Thanks for dropping by reader. I wasn't able to post anything last week, not that it mattered since there wasn't anything exciting to see in the market. There was a brief rally after Europe announced its rescue package but markets the world over has been on the way down since.
I expect the market to head with no direction. And lesson and experience tells me that when the market has no direction, it's better to stay out. Somehow, the saying that "sell in May and go away" is holding true thus far.
Putting the perspective of the US' bailout of its failing financial system in 2008, markets rallied for a while then just went south. It took quite a while before stock markets - and economies - rose again. Given the US bailout the time frame was close to 6 months, if memory serves me right.
But now, we're not talking about bailing out banks. We're talking about bailing out countries! So.... I shudder at the thought.
I got to wonder really. Banks mismanage money. Governments mismanage it too. So if that's the case, will it be better to just put your money in a stash? You can trade the stock market on your own, cash in the gains and always hold on to cash.
While this may sound enticing at some points, it somehow borders on paranoia. Time and time again, investing for the long term has been a boon for investors. I can't say yet if that's applicable in the Philippine setting as I haven't done that. Perhaps if I'm able to have enough to invest for the long haul, I can tell you in about 5-10 years hahaha. Right now, I'd rather be a trader than an investor.
The Philippines though, could be a bit insulated, sans foreign brokers dumping our stocks, given our relatively clean and peaceful national elections. I checked today's PSEi close, and we're now at 3,222. We're 100 points shy from the low last last week of 3,142. More pain to come.
It's inevitable, stock prices may have risen ahead of themselves (i.e. ahead of their projected earnings). While there is a crisis on going, this can serve as an opportunity for stock market newbies to enter at "cheaper" prices. Of course, this is a double edged sword. The path downwards could be continuous.
But, there's really a dearth of possible investment opportunities for the Filipino investor. Time deposit? Interest rate is too low. You're better off spending your money and enjoying your life. Mutual funds and UITF's? If you pick the equity fund they're investing in the same place - the local stock market. Except of course if you choose bond funds. Historically, when the stock markets are crashing, bond markets are cashing gains for investors. This is referred to as "flight to quality". Of course, this is just a simplistic definition.
Making money today is more difficult than it was a 20 years ago. Most industries have heavily entrenched players already. Margins are smaller given the stiff competition. So if you are afraid of shelling out money to be an entrepreneur, then there's a slower way to growth - investing for the long term.
The bloodbath in the markets can spell good opportunities for you. This is a pure speculation play but I would advise going to quality real estate stocks like SMPH, RLC, and ALI. The REIT is supposed to be passed into law sometime this year. With this, there'd be gains for these three big real estate companies. I suppose SMPH and RLC are the ones who stand to gain the most due to their massive square meters (or hectares? hehe) of leasing space.
Of course, if you will invest just for the speculation, then expect that the price can go both ways - up ... or down. Don't say I didn't warn you. Currently, I don't hold any of these stocks but I'm actively looking at them as opportunities.
Until my next post, stay safe with your cash :D (as of this writing the DOW JONES is down 70 points, and more bad news - mortgage delinquencies and new foreclosures increase)
Showing posts with label Guerilla Investing's Hypotheses. Show all posts
Showing posts with label Guerilla Investing's Hypotheses. Show all posts
Wednesday, May 19, 2010
Saturday, May 1, 2010
The Beta...max?
We are just one week away from the national elections and perhaps, that could be a drag for the market due to uncertainties about the automated elections, and of course, anticipation to know who'll be the next President.
If the automated elections push through with little hitches, then on May 11, expect a good market rally (as long as foreign indices, especially the DOW go up too). So this coming week of May 4-7 will likely be a consolidation phase for the market. I tried my rusty knowledge of TA over at Yahoo, since I don't have a charting software. I tried reviewing the chart of the PSEi, or the index of the local market. (If you're a first time stock market trader and would like to know more about TA, go to Absolute Traders)
If my reading is correct, the index will just hover between 2-3% the resistance of 3,300. Certainly a dip back to 3,250 seems likely as the market needs fresh directions. The market may have that big a correction since there's no clear index support except somewhere at 3,200.
While the IMF has raised its forecast for the Philippines, but our deficit shot beyond the target for the first quarter. Earnings of most of the biggest Philippine corporations have been robust so that's quite a number of good news trouncing the bad. The next big story will be the Philippine election and I'm keeping my fingers crossed that all these naysayers about the election not pushing through, blah blah blah will not hold true.
Enough of the elections, there are more sites out there and more personalities who can give you a better opinion. So I digress.
Before you even begin to look at individual stocks, you should look first at the index and its trending. If the overall index is going down, then there's no sense picking individual stocks. These stocks will just be dragged lower by the index. The relationship of a particular stock to the overall index is called the Beta. Of course, don't take my word for it, so go to Investopedia (this is the link) for the exact definition. The higher the beta is of a stock, the more volatile it is. If you're lazy and you don't want to go to the link anymore, here's a quick definition -
A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.
This data is not readily available and you need to do regression analysis as Investopedia suggests. Don't ask me how to do it, as I only do regrets analysis. Hehe. In the past, when I was still subscribing to Technistock, the data was ready, albeit not accurate.
But, without going into the actual computation, if you are a regular stock market trader, you will know more or less what stocks have a strong relationship to the market and which don't. I learned about Beta after browsing through a book on stock market investing. I didn't buy the book anymore as stock market books are quite expensive. If I stumble upon one of them in Book Sale, then that may make me decide to open my wallet...or coin purse.
It's always good to look at the bigger picture before you settle on any particular stock. As that cliche often quoted is, you cannot go against the market. So, before you take a plunge, study first. Good things come to those who wait... and study.
P.S. CPM was the biggest gainer last week (ending April 27) and undoubtedly the biggest loser this week (ending April 30). Then again, 3.70 was a strong resistance. I'm just surprised that it went back all the way down to 3.15 (lowest for the day). Just another day for CPM I suppose.
If the automated elections push through with little hitches, then on May 11, expect a good market rally (as long as foreign indices, especially the DOW go up too). So this coming week of May 4-7 will likely be a consolidation phase for the market. I tried my rusty knowledge of TA over at Yahoo, since I don't have a charting software. I tried reviewing the chart of the PSEi, or the index of the local market. (If you're a first time stock market trader and would like to know more about TA, go to Absolute Traders)
If my reading is correct, the index will just hover between 2-3% the resistance of 3,300. Certainly a dip back to 3,250 seems likely as the market needs fresh directions. The market may have that big a correction since there's no clear index support except somewhere at 3,200.
While the IMF has raised its forecast for the Philippines, but our deficit shot beyond the target for the first quarter. Earnings of most of the biggest Philippine corporations have been robust so that's quite a number of good news trouncing the bad. The next big story will be the Philippine election and I'm keeping my fingers crossed that all these naysayers about the election not pushing through, blah blah blah will not hold true.
Enough of the elections, there are more sites out there and more personalities who can give you a better opinion. So I digress.
Before you even begin to look at individual stocks, you should look first at the index and its trending. If the overall index is going down, then there's no sense picking individual stocks. These stocks will just be dragged lower by the index. The relationship of a particular stock to the overall index is called the Beta. Of course, don't take my word for it, so go to Investopedia (this is the link) for the exact definition. The higher the beta is of a stock, the more volatile it is. If you're lazy and you don't want to go to the link anymore, here's a quick definition -
A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.
This data is not readily available and you need to do regression analysis as Investopedia suggests. Don't ask me how to do it, as I only do regrets analysis. Hehe. In the past, when I was still subscribing to Technistock, the data was ready, albeit not accurate.
But, without going into the actual computation, if you are a regular stock market trader, you will know more or less what stocks have a strong relationship to the market and which don't. I learned about Beta after browsing through a book on stock market investing. I didn't buy the book anymore as stock market books are quite expensive. If I stumble upon one of them in Book Sale, then that may make me decide to open my wallet...or coin purse.
It's always good to look at the bigger picture before you settle on any particular stock. As that cliche often quoted is, you cannot go against the market. So, before you take a plunge, study first. Good things come to those who wait... and study.
P.S. CPM was the biggest gainer last week (ending April 27) and undoubtedly the biggest loser this week (ending April 30). Then again, 3.70 was a strong resistance. I'm just surprised that it went back all the way down to 3.15 (lowest for the day). Just another day for CPM I suppose.
Thursday, April 1, 2010
Resurrecting Your Finances
It's good to be able to blog again.
Two weeks ago today I was on a plane to Davao and spent the rest of the week there. Then the week after that, I was catching up on the work hours I lost while in Davao. It's just now, over the long Holy Weekend, that I'm able to relax and hammer away at my keyboard again.
While in the plane en route to Davao, my mind was fixated on the news about Cebu Pac's IPO this coming May. It's been a while since there's been any IPO in the local stock market. I can't remember how the following got listed - CPM and E-Games - but I know they were not IPOs. Their prices went up after their listing, albeit for a few days.
E-Games in particular also benefited its sister stock - IP (ticker for IPVG Corporation) - the stock rose...and died after about three days.
With Cebu Pac, JGS (ticker for JG Summit) also rose, and is now dead, more or less. Dead meaning the price isn't moving. Perhaps when the IPO date nears, JGS will have price activity once again.
In any case, the IPO of Cebu Pac would hopefully create excitement in the market... next to the post election rally.
Speaking of the market, it has been rising... but the volume hasn't, so it's best to adopt a wait and see approach. Volume is a very important indicator, pointing you towards the right direction when you are trying to time the market. Of course, Warren Buffett will tell you that you can never time the market. Actually, you can, to a certain extent, with the help of technical analysis. You can also time your entry to a particular stock.
I learned about technical analysis from Absolute Traders. They recently had an event which unfortunately, I wasn't able to attend. If you are an active stock trader or you plan to be, it's good to attend their seminars.
Technical analysis isn't a fool proof system and it depends on personal discipline. Unfortunately, most people do not have trading discipline, i.e. we make decisions to buy a particular stock based on fear or greed. If you can make decisions mechanically, then it's good to trade. Otherwise, you're better off buying a quality stock and holding to it until the day you need your money.
Or, you might want to look at investing via mutual funds. Let the professional money managers select the stocks for you. Do note that I use the term "investing" and not trading. Investing is a continuing approach, i.e. you put money into something continuously with the aim of withdrawing those funds only when you are about to retire, or, if the money was meant for a bigger investment (usually real estate) or a future expense (wedding, child's education, hospital expenses, etc).
If you invested in stocks or stock mutual funds in 2007 or 2008 and invested only one time, then your money has (thankfully) recovered most of its value. But that's the wrong way of investing. In fact it's not investing.
Real investing is doing it consistently, usually monthly, using a portion of your monthly paycheck as investment fund. Then, whether it's a stock, or a mutual fund, you invest monthly in the same security. By doing this, you are doing peso cost averaging, so you are able to average out the buying values, whether it's in the highs or in the lows.
With peso cost averaging, you are able to "resurrect" your money over the long term because even if you bought at times of market highs or peak prices, you'll also have times where you buy at the lows. Volatility can be a friend.
I don't confess to be a money expert. I'm still learning along the way, reading books, watching news, and learning from others. Money is easily spent but not so easily earned. So if you are not aware of what you are getting yourself into, whether it is in bonds, stocks, real estate, insurance, or what not, it's best to just go via the safer way of investing - buy and hold and diversifying the kinds of investments you get yourself into.
Two weeks ago today I was on a plane to Davao and spent the rest of the week there. Then the week after that, I was catching up on the work hours I lost while in Davao. It's just now, over the long Holy Weekend, that I'm able to relax and hammer away at my keyboard again.
While in the plane en route to Davao, my mind was fixated on the news about Cebu Pac's IPO this coming May. It's been a while since there's been any IPO in the local stock market. I can't remember how the following got listed - CPM and E-Games - but I know they were not IPOs. Their prices went up after their listing, albeit for a few days.
E-Games in particular also benefited its sister stock - IP (ticker for IPVG Corporation) - the stock rose...and died after about three days.
With Cebu Pac, JGS (ticker for JG Summit) also rose, and is now dead, more or less. Dead meaning the price isn't moving. Perhaps when the IPO date nears, JGS will have price activity once again.
In any case, the IPO of Cebu Pac would hopefully create excitement in the market... next to the post election rally.
Speaking of the market, it has been rising... but the volume hasn't, so it's best to adopt a wait and see approach. Volume is a very important indicator, pointing you towards the right direction when you are trying to time the market. Of course, Warren Buffett will tell you that you can never time the market. Actually, you can, to a certain extent, with the help of technical analysis. You can also time your entry to a particular stock.
I learned about technical analysis from Absolute Traders. They recently had an event which unfortunately, I wasn't able to attend. If you are an active stock trader or you plan to be, it's good to attend their seminars.
Technical analysis isn't a fool proof system and it depends on personal discipline. Unfortunately, most people do not have trading discipline, i.e. we make decisions to buy a particular stock based on fear or greed. If you can make decisions mechanically, then it's good to trade. Otherwise, you're better off buying a quality stock and holding to it until the day you need your money.
Or, you might want to look at investing via mutual funds. Let the professional money managers select the stocks for you. Do note that I use the term "investing" and not trading. Investing is a continuing approach, i.e. you put money into something continuously with the aim of withdrawing those funds only when you are about to retire, or, if the money was meant for a bigger investment (usually real estate) or a future expense (wedding, child's education, hospital expenses, etc).
If you invested in stocks or stock mutual funds in 2007 or 2008 and invested only one time, then your money has (thankfully) recovered most of its value. But that's the wrong way of investing. In fact it's not investing.
Real investing is doing it consistently, usually monthly, using a portion of your monthly paycheck as investment fund. Then, whether it's a stock, or a mutual fund, you invest monthly in the same security. By doing this, you are doing peso cost averaging, so you are able to average out the buying values, whether it's in the highs or in the lows.
With peso cost averaging, you are able to "resurrect" your money over the long term because even if you bought at times of market highs or peak prices, you'll also have times where you buy at the lows. Volatility can be a friend.
I don't confess to be a money expert. I'm still learning along the way, reading books, watching news, and learning from others. Money is easily spent but not so easily earned. So if you are not aware of what you are getting yourself into, whether it is in bonds, stocks, real estate, insurance, or what not, it's best to just go via the safer way of investing - buy and hold and diversifying the kinds of investments you get yourself into.
Saturday, December 12, 2009
The Weekender
Our market recently fell below 3,000, only to recover last Friday. Has the market finally found its peak? I would have wanted to review the chart, alas, I don't have any.
Some of the stocks that went up (and that really caused me to raise my eyebrows) -
Atok Big Wedge (Ticker: AB)
Macondray (Ticker: MRAY)
Philrealty Holdings (RLT)
LIHC went to as high as 12.75 sometime this week and then fell to 10.00 before closing at 10.50 Friday.
I'm just going to repeat my message - be wary of the market. Speculation is the name of the game and the bubble that it will create could burst soon.
The dollar is picking up. My personal opinion is that the dollar will increase in the medium term. But, in terms of the relation between peso and dollar, there will be a lag effect because in December, the peso is historically stronger due to the OFW remittances being converted to peso.
So if you are a speculator, then you can use this month as a window of opportunity.
Remember that investing is different from speculating. If you think that you need the dollars for a future dollar denominated expense then by all means go for it. Otherwise, don't buy dollars (or any other currency for that matter) just because "you know it'll go up". Like that a book title I saw recently in a bookstore, "Hope is not a strategy."
Some of the stocks that went up (and that really caused me to raise my eyebrows) -
Atok Big Wedge (Ticker: AB)
Macondray (Ticker: MRAY)
Philrealty Holdings (RLT)
LIHC went to as high as 12.75 sometime this week and then fell to 10.00 before closing at 10.50 Friday.
I'm just going to repeat my message - be wary of the market. Speculation is the name of the game and the bubble that it will create could burst soon.
The dollar is picking up. My personal opinion is that the dollar will increase in the medium term. But, in terms of the relation between peso and dollar, there will be a lag effect because in December, the peso is historically stronger due to the OFW remittances being converted to peso.
So if you are a speculator, then you can use this month as a window of opportunity.
Remember that investing is different from speculating. If you think that you need the dollars for a future dollar denominated expense then by all means go for it. Otherwise, don't buy dollars (or any other currency for that matter) just because "you know it'll go up". Like that a book title I saw recently in a bookstore, "Hope is not a strategy."
Saturday, July 25, 2009
Simple Arithmetic & Education Woes
I'm back and I hope my post sparks your interest.In a different blog, I earlier wrote that the quality of Philippine education can be accurately assessed by the people who man (or wo-man) the department stores. Today, I realized that the cashier can also be a good indicator. In two separate instances (actually two fastfood joints), I was reminded that the quality of education in the Philippines is continually degenerating.
Probably this is my version of Freakonomics, but just by observing them you learn a lot of things. During lunch time today, I was with a friend and we went to a restaurant to (obviously) eat. It was already 1:00 in the afternoon so people were sparse and some tables were not yet cleaned.
We found a place to settle in and proceeded to the counter to order. After ordering, the comely cashier politely said, "Sir, total bill is Php 210.00."
I leafed through the bills on my breast pocket and realized that I had a 500.00 bill. I also knew that I had a couple of coins in my infamous coin purse (people who have seen it swear at me because I also store bills in it. It's a quirk).
So I replied, "I'll just give you Php 510.00."
The cashier just stared at me then accepted my bill. The cash register opened up and she took out Php 280.00 and gave it to me. "Here's your change."
For a moment there, I froze and my neurons sparked like wildfire sending signals to my mouth as it uttered the words, "Miss, shouldn't I get Php 300.00?"
The cashier was taken aback so her colleague came over and realized the situation. She asked her how much I gave and how much the bill was. The error was rectified thereafter. In what would be an embarrasing situation, her colleague took out a calculator and gently showed her why it was 300.00.
I thought that was that... who would have thought?
During the afternoon, I was to have a light snack with somebody.
Same scene, except that the restaurant was packed because it was mid-afternoon. After finding a quaint table, we decided to order already. After finishing our order, the cashier told me, "Your bill is Php 202.00."
I gave her a 1,000 bill, and she asked if I had 2.00 coins to which I answered in the affirmative.
The cash register opens and she gives me - surprise surprise - 790.00. What the...?
Anyway, it was resolved shortly thereafter.
Two times in a day? Maybe it's because of their harried state. But in the first instance, I and my friend were the only customer in line. I would believe this to be so for the second instance, but still....
People talk about the brain drain here and I couldn't agree more. In my current work, it's been a month already but I've only gotten a mishmash of so-so applicants for critical positions in my division. I thought that there are many people out there looking for jobs? It's either applicants are picky or there's no pool of quality applicants to pick from. So the story continues...
Saturday, April 18, 2009
Investmenployment Part II
This is the follow up post to my earlier post on employment.
I purposely left hanging my earlier post with this last comment -
So Mr. Guerilla Investor, are you saying that a security guard, a janitor, or a driver should go to work to build a career? Don't they go to work for practical reasons?
In my almost 8 odd years of working, I have come to understand that initially, people work for practical reasons. Yes, you must work in order to live (unless you're sitting on a pile of cash), but when work becomes routine, when it becomes a requirement already, you get burnt out. And before you know it, you're writing your resignation letter for God knows what you created for a reason.
If you're a leader of others (i.e. a manager with staff under you), you have to be aware of the telltale signs that your staff is unmotivated or worse, on the verge of resignation. I've read and been coached that one sign is tardiness. The other is frequent absences. Of course, that's not the only sign you have to watch out for. You must get to the bottom of the subordinate's behavior.
Anyway, going back...
Lacking any factual evidence at this point, I will use empirical data instead, citing examples to establish my point.
The principle of being a career person is to have a goal. It's been said everywhere else and a lot of textbooks and career coaching books will tell you the same thing. Having a goal is an important tool for you to take a step ahead of the pack.
But I would add this point - at the core of having a goal is the word called driven. And with no pun intended, my first example is a rent a car driver I used to deal a lot with during my previous work.
More on it in the next post.
(I know I've been delayed two days since my scheduled post, forgiveness is not too much to ask right? ^^ Thanks for dropping by)
I purposely left hanging my earlier post with this last comment -
So Mr. Guerilla Investor, are you saying that a security guard, a janitor, or a driver should go to work to build a career? Don't they go to work for practical reasons?
In my almost 8 odd years of working, I have come to understand that initially, people work for practical reasons. Yes, you must work in order to live (unless you're sitting on a pile of cash), but when work becomes routine, when it becomes a requirement already, you get burnt out. And before you know it, you're writing your resignation letter for God knows what you created for a reason.
If you're a leader of others (i.e. a manager with staff under you), you have to be aware of the telltale signs that your staff is unmotivated or worse, on the verge of resignation. I've read and been coached that one sign is tardiness. The other is frequent absences. Of course, that's not the only sign you have to watch out for. You must get to the bottom of the subordinate's behavior.
Anyway, going back...
Lacking any factual evidence at this point, I will use empirical data instead, citing examples to establish my point.
The principle of being a career person is to have a goal. It's been said everywhere else and a lot of textbooks and career coaching books will tell you the same thing. Having a goal is an important tool for you to take a step ahead of the pack.
But I would add this point - at the core of having a goal is the word called driven. And with no pun intended, my first example is a rent a car driver I used to deal a lot with during my previous work.
More on it in the next post.
(I know I've been delayed two days since my scheduled post, forgiveness is not too much to ask right? ^^ Thanks for dropping by)
Monday, April 13, 2009
Investmenployment
I didn't notice time flying by until I visited the blog and noticed that my last post was March 21. I was busy writing a couple of articles for some publications that at some point, my creative juices were drained dry. Apart from that is the fact that I also now have an 8-5 job.
My brain cells are in splinters and I realized that I haven't posted anything new in the recent past. This isn't my normal schedule (I post something new every Friday) but I think I owe you to post something brilliant... I hope.
Having an 8-5 job is a good thing. The mind needs to be constantly nurtured and sharpened, and there is none place better than at work. You are there to strategize, to solve problems and to seek alliances. The best part? You get paid to do that.
Not everyone feels that way. I'm no organizational behavior guru and I'm not here to preach about a new management philosophy. Instead, I'm here today to offer you the perspective that employment - just like the other E called entrepreneurship - is an investment.
There's this common thread among employees that go to work for a handful of reasons - pay the rent, for the children, etc etc. Work is the means to an end. While that is correct, people need to be educated and taught that while work is important, it is having a career that matters.
Sure, I speak like an idealistic fresh graduate. But too many times, I've noticed that people leave organizations because they entered looking for work, not to build their career. Although I've read elsewhere that people leave organizations because of their (problems with their) managers. I agree with that also.
So Mr. Guerilla Investor, are you saying that a security guard, a janitor, or a driver should go to work to build a career? Don't they go to work for practical reasons?
I'll share with you my insight this coming Friday.
My brain cells are in splinters and I realized that I haven't posted anything new in the recent past. This isn't my normal schedule (I post something new every Friday) but I think I owe you to post something brilliant... I hope.
Having an 8-5 job is a good thing. The mind needs to be constantly nurtured and sharpened, and there is none place better than at work. You are there to strategize, to solve problems and to seek alliances. The best part? You get paid to do that.
Not everyone feels that way. I'm no organizational behavior guru and I'm not here to preach about a new management philosophy. Instead, I'm here today to offer you the perspective that employment - just like the other E called entrepreneurship - is an investment.
There's this common thread among employees that go to work for a handful of reasons - pay the rent, for the children, etc etc. Work is the means to an end. While that is correct, people need to be educated and taught that while work is important, it is having a career that matters.
Sure, I speak like an idealistic fresh graduate. But too many times, I've noticed that people leave organizations because they entered looking for work, not to build their career. Although I've read elsewhere that people leave organizations because of their (problems with their) managers. I agree with that also.
So Mr. Guerilla Investor, are you saying that a security guard, a janitor, or a driver should go to work to build a career? Don't they go to work for practical reasons?
I'll share with you my insight this coming Friday.
Friday, March 13, 2009
Buy and Hold a.k.a. Die if you haven't sold
Recently, one of Guerilla Investing's sources of inspiration - Mr. Warren Buffett - has been hit by a series of setbacks. His company's stock has dropped 34% from last year. He is now the second richest man (not that that's a bad thing) due to a shrinkage of over 50% of his net worth - down to just $37 billion from $62 billion a year ago. His flagship company, Berkshire Hathaway has just lost its top credit rating from Fitch.
Another of our idol, Mr. Marc Faber, declared that the strategy being employed by Warren Buffett "is already dead, and has been dead for the past 10 years." I've attended one of the former's talks here in the country before but it's a tad difficult trying to understand his English due to his strong Swiss accent.
Anyway....
I am sure that the span of Warren's career has saw him going through some of the toughest financial climates post-Great Depression. And time and time again, he's been able to prove his critics wrong. The only question now is whether this will still hold true 5 or 10 years from now.
Certainly those who follow the buy and hold method have seen their wealth dwindle by 40-50% from their original investment values. Even our local mutual fund companies have suffered a great deal in terms of their NAVPS.
I guess instead of focusing on the buy and hold strategy, it's better to stick to the other philosophy that Warren Buffett preaches - that is, to diversify. There's also a mainstream thought that you shouldn't invest more than you can lose.
These simple reminders hopefully stick with us even when the bull run returns. Everything moves in cycles.
Have a happy weekend!
Another of our idol, Mr. Marc Faber, declared that the strategy being employed by Warren Buffett "is already dead, and has been dead for the past 10 years." I've attended one of the former's talks here in the country before but it's a tad difficult trying to understand his English due to his strong Swiss accent.
Anyway....
I am sure that the span of Warren's career has saw him going through some of the toughest financial climates post-Great Depression. And time and time again, he's been able to prove his critics wrong. The only question now is whether this will still hold true 5 or 10 years from now.
Certainly those who follow the buy and hold method have seen their wealth dwindle by 40-50% from their original investment values. Even our local mutual fund companies have suffered a great deal in terms of their NAVPS.
I guess instead of focusing on the buy and hold strategy, it's better to stick to the other philosophy that Warren Buffett preaches - that is, to diversify. There's also a mainstream thought that you shouldn't invest more than you can lose.
These simple reminders hopefully stick with us even when the bull run returns. Everything moves in cycles.
Have a happy weekend!
Friday, February 13, 2009
Guerilla Investing's 2009 Predictions
Time to go back to my usual Guerilla Investing blog routine...
>drum roll please<
In this week's post, allow me to wear my fortune teller's hat and give my bold predictions for the year ahead. Now before I start, allow me also to gloat (har har) about an article I wrote that wound up in the Business Mirror.
To sum it up, here was what I said,
"Your active source, be it business or employment, will not evaporate overnight. But the upcoming volatility in the financial markets, which will affect stocks and bonds (do not forget), is only a reminder to you that you should always live within your means. It is also a reminder that large gains from investments are an echo of this famous proverb, “If it sounds too good to be true, it probably is.” Stay safe. "
There's nothing sweeter and more irritating than to hear someone tell you, "I told you so."
Risking a spank to the face or a kick in the a--, I told you so! Haha. In fact, I am also saying that in front of the mirror.
Though I may have had it right with my prognosis last year; I did from time to time forget my own admonition.
It's just good I didn't get sucked in to the double-your-misery-in-five-years scheme. It's also good I am not American and did not entrust my entire life savings to Madoff. I'm also thankful that my preneed firm is still alive, "still" being the operative word here.
Killing Me Softly
You see, the term Filipino time is not used for naught. Progress and development in some sectors and current affairs of the country is slow. Take the public transportation for one. Take our country's competitiveness as another example. Further to that, take the effects of the global financial meltdown as another instance.
So far, our country has either weathered the storm quite well or we are just starting to feel the ill effects of Wall Street greed. No matter which side of the fence you are, uncertainty reigns supreme. And markets hate uncertainties. For this reason, investments this year, particularly paper investments would likely stay flat or decline even further.
If you are someone looking to invest, now is still a good time to invest, as was last year or the year before. Investing is always long term so ruin your eyes a bit and be a farsighted person. For those who invested last year and crying and ripping their hearts out (and maybe their financial "advisor's" also), remember that you didn't invest to make a quick buck. You can go over to the casino for that.
I'm also hearing a lot of people - including Dr. Doom and Jim Rogers - say that you should stay away from the US dollar. For someone who grew up seeing the dollar rise from the high 20s to the high 50s, it's something that's thought provoking, even mythical. So what does a poor fellow who has life insurance quoted in dollars? When he dies, does his beneficiaries get only peanuts?
Yes, the Philippines isn't as fast paced as most of the developed world, but being late also has its merits. Take this chaotic time to review all the assets you have with you. Are you well diversified or are you putting everything in just one basket?
Farming and Gold
During times of crises, the only things that are safe are basic commodities. Unfortunately for us, our slow paced development works to our disadvantage. For poor folks like you and me, it's hard to get our hands on investments in gold. The closest thing to that is jewelry, and it don't come cheap.
Your other option is to buy shares of companies that produce gold like Philex Mining. Apex Mining seems to be getting a lot of attention lately. I'm not saying that these are the stocks you must buy. A lot of "experts" (you see in the olden days, experts were often asked about stocks to buy, and most of them tanked last year, apart from being out of their jobs) tell people to buy defensive stocks - utilities and mining.
I prefer to take it a step further by asking you, the investor, this question. Are you looking at a potential rebound in the global economy. If yes, why are you being defensive? Why aren't you buying the other stocks that are dirt cheap?
Other than gold, food is another potential haven for you. We can do away with a new cellphone, but we cannot live without rice. Again, there aren't really investment avenues for us folks with regards to agriculture - unless you become a farmer.
Whichever investment you choose, it depends on what you see in your own crystall ball.
Something worse over the horizon
Critics and pundits are saying that the age of government control is back, with Newsweek bannering their recent issue with "We are all socialists now"on their cover.
Jim Rogers says that the stimulus plan won't work. Let me share you snippets of the article that came out in CNBC recently-
The recent shifts towards protectionism are harmful, Rogers warned.
Do you hear the drums of World War III?
Last thoughts
While I dream of electric sheep and hope one day of becoming an oft-quoted (expert) source, I just try my best to explain complicated financial planning concepts into digestible nuggets for now.
I'd love to be a consistent contributor to a personal finance column, but I guess some of the things I say are better off being published in a blog than in newspapers or magazines.
While there may be experts out there - hopefully not from Wall Street and ratings agencies - we have to dissect the information ourselves. After all it's our money we're risking.
>drum roll please<
In this week's post, allow me to wear my fortune teller's hat and give my bold predictions for the year ahead. Now before I start, allow me also to gloat (har har) about an article I wrote that wound up in the Business Mirror.
To sum it up, here was what I said,
"Your active source, be it business or employment, will not evaporate overnight. But the upcoming volatility in the financial markets, which will affect stocks and bonds (do not forget), is only a reminder to you that you should always live within your means. It is also a reminder that large gains from investments are an echo of this famous proverb, “If it sounds too good to be true, it probably is.” Stay safe. "
There's nothing sweeter and more irritating than to hear someone tell you, "I told you so."
Risking a spank to the face or a kick in the a--, I told you so! Haha. In fact, I am also saying that in front of the mirror.
Though I may have had it right with my prognosis last year; I did from time to time forget my own admonition.
It's just good I didn't get sucked in to the double-your-misery-in-five-years scheme. It's also good I am not American and did not entrust my entire life savings to Madoff. I'm also thankful that my preneed firm is still alive, "still" being the operative word here.
Killing Me Softly
You see, the term Filipino time is not used for naught. Progress and development in some sectors and current affairs of the country is slow. Take the public transportation for one. Take our country's competitiveness as another example. Further to that, take the effects of the global financial meltdown as another instance.
So far, our country has either weathered the storm quite well or we are just starting to feel the ill effects of Wall Street greed. No matter which side of the fence you are, uncertainty reigns supreme. And markets hate uncertainties. For this reason, investments this year, particularly paper investments would likely stay flat or decline even further.
If you are someone looking to invest, now is still a good time to invest, as was last year or the year before. Investing is always long term so ruin your eyes a bit and be a farsighted person. For those who invested last year and crying and ripping their hearts out (and maybe their financial "advisor's" also), remember that you didn't invest to make a quick buck. You can go over to the casino for that.
I'm also hearing a lot of people - including Dr. Doom and Jim Rogers - say that you should stay away from the US dollar. For someone who grew up seeing the dollar rise from the high 20s to the high 50s, it's something that's thought provoking, even mythical. So what does a poor fellow who has life insurance quoted in dollars? When he dies, does his beneficiaries get only peanuts?
Yes, the Philippines isn't as fast paced as most of the developed world, but being late also has its merits. Take this chaotic time to review all the assets you have with you. Are you well diversified or are you putting everything in just one basket?
Farming and Gold
During times of crises, the only things that are safe are basic commodities. Unfortunately for us, our slow paced development works to our disadvantage. For poor folks like you and me, it's hard to get our hands on investments in gold. The closest thing to that is jewelry, and it don't come cheap.
Your other option is to buy shares of companies that produce gold like Philex Mining. Apex Mining seems to be getting a lot of attention lately. I'm not saying that these are the stocks you must buy. A lot of "experts" (you see in the olden days, experts were often asked about stocks to buy, and most of them tanked last year, apart from being out of their jobs) tell people to buy defensive stocks - utilities and mining.
I prefer to take it a step further by asking you, the investor, this question. Are you looking at a potential rebound in the global economy. If yes, why are you being defensive? Why aren't you buying the other stocks that are dirt cheap?
Other than gold, food is another potential haven for you. We can do away with a new cellphone, but we cannot live without rice. Again, there aren't really investment avenues for us folks with regards to agriculture - unless you become a farmer.
Whichever investment you choose, it depends on what you see in your own crystall ball.
Something worse over the horizon
Critics and pundits are saying that the age of government control is back, with Newsweek bannering their recent issue with "We are all socialists now"on their cover.
Jim Rogers says that the stimulus plan won't work. Let me share you snippets of the article that came out in CNBC recently-
The recent shifts towards protectionism are harmful, Rogers warned.
"This is very dangerous, that's what caused the great depression in the 1930s. If it happens again, then you'd better sell all the stocks, you'd better sell a lot of everything and bunker down," he said.
"We already have a lot of social unrest developing. If protectionism comes back, you'd better be really, really careful," Rogers added.Do you hear the drums of World War III?
Last thoughts
While I dream of electric sheep and hope one day of becoming an oft-quoted (expert) source, I just try my best to explain complicated financial planning concepts into digestible nuggets for now.
I'd love to be a consistent contributor to a personal finance column, but I guess some of the things I say are better off being published in a blog than in newspapers or magazines.
While there may be experts out there - hopefully not from Wall Street and ratings agencies - we have to dissect the information ourselves. After all it's our money we're risking.
Tuesday, November 18, 2008
The Waves of Philippine Business P. 5
Healthcare, the next wave
Last week I mentioned that the next wave for Philippine business could possibly be in the arena of healthcare. You may be wondering, healthcare? Didn't we just send off the last batch of graduating nurses abroad?
While the local healthcare system is certainly needing of more nurses, it makes sense - at least to me - that this is the plausible next wave for business opportunities. One must remember that healthcare is a very very broad word that carries with it a lot of sub-industries. Which is why it's worth noting them down.
Let me name them -
Health Insurance
Health Products
Health (ier) Foods
Hospital Care
Nursing Home
Cheaper Medicines
Medicinal Alternatives
In fact, healthcare may also encompass other industries like dermatology clinics and the booming wellness clinics like spas. With that in mind though, it seems that I am again, behind the curve.
Better Late than Never
Yet, sometimes being behind the curve has its benefits. If you're the pioneer in a certain industry, you almost always have bigger challenges to surmount. This means then, that you also have to have more capital and tons more amounts of perseverance, to survive. Of course, the flipside is that the returns are much higher. The reason is that you have to teach your target market and to acquaint them, and to convince them that they need your product / service.
This brings to mind Smart Money. Smart Money was launched sometime in the earlier part of this century, and to my knowledge, it flunked. This year, they relaunched the product with heavy TV advertising. I wonder if it's made inroads already into the psyche of Filipino consumers. I think that mobile commerce is a lucrative business (more on this in a future post), but right now, the market is still small.
The critical base - the masa crowd, believe it or not, are important in sustaining any business. Consumer goods companies need them to survive. SM needs them to survive. Tutuban and 168 Mall needs them to survive. Since a majority still dont have access to Internet in their homes, it will take more time for mobile commerce companies to really fly in this country.
The other market for mobile commerce - the middle class market - would be a good target market. But in my opinion, I think they are just not ready yet for mobile commerce. Besides, the supposedly cheaper prices of Internet cannot match the vastness of the catalogue (and of course price) of products found in Divisoria. People still brave the horrendous traffic and pickpocketers just to find a good bargain. Moreover, you can't try on a shirt or a pair of shoes on the net now can you?
What am I trying to drive at here?
While using Smart Money alone as an example is not a good indicator, I am relying here on pure gut feel. A gut feel that tells me that being the first isn't always the brightest idea. Especially for an SME entrepreneur.
As you can see, being the first may have its advantages; however, it also brings with it a confounding set of problems. Being behind the curve, albeit not too behind, will allow you to cash in on a certain market without having to put up an insane amount of capital.
Business Cycle
Business will always come in cycles, no matter what an optimistic economist may say otherwise. The current housing problem in the United States is nothing extraordinary, you can't keep on buying houses. There's got to be a plateau at a certain stage. It's what businesses do during the plateau stage that ensures its survival.
The business cycle usually comes in four stages. The infancy stage, the growth stage, the maturity stage and the decline stage. The length of time per stage depends on business to business, industry to industry. Apart from that, you have to know also if there is a decline stage at all for a particular industry.
So far, the telecoms industry is in a prolonged maturity stage. I doubt that there'd be a decline stage in the foreseeable future. People need to communicate. The decline stage though, will come for a particular type of technology. Like how pagers were wiped out from the face of the earth with the entry of the more compact mobile phone.
More in my next enry. Thanks for dropping by!
** I'm posting later than Friday, for that I apologize. I'm busy doing something right now and I have to prioritize them over my blogging. Thanks for dropping by :-)
Last week I mentioned that the next wave for Philippine business could possibly be in the arena of healthcare. You may be wondering, healthcare? Didn't we just send off the last batch of graduating nurses abroad?
While the local healthcare system is certainly needing of more nurses, it makes sense - at least to me - that this is the plausible next wave for business opportunities. One must remember that healthcare is a very very broad word that carries with it a lot of sub-industries. Which is why it's worth noting them down.
Let me name them -
Health Insurance
Health Products
Health (ier) Foods
Hospital Care
Nursing Home
Cheaper Medicines
Medicinal Alternatives
In fact, healthcare may also encompass other industries like dermatology clinics and the booming wellness clinics like spas. With that in mind though, it seems that I am again, behind the curve.
Better Late than Never
Yet, sometimes being behind the curve has its benefits. If you're the pioneer in a certain industry, you almost always have bigger challenges to surmount. This means then, that you also have to have more capital and tons more amounts of perseverance, to survive. Of course, the flipside is that the returns are much higher. The reason is that you have to teach your target market and to acquaint them, and to convince them that they need your product / service.
This brings to mind Smart Money. Smart Money was launched sometime in the earlier part of this century, and to my knowledge, it flunked. This year, they relaunched the product with heavy TV advertising. I wonder if it's made inroads already into the psyche of Filipino consumers. I think that mobile commerce is a lucrative business (more on this in a future post), but right now, the market is still small.
The critical base - the masa crowd, believe it or not, are important in sustaining any business. Consumer goods companies need them to survive. SM needs them to survive. Tutuban and 168 Mall needs them to survive. Since a majority still dont have access to Internet in their homes, it will take more time for mobile commerce companies to really fly in this country.
The other market for mobile commerce - the middle class market - would be a good target market. But in my opinion, I think they are just not ready yet for mobile commerce. Besides, the supposedly cheaper prices of Internet cannot match the vastness of the catalogue (and of course price) of products found in Divisoria. People still brave the horrendous traffic and pickpocketers just to find a good bargain. Moreover, you can't try on a shirt or a pair of shoes on the net now can you?
What am I trying to drive at here?
While using Smart Money alone as an example is not a good indicator, I am relying here on pure gut feel. A gut feel that tells me that being the first isn't always the brightest idea. Especially for an SME entrepreneur.
As you can see, being the first may have its advantages; however, it also brings with it a confounding set of problems. Being behind the curve, albeit not too behind, will allow you to cash in on a certain market without having to put up an insane amount of capital.
Business Cycle
Business will always come in cycles, no matter what an optimistic economist may say otherwise. The current housing problem in the United States is nothing extraordinary, you can't keep on buying houses. There's got to be a plateau at a certain stage. It's what businesses do during the plateau stage that ensures its survival.
The business cycle usually comes in four stages. The infancy stage, the growth stage, the maturity stage and the decline stage. The length of time per stage depends on business to business, industry to industry. Apart from that, you have to know also if there is a decline stage at all for a particular industry.
So far, the telecoms industry is in a prolonged maturity stage. I doubt that there'd be a decline stage in the foreseeable future. People need to communicate. The decline stage though, will come for a particular type of technology. Like how pagers were wiped out from the face of the earth with the entry of the more compact mobile phone.
More in my next enry. Thanks for dropping by!
** I'm posting later than Friday, for that I apologize. I'm busy doing something right now and I have to prioritize them over my blogging. Thanks for dropping by :-)
Monday, November 10, 2008
The Waves of Philippine Business P. 4
OFW Remittances Revisited
No one should belittle the impact OFWs have made for the country. Obviously, having a lot of OFWs also signifies that there is an underlying fundamental problem within the country. Nonetheless, they are and will continue to be the driving force for the local economy.
I discussed about how - knowingly or unknowingly - we have moved up the value chain in terms of talent exports, by sending engineers, interior designers, and recently, nurses.
I would like to explore how OFW remittances have also moved up the higher value spending chain.
It used to be that remittances brought back home would go to necessities - food and clothing. The first high value product were the household appliances, foremost of that was the TV. I was blessed to have travelled abroad while I was still young. I distinctly remember a lot of our compatriots sending back TV sets. While waiting for your baggage at the luggage counter, you'd see a lot of them being ferried out.
Fast forward to the present and now OFW remittances are being used to pay for college education, automobiles, and until recently cart franchises and real estate. As I've said in the second part of this series, an important charting tool to forecast what the next Philippine business wave will be is to understand where and what OFW remittances are being spent on.
However, you don't always need to have the latest data for you to know the answer. You just have to be more perceptive of your surrounding. Take for instance the franchising industry in the country. The franchising business in the country is said to be worth an estimated 15 percent of the annual (Philippine) retail sales of roughly $5 billion. Where did the money come from to fuel enormous growth rates for the franchising industry? Why the OFW remittances of course.
Even though most of our overseas Filipinos have established their lives offshore, I don't doubt that when they are near retiring age, they will return to their homeland. But since they know the value of hard earned money, they don't want to come back here empty handed.
It is for this reason that they have setup a business for their children (or for themselves). That way, they'd still have a source of livelihood once they are here. Some OFWs don't wait until retirement age to come back. These people build up their capital and come back here to put up their SME's.
If business does not suit their tastes, then a roof above their heads is something that holds mass appeal. OFW remittances, proving their economic clout once again, fueled the growth of the local real estate sector. With the burdgeoning supply though, it remains to be seen if this sector will continue to post record gains. Demand has to plateau and it will take a number of years before demand catches up with supply. I touched lightly on the property sector a few posts back.
In tracking the progress of OFW remittances, I project that the next wave of growth would be in the arena of investments. This won't necessarily translate into instant huge volumes in the local stock market though, chap. But the remittances have found their way into the subscription of retail investments like mutual funds and unit investment trust funds.
In fact, I am behind the curve already. Based from the SEC, in the year 2000, our mutual fund industry was already valued at US$ 161M.
These three - business, real estate and investments - are where the money is and will be. Among the three, business, particularly SME's will continue to thrive as opposed to real estate and investments. Cohesively, all three are considered investments anyway. Investments don't just mean mutual funds and stocks and bonds. They also mean putting money in real estate or a going concern. Since we have been in this Investment Wave for quite some time already, probably 3-5 years, growth won't be as insane as in years past. So it's important to extend our lenses even further.
In my bold attempt at trying to be a pseudo business guru, I think the next logical wave would be in the area of healthcare. I'll talk about that in my next entry.
No one should belittle the impact OFWs have made for the country. Obviously, having a lot of OFWs also signifies that there is an underlying fundamental problem within the country. Nonetheless, they are and will continue to be the driving force for the local economy.
I discussed about how - knowingly or unknowingly - we have moved up the value chain in terms of talent exports, by sending engineers, interior designers, and recently, nurses.
I would like to explore how OFW remittances have also moved up the higher value spending chain.
It used to be that remittances brought back home would go to necessities - food and clothing. The first high value product were the household appliances, foremost of that was the TV. I was blessed to have travelled abroad while I was still young. I distinctly remember a lot of our compatriots sending back TV sets. While waiting for your baggage at the luggage counter, you'd see a lot of them being ferried out.
Fast forward to the present and now OFW remittances are being used to pay for college education, automobiles, and until recently cart franchises and real estate. As I've said in the second part of this series, an important charting tool to forecast what the next Philippine business wave will be is to understand where and what OFW remittances are being spent on.
However, you don't always need to have the latest data for you to know the answer. You just have to be more perceptive of your surrounding. Take for instance the franchising industry in the country. The franchising business in the country is said to be worth an estimated 15 percent of the annual (Philippine) retail sales of roughly $5 billion. Where did the money come from to fuel enormous growth rates for the franchising industry? Why the OFW remittances of course.
Even though most of our overseas Filipinos have established their lives offshore, I don't doubt that when they are near retiring age, they will return to their homeland. But since they know the value of hard earned money, they don't want to come back here empty handed.
It is for this reason that they have setup a business for their children (or for themselves). That way, they'd still have a source of livelihood once they are here. Some OFWs don't wait until retirement age to come back. These people build up their capital and come back here to put up their SME's.
If business does not suit their tastes, then a roof above their heads is something that holds mass appeal. OFW remittances, proving their economic clout once again, fueled the growth of the local real estate sector. With the burdgeoning supply though, it remains to be seen if this sector will continue to post record gains. Demand has to plateau and it will take a number of years before demand catches up with supply. I touched lightly on the property sector a few posts back.
In tracking the progress of OFW remittances, I project that the next wave of growth would be in the arena of investments. This won't necessarily translate into instant huge volumes in the local stock market though, chap. But the remittances have found their way into the subscription of retail investments like mutual funds and unit investment trust funds.
In fact, I am behind the curve already. Based from the SEC, in the year 2000, our mutual fund industry was already valued at US$ 161M.
These three - business, real estate and investments - are where the money is and will be. Among the three, business, particularly SME's will continue to thrive as opposed to real estate and investments. Cohesively, all three are considered investments anyway. Investments don't just mean mutual funds and stocks and bonds. They also mean putting money in real estate or a going concern. Since we have been in this Investment Wave for quite some time already, probably 3-5 years, growth won't be as insane as in years past. So it's important to extend our lenses even further.
In my bold attempt at trying to be a pseudo business guru, I think the next logical wave would be in the area of healthcare. I'll talk about that in my next entry.
Friday, October 31, 2008
The Waves of Philippine Business P. 3
I mentioned in the first part of this series, that hindsight is 20/20, and foresight is ensuring you still have 20/20. It's about being prepared for the future. It is a bold attempt for me to be discussing about the waves of Philippine business. I'm no business guru. I just have a penchant for observation and deep thought. Quiet dissertation, so to speak.
I mentioned also that the biggest and most important indicator are OFW Remittances. This is the single most crucial factor that drives the Philippine Economy. Sure consumption is equally important. But to put things in perspective - if we are to illustrate it - the Philippine Economy is like a jeepney.
Consumption is the jeepney driver, OFW remittances are the passengers. The more passengers the jeepney driver has, the bigger his consumption power is. When he sees a lot of prospective passengers on the street, he'll drive the jeepney faster to finish his first trip and go right back to picking the next batch of passengers on his second trip. The Philippine Economy explained.
OFW remittances are the sole reason why the Philippine economy continues to exist. That's why even with high corruption level, bad business practices, rising poverty level, and dwindling natural resources, we aren't going under anytime soon. Obviously, all of these negative factors will catch up with the country one day, but when? The answer is up in the air.
I quoted John Gokonwei earlier, mentioning that we are a country that consumes everything, and produces nothing. Reading between the lines, it means that we have a low manufacturing base in the country. This is beacause most have migrated to investor-friendly China in the past few years. Apart from that, the lack of labor unions in that country allow foreign companies to scrimp on wages.
Even if we don't have a diverse set of manufacturing plants in the country, we still export our number one produce - human talent. However, unlike plants that manufacture goods in just a number of days or weeks or months, ours take years. It takes 20 years to send off able workers. Anyone younger than that would be considered illegal.
Since population is a growing resource for us, there are many who have gone abroad already. There is just so many Filipinos in that age range. So in understanding OFW remittances and OFW exports, we have to know, how many productive individuals are in that age range? And the next important question is, when will the existing ones retire? When they retire, do they plan to come back?
You can see where question leads to, but let's skip that for the moment.
As I've mentioned, even though we don't have a lot of manufacturers here, we are still exporters by my definition. Exporters of labor. But what have you been noticing? We don't just export DH (domestic helpers) anymore, we now export healthcare professionals, apart from engineers or IT professionals.
And this is something that is interesting to talk about. It's basically a hindsight analysis. In most manufacturing countries, they must go up the value chain to survive. China won't survive by just producing cheap garments. They must venture also into technology.
In the same way, our labor exports have gone up the value chain - by producing nurses. And like high value goods, our high value professionals produce/remit more dollars back home, thus driving our economy even more. With growing competition from Indonesia of domestic helpers, (at least in Hong Kong) it's interesting to note that we have shifted our human exports to a different industry.
It is in these analyses that will spring forth a slew of ideas. We'll discuss more in my next entry. Happy Halloween!
I mentioned also that the biggest and most important indicator are OFW Remittances. This is the single most crucial factor that drives the Philippine Economy. Sure consumption is equally important. But to put things in perspective - if we are to illustrate it - the Philippine Economy is like a jeepney.
Consumption is the jeepney driver, OFW remittances are the passengers. The more passengers the jeepney driver has, the bigger his consumption power is. When he sees a lot of prospective passengers on the street, he'll drive the jeepney faster to finish his first trip and go right back to picking the next batch of passengers on his second trip. The Philippine Economy explained.
OFW remittances are the sole reason why the Philippine economy continues to exist. That's why even with high corruption level, bad business practices, rising poverty level, and dwindling natural resources, we aren't going under anytime soon. Obviously, all of these negative factors will catch up with the country one day, but when? The answer is up in the air.
I quoted John Gokonwei earlier, mentioning that we are a country that consumes everything, and produces nothing. Reading between the lines, it means that we have a low manufacturing base in the country. This is beacause most have migrated to investor-friendly China in the past few years. Apart from that, the lack of labor unions in that country allow foreign companies to scrimp on wages.
Even if we don't have a diverse set of manufacturing plants in the country, we still export our number one produce - human talent. However, unlike plants that manufacture goods in just a number of days or weeks or months, ours take years. It takes 20 years to send off able workers. Anyone younger than that would be considered illegal.
Since population is a growing resource for us, there are many who have gone abroad already. There is just so many Filipinos in that age range. So in understanding OFW remittances and OFW exports, we have to know, how many productive individuals are in that age range? And the next important question is, when will the existing ones retire? When they retire, do they plan to come back?
You can see where question leads to, but let's skip that for the moment.
As I've mentioned, even though we don't have a lot of manufacturers here, we are still exporters by my definition. Exporters of labor. But what have you been noticing? We don't just export DH (domestic helpers) anymore, we now export healthcare professionals, apart from engineers or IT professionals.
And this is something that is interesting to talk about. It's basically a hindsight analysis. In most manufacturing countries, they must go up the value chain to survive. China won't survive by just producing cheap garments. They must venture also into technology.
In the same way, our labor exports have gone up the value chain - by producing nurses. And like high value goods, our high value professionals produce/remit more dollars back home, thus driving our economy even more. With growing competition from Indonesia of domestic helpers, (at least in Hong Kong) it's interesting to note that we have shifted our human exports to a different industry.
It is in these analyses that will spring forth a slew of ideas. We'll discuss more in my next entry. Happy Halloween!
Thursday, October 23, 2008
Commodities Hunting
Welcome back! I would like to take a break from the series of blog entries I'm writing. It's about my perception of Philippine business as well as my (attempts at) prophesying what would be the next wave of Philippine business down the road. For the first two I've posted -
For my first post please visit here - Part I.
For my second post in the entire series - Part II.
This year was touted as the start of the mining boom for the country. However, as you can see, it's been anything but. Red tape, local tribal protests, and more importantly - the global credit crunch, has probably crimped any remaining hopes of big ticket mining investments - at least in the near term. So far, commodity prices have also been hammered along with the stock market.
Oil, one of the most traded commodities, was for a time at a high of $155 a barrel and has now plunged to half of that. Experts call it economic slowdown. Pundits call it speculation. Critics call it manipulation. Pinoys call for a price rollback.
A friend and I were discussing about our sentiments for 2009, and while I was admittedly bearish, he was seeing the glass half full. I told him about the possible breakdown of financial institutions, including the local ones. He said that while worldwide, we are indeed in a crisis, he said that it isn't the end of the world yet. If the crisis is as bad as it is being pronounced by media, then we would already be at war right now. That was his two cents.
And two cents mind you, is the worth of OV...well actually less. The stock certificate is probably more expensive than the share price. That's the time you think that the current stock market values are preposterous. I guess this is also the time you call a market bottom - when the costs associated to the production of stock certificates is more than the value of its stock price.
OV, along with OPM, PERC is a classic case of how the Philippine stock market works. The Galoc oil field has been producing oil, although they have not yet been put to commercial use. Apart from that, a nearby site has been discovered to have oil as well. I'm not sure if it's this one. So on paper, there seems to be something positive about these oil companies. Yet, these stocks are in the doldrums. Go figure.
(Yeah, I know it's also attributable to the credit crisis. Blame everything on the credit crisis. But I think what is more important is to know who were the people behind the curtains called "credit crisis".)
This also makes you think that maybe, the stock market is just one big playground for speculators. Obviously, when the there is a bear market, speculators are not in the game. When everything starts turning bullish again, they come back right in, fueling the "growth of the stock market", or "creating wealth", etc. I'd imagine that if this were a bull market, OV's share price would be skyrocketing to the moon.
So is the bottom near? Are we in the capitulation stage? I believe that more likely, we're in the kaput-ulation stage.
What about commodities? Are they the way to go for your money? Older generations of Chinese-Filipinos would always say, put your money in property and gold. Although it sounds like sage advice, it lacks one important element - and that is the timing.
When do you buy? How long do you hold on to it?
Another friend and I were talking about gold, and he asked if it would be alright to shift his money to gold. I asked him one simple question - how are you going to liquidate it in the future?
Yes, it is possible for you to buy gold, but the problem arises when you need to dispose of it. Apart from the fact that it's hard to sell it, it's also hard to find someone who is selling genuine gold bars. Then, even if you find someone who is selling gold, do you know how much money you need to buy?
Doing a layman's computation and analysis, let's examine -
Based on Kitco, one ounce of gold is at $700, more or less. To make it easier for you to understand just how expensive it is to buy gold, let's use a Coca-Cola 8oz bottle. If that 8oz bottle was filled with gold, then you would have -
8 x 700 = $5,600 due to the seller
But since we're in the Philippines, let's multiply that with the latest Peso-Dollar exchange rate of 48.51 then you have -
Php 271,656 for one 8oz of Coke.. er gold.
Still want to buy gold? I think the more prudent approach is to buy gold jewelry. They won't be worth as much as the gold bars, but, in the event of a cataclysmic event like a world war as a result of the financial turmoil, even jewelry can be used as barter for goods. Your property will be worth nil as it will probably be seized by the occupying forces of a military organization.
For my first post please visit here - Part I.
For my second post in the entire series - Part II.
This year was touted as the start of the mining boom for the country. However, as you can see, it's been anything but. Red tape, local tribal protests, and more importantly - the global credit crunch, has probably crimped any remaining hopes of big ticket mining investments - at least in the near term. So far, commodity prices have also been hammered along with the stock market.
Oil, one of the most traded commodities, was for a time at a high of $155 a barrel and has now plunged to half of that. Experts call it economic slowdown. Pundits call it speculation. Critics call it manipulation. Pinoys call for a price rollback.
A friend and I were discussing about our sentiments for 2009, and while I was admittedly bearish, he was seeing the glass half full. I told him about the possible breakdown of financial institutions, including the local ones. He said that while worldwide, we are indeed in a crisis, he said that it isn't the end of the world yet. If the crisis is as bad as it is being pronounced by media, then we would already be at war right now. That was his two cents.
And two cents mind you, is the worth of OV...well actually less. The stock certificate is probably more expensive than the share price. That's the time you think that the current stock market values are preposterous. I guess this is also the time you call a market bottom - when the costs associated to the production of stock certificates is more than the value of its stock price.
OV, along with OPM, PERC is a classic case of how the Philippine stock market works. The Galoc oil field has been producing oil, although they have not yet been put to commercial use. Apart from that, a nearby site has been discovered to have oil as well. I'm not sure if it's this one. So on paper, there seems to be something positive about these oil companies. Yet, these stocks are in the doldrums. Go figure.
(Yeah, I know it's also attributable to the credit crisis. Blame everything on the credit crisis. But I think what is more important is to know who were the people behind the curtains called "credit crisis".)
This also makes you think that maybe, the stock market is just one big playground for speculators. Obviously, when the there is a bear market, speculators are not in the game. When everything starts turning bullish again, they come back right in, fueling the "growth of the stock market", or "creating wealth", etc. I'd imagine that if this were a bull market, OV's share price would be skyrocketing to the moon.
So is the bottom near? Are we in the capitulation stage? I believe that more likely, we're in the kaput-ulation stage.
What about commodities? Are they the way to go for your money? Older generations of Chinese-Filipinos would always say, put your money in property and gold. Although it sounds like sage advice, it lacks one important element - and that is the timing.
When do you buy? How long do you hold on to it?
Another friend and I were talking about gold, and he asked if it would be alright to shift his money to gold. I asked him one simple question - how are you going to liquidate it in the future?
Yes, it is possible for you to buy gold, but the problem arises when you need to dispose of it. Apart from the fact that it's hard to sell it, it's also hard to find someone who is selling genuine gold bars. Then, even if you find someone who is selling gold, do you know how much money you need to buy?
Doing a layman's computation and analysis, let's examine -
Based on Kitco, one ounce of gold is at $700, more or less. To make it easier for you to understand just how expensive it is to buy gold, let's use a Coca-Cola 8oz bottle. If that 8oz bottle was filled with gold, then you would have -
8 x 700 = $5,600 due to the seller
But since we're in the Philippines, let's multiply that with the latest Peso-Dollar exchange rate of 48.51 then you have -
Php 271,656 for one 8oz of Coke.. er gold.
Still want to buy gold? I think the more prudent approach is to buy gold jewelry. They won't be worth as much as the gold bars, but, in the event of a cataclysmic event like a world war as a result of the financial turmoil, even jewelry can be used as barter for goods. Your property will be worth nil as it will probably be seized by the occupying forces of a military organization.
Tuesday, October 21, 2008
The Waves of Philippine Business P. 2
Prelude
Hello regular readers, apologies for taking such a long time to update my entry. I was looking at the share price of Megaworld and I guess it took me some days to recover.
I saw the high of this stock last year when it peaked at around 4.00 or higher. Lo and behold, it's now below 0.95 thereabouts. This is near the lows of its share price during the height of the Asian Financial Crisis.
Now, let me ask you, is Megaworld on the brink of Armageddon? Probably not. Do I see value? Well, on paper there seems to be. I haven't checked their FS; but, based from my experience companies here aren't as transparent as say, US companies anyway. On a topline view though I think they are still booking new sales albeit at a much slower pace than before. But to see its price fall below 1.00? That's just too much.
Back to the Waves
I mentioned during my last post that I'd be discussing the waves of Philippine businesses. Let's proceed to that.
To discuss the waves, you need to have a slew of indicators. These indicators are much like what economists use to gauge where the Philippine economy is headed. These are also indicators that the Bangko Sentral (BSP) (Central Bank) uses to determine if they should do expansionary or restrictive economic measures like adjusting the interest rates. For our purposes though, we will use other forms of factors.
Remember the theme of this blog, it's guerilla investing. Therefore we (or I) don't use the usual indicators used by most economists. We (I) have to approach a problem guerilla style. And that's what we (I) are (am) doing. I hope this third person / first person perspective isn't putting you off. I mean I'm just one writer, but I also have to take into account that the reader here is also interested in the guerilla approach to finances, hence "we".
I haven't battle-tested these indicators, so at this stage of my investing philosophy, they are a work-in-progress suggestion. What does this mean? This means that at this point in time, I cannot safely state that these indicators are good indicators. But as you read along, I am sure that these indicators will make sense to you. Some are the usual indicators, some are not. Some are accessible to the public , some are not.
The Guerilla Indicators
If there is one important indicator, it's this - OFW Remittances. But beyond the number of zeroes you see attached to the $ sign, it's important to dig down the figures. Dig what? For gold? No. Dig the data, where does the money go to? OFW remittances fuel our consumer driven economy, as John Gokongwei puts it, "We are a nation that produces nothing and consumes everything." (Well except for babies, which we produce in great quantities. Haha).
As far as I know, there's only a few studies as to where the OFW remittances go. I'll try to search for them soon.
What other indicators are important?
Media - what's the headlines now? I've realized that a huge chunk of the perception people have here are based on what they see or hear from the news. What are the themes in most magazines now? Magazines are also a good source of information and trends. Who'd think that magazines dealing with gadgets and home decors and condos would fly?
Now, look at the malls, don't you see gajillion outlets selling techie stuff? There're Apple stores now, laptops have become cheaper, Motorola/Ericsson/Nokia boutique shops. Which came first? The magazines or the products? It's hard to tell, but certainly, magazines and media are an indicator for you.
Car sales. It's one of the figures that are hard to fake. This is a subject (cars) that I will tackle in detail in a future post. Check the top 5 brands/models that are being sold. Check the growth rate if it's published in the news. Chances are, if there is growth, then the economy isn't doing as bad as the stock market is telling you.
Number of students in private schools. I am not sure if this is easily accessible, but this is an important indicator for you. We all know how expensive education is locally, so if there are still scores of students enrolling at exclusive schools, then you know that there is something wrong with the low GDP numbers.
We'll talk more on my subsequent post. Thanks for dropping by and being patient. Hope you enjoyed the read!
Hello regular readers, apologies for taking such a long time to update my entry. I was looking at the share price of Megaworld and I guess it took me some days to recover.
I saw the high of this stock last year when it peaked at around 4.00 or higher. Lo and behold, it's now below 0.95 thereabouts. This is near the lows of its share price during the height of the Asian Financial Crisis.
Now, let me ask you, is Megaworld on the brink of Armageddon? Probably not. Do I see value? Well, on paper there seems to be. I haven't checked their FS; but, based from my experience companies here aren't as transparent as say, US companies anyway. On a topline view though I think they are still booking new sales albeit at a much slower pace than before. But to see its price fall below 1.00? That's just too much.
Back to the Waves
I mentioned during my last post that I'd be discussing the waves of Philippine businesses. Let's proceed to that.
To discuss the waves, you need to have a slew of indicators. These indicators are much like what economists use to gauge where the Philippine economy is headed. These are also indicators that the Bangko Sentral (BSP) (Central Bank) uses to determine if they should do expansionary or restrictive economic measures like adjusting the interest rates. For our purposes though, we will use other forms of factors.
Remember the theme of this blog, it's guerilla investing. Therefore we (or I) don't use the usual indicators used by most economists. We (I) have to approach a problem guerilla style. And that's what we (I) are (am) doing. I hope this third person / first person perspective isn't putting you off. I mean I'm just one writer, but I also have to take into account that the reader here is also interested in the guerilla approach to finances, hence "we".
I haven't battle-tested these indicators, so at this stage of my investing philosophy, they are a work-in-progress suggestion. What does this mean? This means that at this point in time, I cannot safely state that these indicators are good indicators. But as you read along, I am sure that these indicators will make sense to you. Some are the usual indicators, some are not. Some are accessible to the public , some are not.
The Guerilla Indicators
If there is one important indicator, it's this - OFW Remittances. But beyond the number of zeroes you see attached to the $ sign, it's important to dig down the figures. Dig what? For gold? No. Dig the data, where does the money go to? OFW remittances fuel our consumer driven economy, as John Gokongwei puts it, "We are a nation that produces nothing and consumes everything." (Well except for babies, which we produce in great quantities. Haha).
As far as I know, there's only a few studies as to where the OFW remittances go. I'll try to search for them soon.
What other indicators are important?
Media - what's the headlines now? I've realized that a huge chunk of the perception people have here are based on what they see or hear from the news. What are the themes in most magazines now? Magazines are also a good source of information and trends. Who'd think that magazines dealing with gadgets and home decors and condos would fly?
Now, look at the malls, don't you see gajillion outlets selling techie stuff? There're Apple stores now, laptops have become cheaper, Motorola/Ericsson/Nokia boutique shops. Which came first? The magazines or the products? It's hard to tell, but certainly, magazines and media are an indicator for you.
Car sales. It's one of the figures that are hard to fake. This is a subject (cars) that I will tackle in detail in a future post. Check the top 5 brands/models that are being sold. Check the growth rate if it's published in the news. Chances are, if there is growth, then the economy isn't doing as bad as the stock market is telling you.
Number of students in private schools. I am not sure if this is easily accessible, but this is an important indicator for you. We all know how expensive education is locally, so if there are still scores of students enrolling at exclusive schools, then you know that there is something wrong with the low GDP numbers.
We'll talk more on my subsequent post. Thanks for dropping by and being patient. Hope you enjoyed the read!
Monday, October 13, 2008
The Waves of Philippine Business P. 1
I know I know, there I go again, passing up my blogging schedule. I've ran out of reasons, (they're real by the way), but on with the new entry. I said two weeks ago that I would talk about the next wave of Philippine business. Yup, it's my attempt at being Alvin Toffler-like. I haven't read past the cover page of his book/s; but, seeing how his books are still being sold today, it probably has some really good stuff inside.
Too often, the cliche that you must look to the past to know the future is mentioned whenever a person is to talk of what he thinks about the future. I find that I also have the temptation to do that. But instead of using that cliche, I'm going to use another one - "Hindsight is 20/20."
And indeed, the looking back and understanding the past is 20/20.
I was idling by one day, thinking of how things have changed over the years, and how many business opportunities were lost along the way. Not one to have much time on his hands, I guess I shelved the though for a while and went on to my other tasks. However, my brain is never in a state of inertia. Even when I am doing something, thoughts just keep popping up in my head, and this thought I guess was one of those I couldn't ignore. It was the thought of the waves of Philippine business.
I'd like to caution you that I'm not born nor academically trained to be an economist. I just have a penchant for observation and "quiet dissertation". Quiet dissertation is my own term for the times when you present your hypothesis in your mind, then you argue the points and the cons of that hypothesis, but only in your mind.
Right now, these hypothetically called "waves" have no general theme yet. They're all just a bunch of ideas that need collation. At any rate though, I'd discuss them one by one albeit with less flow and consistency in theme. I hope that they will be an interesting read for you and that they will conjure up business ideas for you as well.
Come back for my next entry as we journey together and (valiantly attempt to) discuss what I think business was before to what business will be down the Philippine road. I always love to say, if hindsight is 20/20, then foresight is ensuring you still have 20/20.
Remember, as much as Guerilla Investing is about investments, starting and doing any form of business is also an investment. And unlike other investments, a business requires more than just an investment of money or capital. It requires an investment of time, brains, and will power. But as history (again, the past!) will show, succeeding in business have made for people more money than investments.
Until the next entry, do investing the Guerilla Investing way! I've got investing tips, tricks and new gimmicks in the coming months. I've been blogging for more than a year already and I think it's really time to migrate to something bigger. Ciao for now! =D
Too often, the cliche that you must look to the past to know the future is mentioned whenever a person is to talk of what he thinks about the future. I find that I also have the temptation to do that. But instead of using that cliche, I'm going to use another one - "Hindsight is 20/20."
And indeed, the looking back and understanding the past is 20/20.
I was idling by one day, thinking of how things have changed over the years, and how many business opportunities were lost along the way. Not one to have much time on his hands, I guess I shelved the though for a while and went on to my other tasks. However, my brain is never in a state of inertia. Even when I am doing something, thoughts just keep popping up in my head, and this thought I guess was one of those I couldn't ignore. It was the thought of the waves of Philippine business.
I'd like to caution you that I'm not born nor academically trained to be an economist. I just have a penchant for observation and "quiet dissertation". Quiet dissertation is my own term for the times when you present your hypothesis in your mind, then you argue the points and the cons of that hypothesis, but only in your mind.
Right now, these hypothetically called "waves" have no general theme yet. They're all just a bunch of ideas that need collation. At any rate though, I'd discuss them one by one albeit with less flow and consistency in theme. I hope that they will be an interesting read for you and that they will conjure up business ideas for you as well.
Come back for my next entry as we journey together and (valiantly attempt to) discuss what I think business was before to what business will be down the Philippine road. I always love to say, if hindsight is 20/20, then foresight is ensuring you still have 20/20.
Remember, as much as Guerilla Investing is about investments, starting and doing any form of business is also an investment. And unlike other investments, a business requires more than just an investment of money or capital. It requires an investment of time, brains, and will power. But as history (again, the past!) will show, succeeding in business have made for people more money than investments.
Until the next entry, do investing the Guerilla Investing way! I've got investing tips, tricks and new gimmicks in the coming months. I've been blogging for more than a year already and I think it's really time to migrate to something bigger. Ciao for now! =D
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