The PSEi, what now?

While the DOW recently made a new high Filipino stock market investors only made new sighs.

Thanks to the drama unfolding between two previous lovebirds - Former President Erap and Current Senator Panfilo Lacson - TEL was rattled and its price fell, bringing with its weight the PSEi or the Philippine Stock Market Index. Perhaps it was also timing because the market needed a breather first, a healthy correction so to speak. How long... and low it will get, only time will tell.

The basura stocks are making a comeback and for this I am worried. There are only two reasons why basura stocks go up, IMO even though I only started investing in late 2006.

One is that it is a bull market and speculators just want to make more money now that liquidity is back.

Two, the bull market is near its peak, so it's time to be defensive.

I'm no expert so I won't proffer any forecast. If you want a good analysis though, please visit the latest technical analysis of the PSEi by Mr. Dytoc here.

Some other stock market findings -

Meralco, a recent darling speculative stock has fallen by the way side.

Gold is above 1000 but PX is just there.

TEL is down. So is the index.

There was news recently saying that we will have a mining boom next year. I don't know about you but last year they said that about 2009. Oh well.

I miss the days when I would trade using Technistock. It was easy to trade using that terminal. It was connected to the stock market so you could see the buying and selling momentum of any listed stock. Unfortunately, I'm now back to being a career person and just trade from time to time.

I now rely on four things -

Charts
Gut feel
Speculation
Common Sense

The third is not recommended for investors, only for traders with a stomach for risk. For investors, I still suggest you take up a course in Technical Analysis. Fundamental Analysis is also important but do you have the time to go over financial statements?

The second one, gut feel, may not be common to everyone. I don't pride myself of having an innate super ability called gut feel. I only have a batting average of about 70-80%. Usually my gut feel is held back by fear only to realize that I should have acted on it. That split second of indecision has caused me countless lost opportunities.

The last one, common sense, is based on your understanding of the news coming out of your government (where ever you are in the world). If you believe the numbers and think that the economy will grow then pick the sectors likely to be the first beneficiaries. Otherwise, just put your money under your pillow (although this isn't recommended).

Anyway, next week will be an interesting week. Also, keep in mind that the elections are coming. Unlike the US, election years in the Philippines cause the market to move sideways if my memory serves me right.

Thanks for dropping by my blog. I hope my post today is able to satisfy the readers who patiently visit my blog every so often.

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...

@#$%

After ranting during my last post, I was looking forward to some positive posting. Little did I know Friday would be another one of those @#$% days.

What's worse than being left out of the market?

Knowing what to buy, being held back by fear, then realizing your error after.

I'm talking about MPI. Metro Pacific Investments.

As early as late last year, I was already looking at this stock. It wasn't because of the FS, it wasn't because of the charts. It was purely on gut feel and knowing what kind of businesses they have.

You might say that's a load of crap, but I was really looking at it. Think about it, a tollway business, property (and a possibility of selling Landco Pacific), and more importantly two hospitals.

Followers and readers of my blog for a long time would have read an entry of mine last November regarding healthcare, albeit short. So if I'm bullish on healthcare, naturally I'd be looking at MPI with keen interest.

Last post I said I don't normally hype stocks - and I'm not hyping it now. Because if you've seen its performance yesterday +28% from its Thursday close, then you'll know that hyping is the last thing on my mind.

I was again left out. What's worse, during the morning, I called up my broker, and out of instincts, I said could you check up MPI for me?

@#$@#$#@$#@.

What ever your comments are of this post - or of MPI - what I can say is that in the future, MPI will be big. You will have to take a long view. And with Manny Pangilinan sticking around, MPI might well be Manny Pangilinan's Investments.

In 2006, I kicked myself in the arse because I also made another mistake - with IPVG. During that time it was just doing 1.00.

Crap.

Disclaimer: Again, I'm not offering investment advice for you to buy or sell MPI, or any other stock for that matter. The decision really rests on you. Know what you're getting into first before you take action.

Guerilla Investing is Back

... After securing an internet connection one month after the last post.

I am using Sun Cellular's mobile broadband and I tell you, the monthly rate is quite a steal. So far, in my two weeks of using the service, it has been quite consistent. (Unlike their mobile phone service). If you already have an existing Sun Cellular line, you can avail of the service for just Ph 799 a month.

Before I go back to my usual guerilla posts, I'd like to blab about personal observations heh. O.o

These aren't trivial posts though, my ever observant and critical mind could not stop wandering and wondering about the real state of the economy. I used to say that the Philippine economy is a student economy. I forgot to mention that the country is also driven by the mall culture economy.

Last month I went to Robinsons Place Ermita and SM Manila due to the proximity from where I am based. Both were open until midnight on the occasions I went there. It was a pitiful sight. There were only scant shoppers and every shop had the "S" word. I wondered if it was because everyone was at the Mall of Asia or that the economy was that bad.

In any case, I am of the opinion that the mall business has reached saturation point. Apart from that, the growth rate of personal wages will fall behind the rate of expansion of malls. Malls are just snatching away customers from each other. The industry is much like the cellular network industry. While there may still be growth, each provider is just eating away at the share of the next competitor.

More than just wooing customers from the next competitor, each company is also at risk of cannibalizing its own market. Smart has Talk and Text. Globe has Touch Mobile. Their prepaid promotions (text all you can, etc) is used to flank Sun Cellular. Now, Red Mobile is attempting to eat a pie that's already saturated. When one company reports growth while another report losses, you know that the industry has reached saturation point.

Is the Philippines just one big saturated market?

Have you seen the distance between Banco De Oro branches? You should visit Binondo. Along Soler street, you will see not one, not two, but three Banco de Oro branches along the same street! This isn't the best example as some were recently converted Equitable Bank branches. Nonetheless, it makes you wonder if there is any room left for new players in local industries.

Going back to the malls, I wouldn't be surprised if malls compete with each other and decide to have parking rate promos or, better yet, waive parking fees on selected hours just to entice customers to visit their malls. SM alone already has 32 malls if I'm not mistaken. And like the relationship of Jollibee and McDonalds, a Robinsons mall is never far away from SM.

*****

Thank you for patiently waiting for a new post. When you come back here, you'll get more guerilla investing tips. Ciao!

Tales of the Guerilla Investor - Interesting Public Offering

I attended the recent CAF of Absolute Traders last June 24 at the trading floor of the Philippine Stock Exchange. The number of audience participants was modest, compared to previous CAFs, where the venue would always be filled to the brim. One reason for such a modest turnout is the state of the Philippine stock market, which has bled uncontrollably since the start of the year.

This CAF was notably different than previous CAFs in that there was a fundamental analysis presentation. The fundamental analysis portion was presented by Sandy Gilles, a CFA. The key take away from his presentation is that the current stock market is at a fair PE ratio. This means that the stock prices are not expensive relative to the earnings growth for PSE-listed companies. It is expected that companies will have income growth of about 11%.

Stock buyers beware though. This does not mean that the market has bottomed out. There are issues like inflation, weather (due to its correlation with rice production), gas prices, and further government monitoring of the utility sector.

Absolute Traders Chairman, Mr. Fitz Aclan also presented his view of the market. Based on charts, there are still downside risks to the PSE with a worst case scenario of the index falling to 2,000 or 2,200. The worst case scenario will be made possible in a situation wherein crude oil exceeds $150, local inflation rate goes beyond 12%, and downgrades by foreign financial institutions and ratings agencies.

One interesting slide that he presented was a slide on the worst stock performers (index linked stocks) since the start of the subprime crisis in the US. FPH ranked the first with a -77% paper loss (or actual loss, if you realized it by selling). The resilient stocks were only three -
ICT (+1.72%)
MWC (+42%)
PX (+79%)

Who says you can't make money in a bear market? You just have to have an eye for the right stock.

Nurturing the Agriculture sector

Despite the gloom and doom that fell upon the audience, one shining light was the upcoming IPO of an agriculture-based company, Agrinurture Inc. Not only is it an initial public offering, it is also an interesting public offering. The company presentation was represented by no other than their CEO, Tony Tiu.

I always enjoy business presentations from reputable and upcoming businesses. This is one of them.

Prior to the presentation though, I had my doubts about the company. Who is Agrinurture? If my broker inquired if I wanted to get the IPO, should I bother? After the presentation, all my doubts were laid to rest.

Mr. Tiu's presentation was both about the company and a reminder of how our country has gone down the wrong road in terms of the agricultural sector. If you take a look at this list, I ask you, is agriculture a bad sector to invest in? Look at the countries and tell me, aren't ALL of them considered part of the developed world? Doesn't this give us a hint that agriculture is actually a good sector to invest in?

For one, our country's people would rather work in offices than plow the fields largely because the salary of these two are in opposite extremes. Yet, it's not like our country has no natural resources. Compare ourselves to Singapore. Singapore imports most of its agricultural needs because their country has little to no arable lands. What about ours? Are chip manufacturing, BPOs and ship-building the only sectors that our country has to offer?

According to Mr. Tiu, Siliman University used to have 900 agriculture undergraduates. It's fallen to just 50. Sometimes we have to wonder where did we all go wrong? Is it because people are practical so they want to take up better courses to work in offices with good pay? Is it because there are no opportunities in the agricultural sector? Which is the chicken, and which is the egg? By the way, if there were no poultry farms, we won't even have chicken nor eggs.

New Stock on the Block

I like their company initial, ANI. It's very positive and also relates well to the industry where the company operates in. Kudos to the person who thought about that.

I won't divulge much of their business operations as that will be made possible by the prospectus that will come out once the IPO plans have been finalized. Apart from that, what I share is already second hand information. I would rather the company do their presentation via their own representative.

What I can share though is my impression and what I like about their company. They are big exporters of canned coconut juice and other fruits. They are a major supplier to the biggest supermarket chain in the country. They have acquired a popular juice retailer brand that is a natural extension of their business, i.e. fruits. They are also looking into the agricultural estate business, which to me is very promising.

One of their key growth drivers is the food crisis. Don't you just wish you were in a business that could say that? As Mr. Tiu rightly puts it, "In good times we eat, in bad times, we eat more." Apart from that, it's been historically proven that in high inflation environments, prices of basic commodities go higher, driven by demand from people doing panic buying. During bad times, you'd obviously put your money in essentials, and do away with those that are not.

I hope the investing public would be interested in this stock. Do note, this is going to be the only stock that is directly involved in the agricultural sector. Moreover, they will likely prosper in this volatile stock market times.

P.S. I found this appalling set of data from a press release by the PSE. Imagine, if you add another 1% to the number of people who trade the stock market, or even people who would just buy and hold, stock prices would definitely increase due to the increased demand. Go figure.

Tales of the Guerilla Investor: MAFBEX

I bet you thought I wouldn't post an entry this week =P

I was unable to blog yesterday because I was at the MAFBEX in World Trade Center (Pasay City). I went there with a couple of friends to check it out. It's my first time to attend a food and beverage expo (MAFBEX stands for Manila Food and Beverage Expo), so I went in with no expectations. I didn't bring my camera with me, primarily because I went there for myself. I am sure you will see the pictures from press releases anyways.

The Basics

If you brought a car, you have two options - you can park at the old Boom na Boom lot, or you can park inside World Trade Center compound. I don't know the parking rates of Boom na Boom, but for the latter one, it costs 30.00 (I think, hehe. It was my friend who paid for it). It can get muddy when it rains so don't bring white colored vehicles or small cars (pot hole filled parking lot), unless that's the only car you have.

The entrance fee will set you off by Php 50.00 and a list of the exhibitors' directory will cost Php 150.00. I attended an exhibit previously in SMX of the Mall of Asia, the entrance was free, but the exhibitors were not really that exciting (This was the recently concluded Chinese Trade Expo).

There are free seminars, cooking presentations and myriads of foodstuffs you can buy. There are also suppliers, some franchisors, and if you are lucky you may just be able to meet Bobby Andrews (it's the only link with a picture). He has a booth at the last row to the right. I'm not much of a fan of local movie stars but I am happy that these guys - or at least much of them - are wise enough to invest their money in a business.

If you are someone who is inquisitive and have a nose for details, then you will need about 3-4 hours to cover the entire ground. Yes, I finished after that much time. ^^

For the hungry visitors, I didn't check out the prices of the food outside of the exhibit area, I bought my food inside. I ate shawarma with rice. The beef was good, yumyum. I think it cost me about Php 65 to 70. I have some short term memory problems hehe, my apologies. My only gripe is that a cup of gulaman being sold inside costs Php 12.00!

If you are a hotdog or German franks fanatic, then there's Hero, Purefoods and Swift. There's McDo, and Yellow Cab pizza for someone who has higher tastes in food (well relatively anyway).

Enough of the gastronomic finds there. This blog is about finance, not food. I'll leave the food stuff to other blogs who really know what they're talking about with regards to food.

The Good and the Bad

There are a lot of exhibitors and most of them are quality exhibitors. There were some oddities (vis-a-vis the meaning of MAFBEX) because there were about two booths selling apparel. Then there were people selling these huge standing airconditioners. Then there were booths selling health supplements, magazines, credit card memberships, and worse, vacation club memberships.

These vacation clubs entice you by promoting their free raffle. I begged off after an awful experience in the past. Let me recount the ways.

A few years back, I signed up on one such vacation club because of their enticing raffle. After some weeks I was notified that I won the free vacation publicized by the exhibitor. I was excited so I took a day off to claim my prize. Yes, a day off!

When I was there, I was ushered into a huge room filled with about eight tables. I started to think that there was something fishy going on.

I was led into another room that contained a TV and a DVD player. The usher told me to watch the video and that she would be back after about 10 minutes. She turned on the player and the TV and left me inside the room. The video was an infommercial about their resort up in Pangasinan.

After the DVD played its last minute, the usher was back and she then led me back to that huge room. This time, the tables had a booklet placed on top of each of them. The usher then asked me to fill up a short questionnaire, and thus began her long spiel.

The booklet contained a list of hundreds of hotels from around the globe. After about ten minutes, she then asked me sets of questions regarding my vacation habits. After the end of a series of questions, she was puzzled as to my habits, or lack of them. I hated traveling. (I don't see the point to traveling because I don't have excess money. I'm of the opinion that traveling is stressful because of the preparation and the unpacking once you go back home.)

It was after the entire process was finished that I realized that she was selling me timeshares for the hotels accredited with their organization. I politely said no to every selling tactic she had up her sleeve. Finally, she surrendered and just showed me the way to the front desk where I would receive my ticket to a free overnight stay at their Pangasinan resort.

I didn't book it. I hated that they wasted my entire afternoon. I can't say if what they did was legit or not, but one thing is for sure - it wasn't enticing.

Let's go back to the MAFBEX.

It's encouraging that despite the high inflation, high fuel costs, and high entrance fee, people still visited the exhibit. This means that Filipinos are all still looking for ways to earn extra money. The flipside is that most of the visitors who were there (at least yesterday) were students. A huge percentage of that are students from the College of St. Benilde because I think they're one of the co-sponsors.

I for one didn't find much opportunities that I could take advantage of. The exhibitors there were the same exhibitors from another franchising exhibit that I have attended in the past. A friend of mine sent me an SMS during their opening day and told me that it was just the same as last year's MAFBEX. Go figure.

However, if you're a restaurateur who is looking to expand or want to look for suppliers, then the MAFBEX can provide you with some good opportunities. There's a representative booth for HALAL certification. There are about 4-5 kitchen equipment suppliers for those who are looking to open up a restaurant. Then, for those interested to retail coffee, there are plenty of coffee bean sellers to choose from.

I went there with no expectations, but I wanted to have some fresh ideas and new opportunities I could venture into in the food industry. I can't say that I was disappointed, but neither can I say that I was awed in the MAFBEX. My search for a profitable venture continues.

Pay (pun very much intended) a visit and see for yourself. Maybe you can give me a different perspective.


P.S. Please visit my other blog. Thank you. I write just as well as I do here. Hehe.