocks at the moment for trading.
The blue chips having run up so much means that the first wave is almost over. The second wave and third wave is upon us so that means a lot of the basuras will be moving, along with the second liners. I don't know exactly what stocks can be considered second liners but I think these are stocks that don't have large capitalizations like the blue chip stocks like Ayala Corp, Ayala Land, SM Prime, etc.
In short, if you want to trade the local stock market, then you shouldn't be buying blue chips. Most blue chips are included in the PHISIX (index), so these are the stocks you will be staying away from in the near term.
If you plan to invest in an equity/stock mutual fund; then, now isn't the time to invest if you want to "time" your placement. Wait for a while further before you plunk down your money. Of course, this does not mean that you will be able to time it perfectly. In fact, it's better if you just invest and not think about whether if it's high or low as long as you utilize peso cost averaging.
If you are the type of person who has an account with a broker; then, if you want to earn a quick buck then look for basura stocks on the move. I don't give any hints on basura stocks because these are highly volatile stocks and you might have a heart attack just looking at the movement of their prices.
I think that the coming week will be a consolidation mode for the index or worse, a correction phase. If the index continues to go up, then there's the risk of "overheating" and thus set our market up for an even bigger correction. Tread (trade) with caution.
So if this is the case, then this will put a crimp on MPI, although not directly. I am recommending MPI as a long term buy but of course this is just my opinion. You should consult your own financial advisor. Investments have risks, whether you invest directly in a stock, or through mutual funds.
Recently, the stock market rose to a new high due to the increasingly bullish outlook... and supposedly an improving economy. The latter is hard to say but the DOW is going up so that could have been the inspiration for our stock market's recent incredible run. I'd still recommend taking a wait and see approach to buying any stocks at the moment for trading.
The blue chips having run up so much means that the first wave is almost over. The second wave and third wave is upon us so that means a lot of the basuras will be moving, along with the second liners. I don't know exactly what stocks can be considered second liners but I think these are stocks that don't have large capitalizations like the blue chip stocks like Ayala Corp, Ayala Land, SM Prime, etc.
In short, if you want to trade the local stock market, then you shouldn't be buying blue chips. Most blue chips are included in the PHISIX (index), so these are the stocks you will be staying away from in the near term.
If you plan to invest in an equity/stock mutual fund; then, now isn't the time to invest if you want to "time" your placement. Wait for a while further before you plunk down your money. Of course, this does not mean that you will be able to time it perfectly. In fact, it's better if you just invest and not think about whether if it's high or low as long as you utilize peso cost averaging.
If you are the type of person who has an account with a broker; then, if you want to earn a quick buck then look for basura stocks on the move. I don't give any hints on basura stocks because these are highly volatile stocks and you might have a heart attack just looking at the movement of their prices.
I think that the coming week will be a consolidation mode for the index or worse, a correction phase. If the index continues to go up, then there's the risk of "overheating" and thus set our market up for an even bigger correction. Tread (trade) with caution.
Friday, November 27, 2009
Investing ... or speculating? (continued)
I was that blunt and the friend pondered about what I said. The friend agreed that that was true.
So that was my cue to say that there were more to investment decision making than just listening to what your other friends are doing. I also told the friend that before deciding on what kind of investment to take, an emergency fund should be put up first.
People are far more interested to get into the action rather than planning ahead. What does this mean? People want to see their money grow right away without considering if they have money set aside for a stormy day. Humans are generally a greedy bunch.
Instead of asking, where can I invest? You should first ask, where can I invest without risking my near term prospects? I.e., if you have paper loss sometime down the road, do you have money to keep you going (and living) if you should lose your job or lose a business?
To know if you are just speculating or actually investing with your investible funds, here are some possible "indicators". -
1. You focus on the short term, rather than the long term
2. Fear drives your decision to sell...
3. ...and Greed drives your decision to buy a new investment
4. Your decision is anchored on hope and slight delusion (a stock has fallen by 15% and you still think that those behind the stock will support it and it'll eventually recover more than 15% sometime soon)
5. Where there's smoke, there's fire, and more often than not, you get burned
6. You are fidgety, checking your investments more often than you have to
7. You boast when you have paper gains, and then gloat when you realize them...
8. ... and you don't tell anybody when you take a loss or have a paper loss...
9. ... or if you did tell someone, you just go back to telling your "war stories" of "I earned so and so in the past"
Speculation is gambling. You might have better chances at the casino than in the investment world.
Investing is based on logical decisions. You don't have to be a fundie or a technician to become an excellent investor. If you know how to save money, then you're already on your way to becoming one.
So that was my cue to say that there were more to investment decision making than just listening to what your other friends are doing. I also told the friend that before deciding on what kind of investment to take, an emergency fund should be put up first.
People are far more interested to get into the action rather than planning ahead. What does this mean? People want to see their money grow right away without considering if they have money set aside for a stormy day. Humans are generally a greedy bunch.
Instead of asking, where can I invest? You should first ask, where can I invest without risking my near term prospects? I.e., if you have paper loss sometime down the road, do you have money to keep you going (and living) if you should lose your job or lose a business?
To know if you are just speculating or actually investing with your investible funds, here are some possible "indicators". -
1. You focus on the short term, rather than the long term
2. Fear drives your decision to sell...
3. ...and Greed drives your decision to buy a new investment
4. Your decision is anchored on hope and slight delusion (a stock has fallen by 15% and you still think that those behind the stock will support it and it'll eventually recover more than 15% sometime soon)
5. Where there's smoke, there's fire, and more often than not, you get burned
6. You are fidgety, checking your investments more often than you have to
7. You boast when you have paper gains, and then gloat when you realize them...
8. ... and you don't tell anybody when you take a loss or have a paper loss...
9. ... or if you did tell someone, you just go back to telling your "war stories" of "I earned so and so in the past"
Speculation is gambling. You might have better chances at the casino than in the investment world.
Investing is based on logical decisions. You don't have to be a fundie or a technician to become an excellent investor. If you know how to save money, then you're already on your way to becoming one.
Saturday, November 14, 2009
MP, Metro Pacific and Manny Pacquiao
The index recently broke the 3,000 barrier and closed up at 3,034 last Friday for the year. Due to losses in the US (and perhaps people cashing in to bet for Pacquiao-Cotto fight) the market lost momentum on the 13th. Philex also lost its luster Friday and fell by 14% to 16.75, bringing down with it the mining index. Those who bought at the 19 range better be wary.
Having risen by 100% in such a short time may mean a free fall in also the same short period to God knows where. There is no strong support for the stock having risen continuously when it breached the 10 barrier. The good thing though, at least for those who bought at the 13 level, is that they still made money (assuming they exited at 19). That's still almost 50%.
I could be wrong.
The performance of these two stocks this year - Meralco and Philex - reflects the state of our market. It is both bullish and speculative. Basura stocks are gaining and even blue chip stocks are being speculated upon. Some of the other winners for this year was WEB, and the Angping stocks, especially Nihao is back with a vengeance. As we reach the year end rally (hopefully), you may wish to take the time to think about 2010.
If you think 2010 will be a better year, then hold on to your stocks and buy the corrections. Otherwise, this could be your time to scale back and take profits while there is one. I wanted to look at the volume, as well as the amount of foreign buying for this year, but I don't have access to those information. Those are also good indicators as to the sustainability of the recent bullishness in the market.
Winners during the past week were Philex (double your money in less than a month, code: PX), Century Peak Minerals (code: CPM), Alsons Consolidated (Code: ACR), I-remit (I), and TK Steel (T). There were also other stocks that rose, mostly basura stocks, and index issues. The worst performer, at least based on the stocks that I monitor, was Metro Pacific, falling by almost 30%. What's amazing is that they recorded huge revenues.
The stock price perhaps does not reflect the correct value. At least for now. Having made so many acquisitions, as well as the possibility of diluting shareholders, bearish sentiment has killed the stock. But as Buffett is says, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
I visited their website and looked at the businesses they now hold - hospitals, toll roads, water utilities. These are businesses that do well when the economy is good, and don't suffer as much when the economy is bad.
Using common sense, I think Metro Pacific is a buy, although it will definitely be a long term buy (as long as 2-3 years from today) as we still have to wait what happens when they list new shares (unless they've done so already, I don't track the news that much). Its 52-week high is 7.10 and 52-week low is 2.08. Trading volume for the stock has increased substantially this year. But of course, there's the threat by GSIS over the recent acquisition of Meralco shares.
GSIS killed Meralco last year and they migh very well do the same for MPI this year. Sniff the news whenever it's out in the press.
I also don't know much about financial ratios so I don't bother reviewing them. What I do know is that perhaps, there's a lot of debt going around at MPI.
Of course, this is just my opinion. Investor discretion is advised and you should consult with your own financial advisor. Investments take time to generate consistent cash flows and 3 years is about the right time frame to expect the kind of revenues that MPI holdings should have with its current portfolio of companies.
**************
At least the other MP (not listed in the PSE) made winners of those who betted for him in today's fight. I'm talking about Manny Pacquiao. He beat Cotto with a TKO (hey that rhymes).
Congratulations to Pacquiao! I just hope he doesn't enter politics.
In the U.S., there's been an attempt to correlate Tiger Wood's golf games to the performance of the Dow Jones. Perhaps, we should do one for Manny Pacquiao and the Philippine Index.
Until then, be careful where you invest. Tomorrow may be another up day because of the euphoria as well as the positive end for the Dow last Friday.
Having risen by 100% in such a short time may mean a free fall in also the same short period to God knows where. There is no strong support for the stock having risen continuously when it breached the 10 barrier. The good thing though, at least for those who bought at the 13 level, is that they still made money (assuming they exited at 19). That's still almost 50%.
I could be wrong.
The performance of these two stocks this year - Meralco and Philex - reflects the state of our market. It is both bullish and speculative. Basura stocks are gaining and even blue chip stocks are being speculated upon. Some of the other winners for this year was WEB, and the Angping stocks, especially Nihao is back with a vengeance. As we reach the year end rally (hopefully), you may wish to take the time to think about 2010.
If you think 2010 will be a better year, then hold on to your stocks and buy the corrections. Otherwise, this could be your time to scale back and take profits while there is one. I wanted to look at the volume, as well as the amount of foreign buying for this year, but I don't have access to those information. Those are also good indicators as to the sustainability of the recent bullishness in the market.
Winners during the past week were Philex (double your money in less than a month, code: PX), Century Peak Minerals (code: CPM), Alsons Consolidated (Code: ACR), I-remit (I), and TK Steel (T). There were also other stocks that rose, mostly basura stocks, and index issues. The worst performer, at least based on the stocks that I monitor, was Metro Pacific, falling by almost 30%. What's amazing is that they recorded huge revenues.
The stock price perhaps does not reflect the correct value. At least for now. Having made so many acquisitions, as well as the possibility of diluting shareholders, bearish sentiment has killed the stock. But as Buffett is says, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
I visited their website and looked at the businesses they now hold - hospitals, toll roads, water utilities. These are businesses that do well when the economy is good, and don't suffer as much when the economy is bad.
Using common sense, I think Metro Pacific is a buy, although it will definitely be a long term buy (as long as 2-3 years from today) as we still have to wait what happens when they list new shares (unless they've done so already, I don't track the news that much). Its 52-week high is 7.10 and 52-week low is 2.08. Trading volume for the stock has increased substantially this year. But of course, there's the threat by GSIS over the recent acquisition of Meralco shares.
GSIS killed Meralco last year and they migh very well do the same for MPI this year. Sniff the news whenever it's out in the press.
I also don't know much about financial ratios so I don't bother reviewing them. What I do know is that perhaps, there's a lot of debt going around at MPI.
Of course, this is just my opinion. Investor discretion is advised and you should consult with your own financial advisor. Investments take time to generate consistent cash flows and 3 years is about the right time frame to expect the kind of revenues that MPI holdings should have with its current portfolio of companies.
**************
At least the other MP (not listed in the PSE) made winners of those who betted for him in today's fight. I'm talking about Manny Pacquiao. He beat Cotto with a TKO (hey that rhymes).
Congratulations to Pacquiao! I just hope he doesn't enter politics.
In the U.S., there's been an attempt to correlate Tiger Wood's golf games to the performance of the Dow Jones. Perhaps, we should do one for Manny Pacquiao and the Philippine Index.
Until then, be careful where you invest. Tomorrow may be another up day because of the euphoria as well as the positive end for the Dow last Friday.
Friday, May 29, 2009
@#$%
After ranting during my last post, I was looking forward to some positive posting. Little did I know Friday would be another one of those @#$% days.
What's worse than being left out of the market?
Knowing what to buy, being held back by fear, then realizing your error after.
I'm talking about MPI. Metro Pacific Investments.
As early as late last year, I was already looking at this stock. It wasn't because of the FS, it wasn't because of the charts. It was purely on gut feel and knowing what kind of businesses they have.
You might say that's a load of crap, but I was really looking at it. Think about it, a tollway business, property (and a possibility of selling Landco Pacific), and more importantly two hospitals.
Followers and readers of my blog for a long time would have read an entry of mine last November regarding healthcare, albeit short. So if I'm bullish on healthcare, naturally I'd be looking at MPI with keen interest.
Last post I said I don't normally hype stocks - and I'm not hyping it now. Because if you've seen its performance yesterday +28% from its Thursday close, then you'll know that hyping is the last thing on my mind.
I was again left out. What's worse, during the morning, I called up my broker, and out of instincts, I said could you check up MPI for me?
@#$@#$#@$#@.
What ever your comments are of this post - or of MPI - what I can say is that in the future, MPI will be big. You will have to take a long view. And with Manny Pangilinan sticking around, MPI might well be Manny Pangilinan's Investments.
In 2006, I kicked myself in the arse because I also made another mistake - with IPVG. During that time it was just doing 1.00.
Crap.
Disclaimer: Again, I'm not offering investment advice for you to buy or sell MPI, or any other stock for that matter. The decision really rests on you. Know what you're getting into first before you take action.
What's worse than being left out of the market?
Knowing what to buy, being held back by fear, then realizing your error after.
I'm talking about MPI. Metro Pacific Investments.
As early as late last year, I was already looking at this stock. It wasn't because of the FS, it wasn't because of the charts. It was purely on gut feel and knowing what kind of businesses they have.
You might say that's a load of crap, but I was really looking at it. Think about it, a tollway business, property (and a possibility of selling Landco Pacific), and more importantly two hospitals.
Followers and readers of my blog for a long time would have read an entry of mine last November regarding healthcare, albeit short. So if I'm bullish on healthcare, naturally I'd be looking at MPI with keen interest.
Last post I said I don't normally hype stocks - and I'm not hyping it now. Because if you've seen its performance yesterday +28% from its Thursday close, then you'll know that hyping is the last thing on my mind.
I was again left out. What's worse, during the morning, I called up my broker, and out of instincts, I said could you check up MPI for me?
@#$@#$#@$#@.
What ever your comments are of this post - or of MPI - what I can say is that in the future, MPI will be big. You will have to take a long view. And with Manny Pangilinan sticking around, MPI might well be Manny Pangilinan's Investments.
In 2006, I kicked myself in the arse because I also made another mistake - with IPVG. During that time it was just doing 1.00.
Crap.
Disclaimer: Again, I'm not offering investment advice for you to buy or sell MPI, or any other stock for that matter. The decision really rests on you. Know what you're getting into first before you take action.
Friday, February 27, 2009
How to make money in...
Welcome to a new Guerilla Investing Series Special which will be a series of posts headlined by the title "How to make money in...". For the first in the series, we'll tackle the stock market.
I've written other series in the past and they include primers on investing, unique perspectives on conventional personal finance concepts, the purpose of having your personal mission statement, and of course my continuing take on the Waves of Philippine Business. The last one is still on hold as I'm further developing it.
So what about the stock market? I'm not going to teach you about technical analysis or fundamental analysis (Go to Absolute Traders instead!). I'm going to teach you how to make money consistently by sharing with you an approach that has proven successful for a selected elite group of stock traders.
I don't know them personally. I only got acquainted to their style of trading through my broker. If you are a fan of Robert Kiyosaki, he defines a stock broker as someone who is more broke than you. While that diatribe certainly will raise some eyebrows (especially of stock brokers), let's examine what my broker broke to me. I summarized them as such-
1. Have a Monogamous relationship with your Stock
He has a client who only buys one stock. Yes, just one. Regardless of whether the market is a Yogi Bear, a Red Bull or a Panda market, he only sticks to one stock. My broker would narrate to me how this client would call out of the blue and give a buy order for his (only) favorite stock. Whenever it came to selling time, this guy made a tidy profit.
This person didn't enjoy GEO like profits during the boom market (oh don't you miss the yesteryears of 2006 and 2007?) but he did enjoy profits CONSISTENTLY even during the bear market. Luck? More like excellent stock knowledge of his stock.
2. Have an experienced broker who has knowledge on Technical Analysis and Fundamental Analysis.
I'm no genius. I'll probably take a million years trying to absorb the rudiments of fundamental analysis. Moreover, a broker who is knowledgeable on Technical Analysis can give support to what you see (or maybe, perceived to see) in a selected stock if you pride yourself to be a technician. Since you have to have a broker (unless you trade online) to transact, then why not get his aid? A broker's duty is not just to do salestalk. He has to do a meaningful salestalk.
3. If you are in it for the long haul, learn to average down
The statement could be debatable but I think it is self explanatory. Just make sure you are buying a "good stock with fundamentals" like Ayala Corp., SM Prime, etc.
4. If you are in it for the short haul, learn to cut your losses.
Learn to internalize the catch phrase "don't catch a falling knife" and you'll soon realize that you have to call it quits when your trade goes awry.
5. If you want to feel a gain, you have to invest or trade big.
Usually 50K as a minimum would be a better start. So save up!
6. Timing Timing!
In real estate, location is everything. But redounded to its basic investment philosophy, timing is the more crucial factor, and this is most true for the stock market. Sure, you won't catch the absolute bottom or the absolute high, but if you have a bit of experience you'll know if you're early or worse, late into the investment.
Just look at the tell tale signs. For the stock market when IPOs are the norm, it means the market is about to peak. There were gajillions of IPOs in 2006 and 2007. Most of those that did an IPO in 2007 were flops.
If you follow rule number one and combine it with this rule, then you would know when your favorite stock is at its highest... or its lowest.
So that's it for now. Simple rules to remember. I hope you gained some new insights today. Come back for more and learn more about guerilla investing's guide to investments. =D
I've written other series in the past and they include primers on investing, unique perspectives on conventional personal finance concepts, the purpose of having your personal mission statement, and of course my continuing take on the Waves of Philippine Business. The last one is still on hold as I'm further developing it.
So what about the stock market? I'm not going to teach you about technical analysis or fundamental analysis (Go to Absolute Traders instead!). I'm going to teach you how to make money consistently by sharing with you an approach that has proven successful for a selected elite group of stock traders.
I don't know them personally. I only got acquainted to their style of trading through my broker. If you are a fan of Robert Kiyosaki, he defines a stock broker as someone who is more broke than you. While that diatribe certainly will raise some eyebrows (especially of stock brokers), let's examine what my broker broke to me. I summarized them as such-
1. Have a Monogamous relationship with your Stock
He has a client who only buys one stock. Yes, just one. Regardless of whether the market is a Yogi Bear, a Red Bull or a Panda market, he only sticks to one stock. My broker would narrate to me how this client would call out of the blue and give a buy order for his (only) favorite stock. Whenever it came to selling time, this guy made a tidy profit.
This person didn't enjoy GEO like profits during the boom market (oh don't you miss the yesteryears of 2006 and 2007?) but he did enjoy profits CONSISTENTLY even during the bear market. Luck? More like excellent stock knowledge of his stock.
2. Have an experienced broker who has knowledge on Technical Analysis and Fundamental Analysis.
I'm no genius. I'll probably take a million years trying to absorb the rudiments of fundamental analysis. Moreover, a broker who is knowledgeable on Technical Analysis can give support to what you see (or maybe, perceived to see) in a selected stock if you pride yourself to be a technician. Since you have to have a broker (unless you trade online) to transact, then why not get his aid? A broker's duty is not just to do salestalk. He has to do a meaningful salestalk.
3. If you are in it for the long haul, learn to average down
The statement could be debatable but I think it is self explanatory. Just make sure you are buying a "good stock with fundamentals" like Ayala Corp., SM Prime, etc.
4. If you are in it for the short haul, learn to cut your losses.
Learn to internalize the catch phrase "don't catch a falling knife" and you'll soon realize that you have to call it quits when your trade goes awry.
5. If you want to feel a gain, you have to invest or trade big.
Usually 50K as a minimum would be a better start. So save up!
6. Timing Timing!
In real estate, location is everything. But redounded to its basic investment philosophy, timing is the more crucial factor, and this is most true for the stock market. Sure, you won't catch the absolute bottom or the absolute high, but if you have a bit of experience you'll know if you're early or worse, late into the investment.
Just look at the tell tale signs. For the stock market when IPOs are the norm, it means the market is about to peak. There were gajillions of IPOs in 2006 and 2007. Most of those that did an IPO in 2007 were flops.
If you follow rule number one and combine it with this rule, then you would know when your favorite stock is at its highest... or its lowest.
So that's it for now. Simple rules to remember. I hope you gained some new insights today. Come back for more and learn more about guerilla investing's guide to investments. =D
Monday, October 6, 2008
The Thermometer of the Global Economy - Stock Markets
Personal random thoughts -
Sorry folks, I've been delayed by not a few days from my scheduled posting date. Been rather busy and had to prioritize them over my blog... unfortunately.
I did, however, before this respite of time, manage to write a piece of fiction, just to rescue my sanity.
I've also added a new search feature to this site care of Google. Do tell me if it's useful or it needs more tweaking.
Important Philippine business news -
AIG plans to sell its Philippine unit Philamlife
Philippine Stock Market UP (yes, you read that right) for the third quarter unlike other Southeast Asian bourses. (Sorry no link, I just saw it on CNBC last week). Strength? Looks like it.
HK Securities, a local stockbrokerage despite its name, is going to be taken over by the PSE
On to our blog entry -
Stock markets worldwide plummet because of growing recession fears
As I am blogging, the DOW is down by triple digits, and and has fallen the 10,000 mark. The passing of the bailout package has become a classic case of sell on news for traders. I guess passing it was just to delay the inevitable path of the DOW to 8000.
I can only imagine the bloodshed in tomorrow's local market. (Shaking my head). This has been a tough year for people trading the stock market. The stock market is no longer a barometer. It's now a thermometer. It's a thermometer for sick stock traders, economists, investors and every other individual. All of whom are clueless and helpless... sick from the avalanche of negative news.
The thermometer has yet to reach typhoid fever levels, but with banks falling like dominoes, there is a lingering question, who's next? Stock markets, and obviously even us regular folks, don't like uncertainty. Until all these bad news are accounted for, we'll be seeing a sea of red for the weeks ahead.
The things to look out for right now are if other businesses are also affected. Right now, bulk of the problems everywhere are in the financial sector. The problem is when banks start folding up, businesses will have difficulty accessing credit to fund their expansion. This simple concept is packaged in a term called credit squeeze.
Right now, I don't and can't offer any piece of positive news. Hold on to your butts and cash. And if you're brave enough, you can still put money into INVESTING. Those who made the right investments during the fallout of the Asian financial crisis are happy now. Who knows, these crazy and panicky times could provide an ample opportunity for the shrewd investor out there.
I'm not recommending any Philippine stock though. Not yet anyways. But there is one thing I might suggest. And that is gold.
Sorry folks, I've been delayed by not a few days from my scheduled posting date. Been rather busy and had to prioritize them over my blog... unfortunately.
I did, however, before this respite of time, manage to write a piece of fiction, just to rescue my sanity.
I've also added a new search feature to this site care of Google. Do tell me if it's useful or it needs more tweaking.
Important Philippine business news -
AIG plans to sell its Philippine unit Philamlife
Philippine Stock Market UP (yes, you read that right) for the third quarter unlike other Southeast Asian bourses. (Sorry no link, I just saw it on CNBC last week). Strength? Looks like it.
HK Securities, a local stockbrokerage despite its name, is going to be taken over by the PSE
On to our blog entry -
Stock markets worldwide plummet because of growing recession fears
As I am blogging, the DOW is down by triple digits, and and has fallen the 10,000 mark. The passing of the bailout package has become a classic case of sell on news for traders. I guess passing it was just to delay the inevitable path of the DOW to 8000.
I can only imagine the bloodshed in tomorrow's local market. (Shaking my head). This has been a tough year for people trading the stock market. The stock market is no longer a barometer. It's now a thermometer. It's a thermometer for sick stock traders, economists, investors and every other individual. All of whom are clueless and helpless... sick from the avalanche of negative news.
The thermometer has yet to reach typhoid fever levels, but with banks falling like dominoes, there is a lingering question, who's next? Stock markets, and obviously even us regular folks, don't like uncertainty. Until all these bad news are accounted for, we'll be seeing a sea of red for the weeks ahead.
The things to look out for right now are if other businesses are also affected. Right now, bulk of the problems everywhere are in the financial sector. The problem is when banks start folding up, businesses will have difficulty accessing credit to fund their expansion. This simple concept is packaged in a term called credit squeeze.
Right now, I don't and can't offer any piece of positive news. Hold on to your butts and cash. And if you're brave enough, you can still put money into INVESTING. Those who made the right investments during the fallout of the Asian financial crisis are happy now. Who knows, these crazy and panicky times could provide an ample opportunity for the shrewd investor out there.
I'm not recommending any Philippine stock though. Not yet anyways. But there is one thing I might suggest. And that is gold.
Thursday, July 10, 2008
The Movie You've All Been (Still) Waiting For (Part 2)
The PSEi closed down 13 points today to settle at 2,437.99. On a week on week basis we are up 68 points from last Friday's close of 2,369. At this point, the much hyped 4000 index level has converted many traders into forced investors. I wrote a five-part mini series before on the distinction between the two (i.e. trader vs investor). You may check the following links for each part.
Are you a stockholder or a stocktrader - Part I
Are you a stockholder or a stocktrader - Part II
Are you a stockholder or a stocktrader - Part III
Are you a stockholder or a stocktrader - Part IV
Are you a stockholder or a stocktrader - Part V
I have my own views on which one you should be. It's based on your personality, risk tolerance, available time and aptitude. The most important question is : Can you cut your losses when the going gets tough?
If you answered yes, then it's good. But that's just the first step. You also have to answer the following questions -
Can you be unemotionally attached to the stocks that you will buy?
Will you promise to follow your established cut loss point?
Will you promise to follow your trading system?
Will you also promise to be patient when in a bear market?
There are other questions in mind and it will always redound to three letters - Y-O-U.
As the poem goes, I am the master of my fate, I am the captain of my soul.
So if something goes wrong, it's not the stock market. It's not the other traders or investors out there. It's not your broker or the other brokers. It's not the speculators. It's you. When you put your money into a stock you think will go up, what are the reasons?
Oh, let me count the ways -
Speculation
Hot tip from (a) friend, (b) online forum, (c) broker, (d) relative, (e) a divine message
"Everybody's buying it, so why shouldn't I" syndrome
Business expansion
Business outperformance
Bullish pattern or formation seen in the stock chart
Whatever your reason for buying your stock, if that reason is gone, then why are you holding on to it? That's one simple question that even I tend to forget. That is why in the days spent that I was thinking about the market, I came up with a novel but unique perspective to cutting losses.
Last week, I ended with this note -
Although you don't have control over what is going on, what you have control over is ____. This is the power directors have.
What you have control over is what you see in the market - whether good or bad. What are the two verbs directors the world over scream when making a movie? One is ACTION. The other? Yes, you guessed right folks, CUT!
My friend, when you are a stock trader, you view the action on a boring screen that includes the ticker, the index performance, the volume review, and the stock quotes. This is the movie you are watching and it's in front of you whether it be a computer screen, a TV, or the trading floor. Since you are the director, if you don't like what you're seeing, i.e. your stocks' performance, what do you scream? CUT? And that! That is what you should do.
It's just three letters, but the sheer willpower to do that is formulated as follows -
CUT + Muslces + Guts - Emotions = CUT LOSS SUCCESS!
It will be difficult to do in the beginning. If you're already six months to one year into trading, and you still haven't done a single cut loss, I think you have to visit the nearest mirror and ask yourself if you are really a trader, or an investor.
If your personality is that of an investor but you still do trading, then you'll be burning your money faster than you can curse.
If your personality is that of a trader but you are investing, then you won't be maximizing your gains.
The most important thing is to determine what you want from the stock market and what you are if you are putting money into it. And if all signs show that you are a trader - and you can become a successful one at that - always remember, you're the director of the movie that plays out every trading day. At 9:30AM in the morning, it's ACTION. And in between that up to 1200PM, if you dont like what you see, say CUT!
**************************************
During the previous CAF, i made a gaffe. I said stay away from Meralco. My basis for that decision was due to the issues facing the company. I hope people were still able to make money when they thought beyond the issues and looked at the chart instead.
At least those who asked me about ATN aren't going to curse me this week. Hehe =p
I'm human, and so I do make errors in judgement.
Good luck to us next week!
P.S. This is weird. Today is Friday but my blog entry is published as a July 10 / Thursday entry. See you next week!
Are you a stockholder or a stocktrader - Part I
Are you a stockholder or a stocktrader - Part II
Are you a stockholder or a stocktrader - Part III
Are you a stockholder or a stocktrader - Part IV
Are you a stockholder or a stocktrader - Part V
I have my own views on which one you should be. It's based on your personality, risk tolerance, available time and aptitude. The most important question is : Can you cut your losses when the going gets tough?
If you answered yes, then it's good. But that's just the first step. You also have to answer the following questions -
Can you be unemotionally attached to the stocks that you will buy?
Will you promise to follow your established cut loss point?
Will you promise to follow your trading system?
Will you also promise to be patient when in a bear market?
There are other questions in mind and it will always redound to three letters - Y-O-U.
As the poem goes, I am the master of my fate, I am the captain of my soul.
So if something goes wrong, it's not the stock market. It's not the other traders or investors out there. It's not your broker or the other brokers. It's not the speculators. It's you. When you put your money into a stock you think will go up, what are the reasons?
Oh, let me count the ways -
Speculation
Hot tip from (a) friend, (b) online forum, (c) broker, (d) relative, (e) a divine message
"Everybody's buying it, so why shouldn't I" syndrome
Business expansion
Business outperformance
Bullish pattern or formation seen in the stock chart
Whatever your reason for buying your stock, if that reason is gone, then why are you holding on to it? That's one simple question that even I tend to forget. That is why in the days spent that I was thinking about the market, I came up with a novel but unique perspective to cutting losses.
Last week, I ended with this note -
Although you don't have control over what is going on, what you have control over is ____. This is the power directors have.
What you have control over is what you see in the market - whether good or bad. What are the two verbs directors the world over scream when making a movie? One is ACTION. The other? Yes, you guessed right folks, CUT!
My friend, when you are a stock trader, you view the action on a boring screen that includes the ticker, the index performance, the volume review, and the stock quotes. This is the movie you are watching and it's in front of you whether it be a computer screen, a TV, or the trading floor. Since you are the director, if you don't like what you're seeing, i.e. your stocks' performance, what do you scream? CUT? And that! That is what you should do.
It's just three letters, but the sheer willpower to do that is formulated as follows -
CUT + Muslces + Guts - Emotions = CUT LOSS SUCCESS!
It will be difficult to do in the beginning. If you're already six months to one year into trading, and you still haven't done a single cut loss, I think you have to visit the nearest mirror and ask yourself if you are really a trader, or an investor.
If your personality is that of an investor but you still do trading, then you'll be burning your money faster than you can curse.
If your personality is that of a trader but you are investing, then you won't be maximizing your gains.
The most important thing is to determine what you want from the stock market and what you are if you are putting money into it. And if all signs show that you are a trader - and you can become a successful one at that - always remember, you're the director of the movie that plays out every trading day. At 9:30AM in the morning, it's ACTION. And in between that up to 1200PM, if you dont like what you see, say CUT!
**************************************
During the previous CAF, i made a gaffe. I said stay away from Meralco. My basis for that decision was due to the issues facing the company. I hope people were still able to make money when they thought beyond the issues and looked at the chart instead.
At least those who asked me about ATN aren't going to curse me this week. Hehe =p
I'm human, and so I do make errors in judgement.
Good luck to us next week!
P.S. This is weird. Today is Friday but my blog entry is published as a July 10 / Thursday entry. See you next week!
Friday, July 4, 2008
The Movie You've All Been (Still) Waiting For
If the performance of the Philippine Stock Exchange Index was a movie, I envision its short description to be -
Movie Title - "PSEi at 4000"
Director - D. Bears
Scheduled Release Date - December 2007
Status - Postponed Indefinitely
Genre - Action. Drama. Suspense. Horror.
******
That introduction is a perfect segue to what I want to discuss today. I want to share with you an important component of stock trading psychology and discipline that many people know but few people practice. It's called cutting losses.
As I've learned from Absolute Traders, that's what separates the men from the boys. And folks, there are only a few good men (traders).
It's a sight we often see and a story we often hear. After buying a stock, a novice trader builds an appendage linking himself to his stock. He begins to fall in love with it and before he knows it, the stock becomes a certificate waiting to be passed on as an heirloom.
That's the sad reality. And as in life, the best lessons are learned when you face defeat.
In a bull market, a regular stock trader thinks he is a genius because he is making money. What he doesn't know is that the it doesn't take a genius to make it big in a bull market. Everything is going up. Even speculative stocks.
Then when the bear comes knocking on the door, the trader gets caught with his pants down.
This is what happened to a majority of stock market traders who came in 2007. If you thought stock prices were cheap during the 2nd quarter, they're even "cheaper" now. So now people are waiting for the market turn. And they are doing that...still waiting.
Admitting Defeat: Freeing yourself from emotions
It's difficult when you have to admit defeat. After making money in a bull market, you think you can't fail. If you are a technical analyst - regardless of your expertise - 99% of the time the failure is not because the market didn't go your way. It's you.
Human emotions are as fragile as the stock prices today. That's why it's so difficult to become a very successful trader. It's not that easy to be free from emotions.
My broker has plenty of clients. He has two phones. Sometimes he'd ask me to wait on the phone while he answers his other call. I'd hear him calming the nerves of his client. It just gives you an idea as to how dynamic human emotions are.
I can still remember what Bonner Dytoc (or was it Danny Go?) said. Investors are traders who forgot to cut their losses. There are real long term investors out there, but in the Philippine market, it's quite difficult to be an investor. It requires a supreme test of patience.
Ask someone who bought certain stocks in 1997 and in 2001. I am sure this person will give you his two cents worth. Or he can just give you a stock that's worth as much. :-D
The key thing in keeping your emotions in check is to know when the chart has broke down. If you don't mitigate your losses the next to break down will be you. Apart from that, you need experience. If you've been actively trading for a good three months, I am very sure that in that span of time you will have learned the value of cutting your losses.
Obviously though, there are still many stubborn people out there. Apart from being stubborn, people like to be sentimental and being needlessly optimistic even if the signs point otherwise. As someone once said, there's no sense in holding on to a stock if you're only investing (or trading) purely on hope.
Just remember, what is the main reason you bought the stock? If that reason is not there anymore, and the chart is obviously confirming that also, then it's time to bid your stock adieu.
You as Director
I am always thinking of how to make technical analysis, trading and investing more relevant for people who have little to no knowledge about the stock market. I made a lot of errors in my short trading life, and I don't want people to have to go through the same. If you lose some, you should win some, otherwise, it's easy to feel disheartened and just classify stock market investing as pure gambling.
As I pondered on the aspect of cutting losses, it dawned upon me that as a stock trader you are actually watching a movie. The stock market is a movie composed of actors called the bear, the bull and the utterly clueless. Although you don't have control over what is going on, what you have control over is ____. This is the power directors have.
And this tip I am sharing with you is absolutely free! But not today. I'll share what it is in the next entry. Stay tuned next Friday! For new readers, I only update my blog on Fridays because of my busier schedules now.
Movie Title - "PSEi at 4000"
Director - D. Bears
Scheduled Release Date - December 2007
Status - Postponed Indefinitely
Genre - Action. Drama. Suspense. Horror.
******
That introduction is a perfect segue to what I want to discuss today. I want to share with you an important component of stock trading psychology and discipline that many people know but few people practice. It's called cutting losses.
As I've learned from Absolute Traders, that's what separates the men from the boys. And folks, there are only a few good men (traders).
It's a sight we often see and a story we often hear. After buying a stock, a novice trader builds an appendage linking himself to his stock. He begins to fall in love with it and before he knows it, the stock becomes a certificate waiting to be passed on as an heirloom.
That's the sad reality. And as in life, the best lessons are learned when you face defeat.
In a bull market, a regular stock trader thinks he is a genius because he is making money. What he doesn't know is that the it doesn't take a genius to make it big in a bull market. Everything is going up. Even speculative stocks.
Then when the bear comes knocking on the door, the trader gets caught with his pants down.
This is what happened to a majority of stock market traders who came in 2007. If you thought stock prices were cheap during the 2nd quarter, they're even "cheaper" now. So now people are waiting for the market turn. And they are doing that...still waiting.
Admitting Defeat: Freeing yourself from emotions
It's difficult when you have to admit defeat. After making money in a bull market, you think you can't fail. If you are a technical analyst - regardless of your expertise - 99% of the time the failure is not because the market didn't go your way. It's you.
Human emotions are as fragile as the stock prices today. That's why it's so difficult to become a very successful trader. It's not that easy to be free from emotions.
My broker has plenty of clients. He has two phones. Sometimes he'd ask me to wait on the phone while he answers his other call. I'd hear him calming the nerves of his client. It just gives you an idea as to how dynamic human emotions are.
I can still remember what Bonner Dytoc (or was it Danny Go?) said. Investors are traders who forgot to cut their losses. There are real long term investors out there, but in the Philippine market, it's quite difficult to be an investor. It requires a supreme test of patience.
Ask someone who bought certain stocks in 1997 and in 2001. I am sure this person will give you his two cents worth. Or he can just give you a stock that's worth as much. :-D
The key thing in keeping your emotions in check is to know when the chart has broke down. If you don't mitigate your losses the next to break down will be you. Apart from that, you need experience. If you've been actively trading for a good three months, I am very sure that in that span of time you will have learned the value of cutting your losses.
Obviously though, there are still many stubborn people out there. Apart from being stubborn, people like to be sentimental and being needlessly optimistic even if the signs point otherwise. As someone once said, there's no sense in holding on to a stock if you're only investing (or trading) purely on hope.
Just remember, what is the main reason you bought the stock? If that reason is not there anymore, and the chart is obviously confirming that also, then it's time to bid your stock adieu.
You as Director
I am always thinking of how to make technical analysis, trading and investing more relevant for people who have little to no knowledge about the stock market. I made a lot of errors in my short trading life, and I don't want people to have to go through the same. If you lose some, you should win some, otherwise, it's easy to feel disheartened and just classify stock market investing as pure gambling.
As I pondered on the aspect of cutting losses, it dawned upon me that as a stock trader you are actually watching a movie. The stock market is a movie composed of actors called the bear, the bull and the utterly clueless. Although you don't have control over what is going on, what you have control over is ____. This is the power directors have.
And this tip I am sharing with you is absolutely free! But not today. I'll share what it is in the next entry. Stay tuned next Friday! For new readers, I only update my blog on Fridays because of my busier schedules now.
Tuesday, January 22, 2008
Making Sense of The Market
I have been trying to view my blog but for the past 3 days, I couldn't. My browser informed me "your connection timed out". Naturally, I pin the blame on my notorious DSL provider.
Well, enough of that.
For the past 3 weeks, investors, traders and institutional buyers have been on the edge of their seats vis-a-vis the market. This is not because of excitement but due to panic. There's a saying that someone's panicked response (i.e. consequential selling) could be someone else's buying opportunity. But in this bear market, there's a "sell on rally" mindset, meaning, people who have held their stocks since last year, and can't take the paper loss anymore will likely sell their shares at each upturn of the market.
What is your best bet during these times?
In the Philippines, where there's only an estimated 1% of the population trading the stock market mainly due to lack of investor education. Hence, 50% of the trading transactions done locally are from foreign brokerages. This makes our market highly sensitive to changes, there's just not enough people investing in the stock market.
I've said in an earlier blog entry (I can't link to it since I can't view my own blog!) that people who buy and sell stocks in the stock market are what I call stock market participants. In general, there are two, the trader and the investor. Last night on CNBC, John Bogle, said that there are two types of people - the investor and the speculator. Even before I heard of John Bogle, I already thought of those two distinctions, albeit in different nouns/descriptions ^_^ This is not to gloat, rather this boosts my confidence in the way I perceive the stock market.
So far, I have heard a lot of friends who say that "be careful" of the stock market. I can't blame them since a lot still have the memories of the half decade spanning 1997 - 2003, where no stock was sacred nor spared. But that is just wrong, if one is to view it that way. Why?
Bato bato sa langit, matamaan huwag magalit, a majority of those who participate in the local stock market are traders, sometimes I prefer to call them gamblers. It is a cynical view of mine of people who try to make the stock market a form of legit gambling house, where people will always ask you the question, what's the next stock to buy? What do you think is the target price of that stock?
This is an immature and premature question, especially for people who have nil knowledge of what really happens and what the objective of the stock market is. Imagine, I was once told that a person, who was new to the stock market, opened with a brokerage firm located in Ortigas, and this person was advised by the broker to buy AJO, PA, "because they have bigger swings", i.e. mas malaki ang kikitain.
If this is how some brokers "advise" their clients, then no wonder we have wild swings in the markets, especially during down days.
Instead of doing that, these "advisers" should first ask the client if they are investing for the short term or for the long term. Time and time again, it has been proven that the stock market will always have short term volatilities, but in the long run, it usually points upwards. The stock market was never meant to be a short term investment.
Think of it this way instead:
Stocks are shares of companies. Companies are business ventures. There is no such thing as a business venture that is built up to lose money. Businesses are put up to make money. However, business cycles will always be there, so there won't always be profits every fiscal year, but in the long run, these businesses will remain. You just have to realize what companies you want to invest in.
Well, enough of that.
For the past 3 weeks, investors, traders and institutional buyers have been on the edge of their seats vis-a-vis the market. This is not because of excitement but due to panic. There's a saying that someone's panicked response (i.e. consequential selling) could be someone else's buying opportunity. But in this bear market, there's a "sell on rally" mindset, meaning, people who have held their stocks since last year, and can't take the paper loss anymore will likely sell their shares at each upturn of the market.
What is your best bet during these times?
In the Philippines, where there's only an estimated 1% of the population trading the stock market mainly due to lack of investor education. Hence, 50% of the trading transactions done locally are from foreign brokerages. This makes our market highly sensitive to changes, there's just not enough people investing in the stock market.
I've said in an earlier blog entry (I can't link to it since I can't view my own blog!) that people who buy and sell stocks in the stock market are what I call stock market participants. In general, there are two, the trader and the investor. Last night on CNBC, John Bogle, said that there are two types of people - the investor and the speculator. Even before I heard of John Bogle, I already thought of those two distinctions, albeit in different nouns/descriptions ^_^ This is not to gloat, rather this boosts my confidence in the way I perceive the stock market.
So far, I have heard a lot of friends who say that "be careful" of the stock market. I can't blame them since a lot still have the memories of the half decade spanning 1997 - 2003, where no stock was sacred nor spared. But that is just wrong, if one is to view it that way. Why?
Bato bato sa langit, matamaan huwag magalit, a majority of those who participate in the local stock market are traders, sometimes I prefer to call them gamblers. It is a cynical view of mine of people who try to make the stock market a form of legit gambling house, where people will always ask you the question, what's the next stock to buy? What do you think is the target price of that stock?
This is an immature and premature question, especially for people who have nil knowledge of what really happens and what the objective of the stock market is. Imagine, I was once told that a person, who was new to the stock market, opened with a brokerage firm located in Ortigas, and this person was advised by the broker to buy AJO, PA, "because they have bigger swings", i.e. mas malaki ang kikitain.
If this is how some brokers "advise" their clients, then no wonder we have wild swings in the markets, especially during down days.
Instead of doing that, these "advisers" should first ask the client if they are investing for the short term or for the long term. Time and time again, it has been proven that the stock market will always have short term volatilities, but in the long run, it usually points upwards. The stock market was never meant to be a short term investment.
Think of it this way instead:
Stocks are shares of companies. Companies are business ventures. There is no such thing as a business venture that is built up to lose money. Businesses are put up to make money. However, business cycles will always be there, so there won't always be profits every fiscal year, but in the long run, these businesses will remain. You just have to realize what companies you want to invest in.
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