What is value?
When you look at a Php 100 peso bill, do you see a piece of paper, Php 100.00 in your hands, or your ticket to a Jollibee meal?
As I've become more and more sensitive and observant of the ways the world works, I have come to realize that this thing called money is a product of general valuation. General what?
With each passing year, tasks and things become simpler and easier to do due to continuing developments in technology. But for money, now that's another thing. It becomes more and more complex with the addition of newer and more sophisticated financial products - futures, options, forex, reits, derivatives, and of course the mortgaged backed securities - products taht are not available in the Philippines. Don't go researching about them either, I don't suppose they'd be in these here shores until maybe the end of this decade.
Last year, the estimated total losses of the subprime mess in the US was at the $480B range. $480B. Think about that. Try researching for the latest count.
My question is where did the money go?
Similarly, in the stock market, what is the value of a piece of stock certificate? The stock's par value? The cost to manufacture one certificate? The prevailing market price of the stock?
The answer to these questions are diverse. My answer is this question - who assigns a value to a stock?
Mathematics and semantics come into play here. People say supply and demand. Critics and stock market doubters call it pure speculation.
At the end of the day, the only thing you hold that is tangible and that has the right value is the paper bill you have. Yet this can also lose value, ask any OFW and he and she will tell you what it's like to feel "currency exchange losses".
What I'm trying to state here certainly isn't something you think about often.
But the gist of all this is, as long as you don't cash in or cut loss on what you hold, whatever the value it is, whoever assigns one to it at any given time, will always remain for as long as the representative object of that value is still with you.
Showing posts with label Workweekenders. Show all posts
Showing posts with label Workweekenders. Show all posts
Friday, February 8, 2008
Friday, January 18, 2008
Workweekender
I recently went to the website of RFP and I was surprised that my article was frontpage view of the said site. I am blushing and gushing at this point.
The title is "Mutual Understanding", it is a piece about mutual funds, written from a different perspective.
The other articles I have written (which have also appeared in Business Mirror) are the following. You can click on the titles at the website of RFP, these titles are inside the orange box to the right middle screen.
Dearth on your face (My first ever article)
Life is a Stage what is your curtain
A Quarter for A Purpose Please
As you can see from the titles, I am not one to write with a technical background. I like presenting old, usually boring topics in a different way. I hope you like them as much as I loved writing them.
What a great way to end the week - talk about myself haha. Seriously though, I have never been selfish with information and my ultimate goal is to make everyone aware, at the basic level, what investments are for. I want to demystify the topic, as well as debunk long held misconceptions that bank savings are the best place for YOUR savings.
So be a Good Samaritan and spread the good word about Guerilla Investing. Thank you to the readers who always drop by. You are the reason why I am maintaining this in the first place.
The title is "Mutual Understanding", it is a piece about mutual funds, written from a different perspective.
The other articles I have written (which have also appeared in Business Mirror) are the following. You can click on the titles at the website of RFP, these titles are inside the orange box to the right middle screen.
Dearth on your face (My first ever article)
Life is a Stage what is your curtain
A Quarter for A Purpose Please
As you can see from the titles, I am not one to write with a technical background. I like presenting old, usually boring topics in a different way. I hope you like them as much as I loved writing them.
What a great way to end the week - talk about myself haha. Seriously though, I have never been selfish with information and my ultimate goal is to make everyone aware, at the basic level, what investments are for. I want to demystify the topic, as well as debunk long held misconceptions that bank savings are the best place for YOUR savings.
So be a Good Samaritan and spread the good word about Guerilla Investing. Thank you to the readers who always drop by. You are the reason why I am maintaining this in the first place.
Friday, December 14, 2007
Thoughts for the Weekend: What's in store for 2008
There has been much trepidation lately among US investors, particularly those investing in the US stock market. This uneasiness also spread to the local market. If you are one of those who actively trade the local stock market, you will realize that there are more people looking to sell than to buy.
The problem lies in two things - the fear of a US recession, and the so called credit crunch. Those fears have resulted to the volatility of stock market indexes worldwide, not just in the US and in local shores. Will these problems stay within the stock market or will this affect you and me?
The answer sadly, is a yes. My perspective is that which is based on logic and all sense of practicality. It's not based on economic figures nor analysts' reports.
Try looking at the news, particularly business news. During the first half of the year, everybody was trumpeting their cheer for the Philippine Stock Index this year. 4000 by December. Left and right, all you could read in the papers were signs of jubilation, and giddy anticipation of what will not happen anymore. Have you seen any analysts saying that by December 29, our index will be 4000, or maybe 3800?
You don't see anyone saying that anymore. When someone is bearish about something, they either make no comments about it, or just try to look through things like a glass half full. "We will track the US Markets", or "It will depend on economic reports", blah blah.
So tell me, have you seen any bullish reports on the stock market lately? People say life imitates art, for me, news is the reflection of life.
Let's shift our focus now to the bigger picture - the economy. If you watch US business news, most of the messages being bandied on the TV is the "risks of going into a recession". I've heard some analysts saying that there is a 1/3 chance of the US going into one. What if the US IS already in one?
Like I mentioned in my other blog, a friend of mine who works for a call center has had some difficulty closing sales from the US. Belt tightening? That's my guess.
What happens when the US goes into a recession? There is a saying that when the US sneezes, the whole world catches a cold.
When the US is in a recession, the dollar falls, the prices of precious metals and commodities - gold and oil - rise. People who have their assets in dollars will likely switch to these two commodities. The recent correction in oil prices is temporary. Remember, the demand for oil is greater than the supply. And basic economics tell us that when demand is greater than supply, prices will likely increase.
The falling dollar my dear friends, is the main reason why our peso is appreciating. Without going into the details of how our economy has "been growing" or its figures thereof, let's see. A government is like a company. It needs revenues to sustain its operation. Our tax take has not been increasing, in fact, it is short of the government's target.
The main reason why foreign investors were coming back to invest in the local stock market was that we were seen to balance our deficit by next year. We're close to achieving that, not by revenue takes, but through asset sales - Transco, Power Plants, Meralco Stake, PNOC EDC. (There is also THAT problem with the power sector, but we're not discussing that). What will happen when the government is finished with selling all of the remaining assets? No more budget deficit, no more assets, and still no tax revenues! This is why your government is fond of taxing everything that they catch their fancy on.
Another reason why our economy is booming is because of the call center business that was flourishing in the country. However, let's look at the stock price of one listed company, PAXYS (PAX), which is a call center operation. It has sunk from the Php 30.00++ highs to its current price of Php 5.90. It's lost almost 80% of its value in less than a year.
Folks, the stock market is considered the barometer of the economy. If we are to use PAX as that for the call center industry. Do you still think it is a sunshine industry?
Most call centers are from the US. This means that when they come to our shores, they invest in dollars. However compare this. Last year, for every dollar of investment, they could get 55 pesos for it. Now, the've lost 13 pesos in less than a year. This makes their investments in call center infrastructure - the biggest capital investment to put up one, a whole lot more expensive. Do you think call centers won't blink first before thinking of investing here?
Like the great analysts who said that we'll hit 4000 for the stock market this year, many of them also said that the peso would strengthen to 45. However, reality check please, Php 41.21 as of today. There are already people saying that next year, we could hit Php 38.00.
When I looked at the peso dollar chart two months ago, I had a gut feeling we'd fall to 40 this year. The chart is like an arc going from Php 28 to our high Php 55s, and now going back down. Php 38 next year? I think not. I think we'd hit 30-35. This is IF the US proceeds to a prolonged recession.
So tell me Mr. Guerilla Investor, what's this got to do with me?
A lot.
Our domestic consumer economy is 60% - 75% dependent on OFW remittances. Everything from clothing, to education, to utility bills, to groceries and to impulse spending, all these money come from money being sent here. People who got used to getting 55 per greenback have to contend with 13 pesos less. And by next year, it will balloon to almost 20 pesos less per buck.
Knowing the local culture of spending, there will be few belt tightening, however, there would also be fewer items bought from the retail stores, and this isn't by choice. This is due to fewer pesos being exchanged per dollar. This will ultimately mean lower corporate earnings for companies because of sagging sales. If companies want to curtail costs and still retain their previous years' earnings, they will do what? Cut costs! And the biggest overhead is? People! Jobs will be cut amigos.
Another fallout of the peso appreciation? The booming real estate sector. Remember the Peso and Dollar exchange rate? OFWs who have begun paying amortizations will still have to pay them, therefore, they'll advise their families here to cut back on their senseless spending. Those who intended to buy properties will likely postpone or hold off their purchases. However, realty companies who have already started their projects can't just stop midway. They have to finis them. Thus, there will be a supply glut in the market which will lead to price depression.
Everything is interconnected. This is why there is a phenomenon called the domino effect.
So the next time you spend your hard earned peso this month, think of the bleak year ahead of you, and maybe, just maybe, you'll hold off that purchase of a brand new mobile phone, or shirt, or shoes, or pants, or any want that you try to fool yourself into thinking it's a need.
The economics of things is not in the numbers or the reports. It's in the things that you see everywhere around you. And sometimes, you don't have to be an expert to see the clues that are in front of you. You just have to notice them.
The problem lies in two things - the fear of a US recession, and the so called credit crunch. Those fears have resulted to the volatility of stock market indexes worldwide, not just in the US and in local shores. Will these problems stay within the stock market or will this affect you and me?
The answer sadly, is a yes. My perspective is that which is based on logic and all sense of practicality. It's not based on economic figures nor analysts' reports.
Try looking at the news, particularly business news. During the first half of the year, everybody was trumpeting their cheer for the Philippine Stock Index this year. 4000 by December. Left and right, all you could read in the papers were signs of jubilation, and giddy anticipation of what will not happen anymore. Have you seen any analysts saying that by December 29, our index will be 4000, or maybe 3800?
You don't see anyone saying that anymore. When someone is bearish about something, they either make no comments about it, or just try to look through things like a glass half full. "We will track the US Markets", or "It will depend on economic reports", blah blah.
So tell me, have you seen any bullish reports on the stock market lately? People say life imitates art, for me, news is the reflection of life.
Let's shift our focus now to the bigger picture - the economy. If you watch US business news, most of the messages being bandied on the TV is the "risks of going into a recession". I've heard some analysts saying that there is a 1/3 chance of the US going into one. What if the US IS already in one?
Like I mentioned in my other blog, a friend of mine who works for a call center has had some difficulty closing sales from the US. Belt tightening? That's my guess.
What happens when the US goes into a recession? There is a saying that when the US sneezes, the whole world catches a cold.
When the US is in a recession, the dollar falls, the prices of precious metals and commodities - gold and oil - rise. People who have their assets in dollars will likely switch to these two commodities. The recent correction in oil prices is temporary. Remember, the demand for oil is greater than the supply. And basic economics tell us that when demand is greater than supply, prices will likely increase.
The falling dollar my dear friends, is the main reason why our peso is appreciating. Without going into the details of how our economy has "been growing" or its figures thereof, let's see. A government is like a company. It needs revenues to sustain its operation. Our tax take has not been increasing, in fact, it is short of the government's target.
The main reason why foreign investors were coming back to invest in the local stock market was that we were seen to balance our deficit by next year. We're close to achieving that, not by revenue takes, but through asset sales - Transco, Power Plants, Meralco Stake, PNOC EDC. (There is also THAT problem with the power sector, but we're not discussing that). What will happen when the government is finished with selling all of the remaining assets? No more budget deficit, no more assets, and still no tax revenues! This is why your government is fond of taxing everything that they catch their fancy on.
Another reason why our economy is booming is because of the call center business that was flourishing in the country. However, let's look at the stock price of one listed company, PAXYS (PAX), which is a call center operation. It has sunk from the Php 30.00++ highs to its current price of Php 5.90. It's lost almost 80% of its value in less than a year.
Folks, the stock market is considered the barometer of the economy. If we are to use PAX as that for the call center industry. Do you still think it is a sunshine industry?
Most call centers are from the US. This means that when they come to our shores, they invest in dollars. However compare this. Last year, for every dollar of investment, they could get 55 pesos for it. Now, the've lost 13 pesos in less than a year. This makes their investments in call center infrastructure - the biggest capital investment to put up one, a whole lot more expensive. Do you think call centers won't blink first before thinking of investing here?
Like the great analysts who said that we'll hit 4000 for the stock market this year, many of them also said that the peso would strengthen to 45. However, reality check please, Php 41.21 as of today. There are already people saying that next year, we could hit Php 38.00.
When I looked at the peso dollar chart two months ago, I had a gut feeling we'd fall to 40 this year. The chart is like an arc going from Php 28 to our high Php 55s, and now going back down. Php 38 next year? I think not. I think we'd hit 30-35. This is IF the US proceeds to a prolonged recession.
So tell me Mr. Guerilla Investor, what's this got to do with me?
A lot.
Our domestic consumer economy is 60% - 75% dependent on OFW remittances. Everything from clothing, to education, to utility bills, to groceries and to impulse spending, all these money come from money being sent here. People who got used to getting 55 per greenback have to contend with 13 pesos less. And by next year, it will balloon to almost 20 pesos less per buck.
Knowing the local culture of spending, there will be few belt tightening, however, there would also be fewer items bought from the retail stores, and this isn't by choice. This is due to fewer pesos being exchanged per dollar. This will ultimately mean lower corporate earnings for companies because of sagging sales. If companies want to curtail costs and still retain their previous years' earnings, they will do what? Cut costs! And the biggest overhead is? People! Jobs will be cut amigos.
Another fallout of the peso appreciation? The booming real estate sector. Remember the Peso and Dollar exchange rate? OFWs who have begun paying amortizations will still have to pay them, therefore, they'll advise their families here to cut back on their senseless spending. Those who intended to buy properties will likely postpone or hold off their purchases. However, realty companies who have already started their projects can't just stop midway. They have to finis them. Thus, there will be a supply glut in the market which will lead to price depression.
Everything is interconnected. This is why there is a phenomenon called the domino effect.
So the next time you spend your hard earned peso this month, think of the bleak year ahead of you, and maybe, just maybe, you'll hold off that purchase of a brand new mobile phone, or shirt, or shoes, or pants, or any want that you try to fool yourself into thinking it's a need.
The economics of things is not in the numbers or the reports. It's in the things that you see everywhere around you. And sometimes, you don't have to be an expert to see the clues that are in front of you. You just have to notice them.
Thursday, November 15, 2007
The Workweek-enders
What's the highlight for this week on the financial sphere? Well the BSP cut its overnight rates by 25 bps. This should spur lending, and should bode well for real estate companies.
We've been talking lately about making vision statements, mission statements, etc. How does this all tie in?
Well, let me ask this question, why do you invest?
If your answer is a vague, because "that's for my future", well my friend/s, this is the perfect reason of why you need a vision statement. You have to save for a purpose. You don't save because your parents told you to. You don't save because you want to save. You save because there is a future expense that will be needed to be paid for.
Having a goal will dictate where you park your money in. You don't put your money in 30-day time deposits so that you can save up for a downpayment for a house that's still 3 years down the road. It's not the right investment vehicle. Remember you're aiming at 3 years, not 30 days.
More tidbits next week from Guerilla Investing.
Happy Weekend!
We've been talking lately about making vision statements, mission statements, etc. How does this all tie in?
Well, let me ask this question, why do you invest?
If your answer is a vague, because "that's for my future", well my friend/s, this is the perfect reason of why you need a vision statement. You have to save for a purpose. You don't save because your parents told you to. You don't save because you want to save. You save because there is a future expense that will be needed to be paid for.
Having a goal will dictate where you park your money in. You don't put your money in 30-day time deposits so that you can save up for a downpayment for a house that's still 3 years down the road. It's not the right investment vehicle. Remember you're aiming at 3 years, not 30 days.
More tidbits next week from Guerilla Investing.
Happy Weekend!
Friday, November 9, 2007
The workWeek-enders
When the weekend nears, expect me to switch my writing mode to something a little less formal.
People who know me, er, know that although I have a serious demeanor, I am actually a disjointed group of humor bones. It's not like I'll be writing nonsense from now until Sunday. I just have to relax a bit.
I actually have a silent THIRD blog. Yes it is me. I must confess. I am a writer trapped in a financial planner's body. (Or is it the other way around?). So there are times that my creative juices need some releasing. And that third blog, is there for that specific reason. I can't do many jokes in a financial planning blog. I just find it inappropriate. If I were a columnist, maybe. Hey, that's a nifty vision! Maybe I'll one day be a columnist.
I have always been attracted to the sounds and groans of a keyboard being mashed by my fingers.
Well, uhm, no not really. I've always been a writer and I think on my tombstone, I shall put the words:
"Write here waiting for you honey"
If you read the Philippine Daily Inquirer, and you browse through the Business Section, I am a great fan of Mr. Bearbull and Conrado Banal. Whatever their reputation is, I really don't care. I'm more interested in the way they write. They have wit. They have humor. That is the kind of writer I want to be. Not some stiff blurbing out whatever jargon only the writer understands.
On a serious note, I recently went to Tutuban Centermall. It has been months since I last went there, although I live near the area. I seldom go to malls these days. After my previous life as an employee, I probably got used to not going to the malls. If you ask me, there's so much more to see in the countryside than going to oversized air-conditioned warehouses.
I previously worked as a field marketer and I was on field 90% of the month. So during my 4-year labor with the company, I probably stepped on the mall about what? 20, 30 times? You see, my work required I went to the provinces. As far north as Ilocos Norte and as far south as Camarines Sur.
I went to Davao once though. I don't recall anything because we went there strictly for business. Our flight in and out of the city was on the same day. I hope to pass by there again soon :)
On weekends, I only had time to sleep. My social life, kaput. It is only recently that I've began catching up again with my high school barkada. Even they weren't spared from a work such as mine. It's a good thing I'm still accepted as a friend hehe.
One of the most important things in life is TIME. Not the magazine, but the thing you probably take for granted the most (other than your spouse).
Ever since I stopped working, I realized all these time I spent working. What was I working for? Who was I toiling for? Is it worth all the stress when at the end of the workday, you go home to a family that has already gone to sleep waiting for you? Money is important, don't get me wrong, but in these modern age. Time flies. You have to weigh your priorities.
As I've learned, it is good to pour your heart (with all the blood) and soul (but not to the Devil), but probably for a good 2-3 years only. After that, try to lower your overly high standard of living and accept a pay cut and work at something that requires only 8 hours of REGULAR work time.
Another important note on time is traffic. The cost of traffic is something that the government has yet to fully comprehend. Traffic eats up much of your time. It is A COMPLETE WASTE OF TIME. That is why I never go out (much) anymore. Imagine, if I want to go to Makati, I'd have to allot what? An hour? On a day with no traffic, you can go there in 30 minutes. If that 30 minutes were freed up, I could have done something more with my life!
So for this, I have made a resolution to go to the mall if absolutely necessary. I go to the neighborhood supermarket and buy all the things I want so that I don't have to go back again.
Life is what you make of it. That statement should be changed and made to say, Life is what you make of TIME.
Enjoy the weekend folks. However way you want it.
**** FROM THE CROSSFIRE ****
On Fridays (or 3:35AM on Saturday) I'll write some workWeek-enders. We need to relax and not live by all the stiffness of the corporate world or of business. We don't work so that we can pay for our hospital bills 15-20 years from now (I'm in my late 20s). We work so we can enjoy a life we want. Go ahead and indulge yourself. I don't believe in saving too much. Heck, long life is not achieved by merely taking vitamins or maintenance drugs everyday. Long life is achieved by living happily. Learn to find the things that make you happy and add some years back into your lives.
The financial planner's caveat: Just don't indulge more than you can pay for it.
People who know me, er, know that although I have a serious demeanor, I am actually a disjointed group of humor bones. It's not like I'll be writing nonsense from now until Sunday. I just have to relax a bit.
I actually have a silent THIRD blog. Yes it is me. I must confess. I am a writer trapped in a financial planner's body. (Or is it the other way around?). So there are times that my creative juices need some releasing. And that third blog, is there for that specific reason. I can't do many jokes in a financial planning blog. I just find it inappropriate. If I were a columnist, maybe. Hey, that's a nifty vision! Maybe I'll one day be a columnist.
I have always been attracted to the sounds and groans of a keyboard being mashed by my fingers.
Well, uhm, no not really. I've always been a writer and I think on my tombstone, I shall put the words:
"Write here waiting for you honey"
If you read the Philippine Daily Inquirer, and you browse through the Business Section, I am a great fan of Mr. Bearbull and Conrado Banal. Whatever their reputation is, I really don't care. I'm more interested in the way they write. They have wit. They have humor. That is the kind of writer I want to be. Not some stiff blurbing out whatever jargon only the writer understands.
On a serious note, I recently went to Tutuban Centermall. It has been months since I last went there, although I live near the area. I seldom go to malls these days. After my previous life as an employee, I probably got used to not going to the malls. If you ask me, there's so much more to see in the countryside than going to oversized air-conditioned warehouses.
I previously worked as a field marketer and I was on field 90% of the month. So during my 4-year labor with the company, I probably stepped on the mall about what? 20, 30 times? You see, my work required I went to the provinces. As far north as Ilocos Norte and as far south as Camarines Sur.
I went to Davao once though. I don't recall anything because we went there strictly for business. Our flight in and out of the city was on the same day. I hope to pass by there again soon :)
On weekends, I only had time to sleep. My social life, kaput. It is only recently that I've began catching up again with my high school barkada. Even they weren't spared from a work such as mine. It's a good thing I'm still accepted as a friend hehe.
One of the most important things in life is TIME. Not the magazine, but the thing you probably take for granted the most (other than your spouse).
Ever since I stopped working, I realized all these time I spent working. What was I working for? Who was I toiling for? Is it worth all the stress when at the end of the workday, you go home to a family that has already gone to sleep waiting for you? Money is important, don't get me wrong, but in these modern age. Time flies. You have to weigh your priorities.
As I've learned, it is good to pour your heart (with all the blood) and soul (but not to the Devil), but probably for a good 2-3 years only. After that, try to lower your overly high standard of living and accept a pay cut and work at something that requires only 8 hours of REGULAR work time.
Another important note on time is traffic. The cost of traffic is something that the government has yet to fully comprehend. Traffic eats up much of your time. It is A COMPLETE WASTE OF TIME. That is why I never go out (much) anymore. Imagine, if I want to go to Makati, I'd have to allot what? An hour? On a day with no traffic, you can go there in 30 minutes. If that 30 minutes were freed up, I could have done something more with my life!
So for this, I have made a resolution to go to the mall if absolutely necessary. I go to the neighborhood supermarket and buy all the things I want so that I don't have to go back again.
Life is what you make of it. That statement should be changed and made to say, Life is what you make of TIME.
Enjoy the weekend folks. However way you want it.
**** FROM THE CROSSFIRE ****
On Fridays (or 3:35AM on Saturday) I'll write some workWeek-enders. We need to relax and not live by all the stiffness of the corporate world or of business. We don't work so that we can pay for our hospital bills 15-20 years from now (I'm in my late 20s). We work so we can enjoy a life we want. Go ahead and indulge yourself. I don't believe in saving too much. Heck, long life is not achieved by merely taking vitamins or maintenance drugs everyday. Long life is achieved by living happily. Learn to find the things that make you happy and add some years back into your lives.
The financial planner's caveat: Just don't indulge more than you can pay for it.
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