Sounds Greek to Me

People who invest and trade in the stock market, mutual funds, and UITFs, would know what I'm talking about just by the title alone.

Those who don't, can just refer to the definition of that phrase.

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It's about what's happening in the stock market lately - locally and globally.

Three years after Lehman Brothers, we now have another banking system problem, this time from Europe, with the origins coming from Greece.

According to Wikipedia, Ancient Greece is considered by most historians to be the foundational culture of Western Civilization. So, Modern Greece will now be considered as the foundation of the second crisis crippling the globe. The first one was the States just three years back.


I won't offer to conjecture further about it. There are people more qualified to give their opinion about the situation. Further, there's enough news on the web, print, and TV so I am sure you've at least a bit of an idea as to what is happening.

However, I think locally, no one - outside the financial industry / and the investing public anyway - really cares about it.

The up side of having so many domestic problems is that you don't have time to worry about issues outside your national borders. Of course, that doesn't mean we won't be affected by it.

Plus, you still have a job, so I don't think that you'd be minding the prevailing crisis that much - yet.

But, if you're someone who's been investing (or just started to), you'd be worrying about what's happening to the values of your investment holdings.

If you're someone who invests, you are doing what most financial advisors and planners would term, increasing your passive income.

Active income is the money derived from blood, sweat, and tears - i.e. your job, business, your sidelines and moonlighting, etc.

Passive income produces blood, sweat, and tears if your stocks/UITFs/mutual funds falls below your cost of investment.

Just kidding. =)

Most people would like to have a high active income in the form of big paychecks, then also spend massively. It's a vicious cycle.

Others resort to multiple sources - sell beauty products, tutor, teach, etc. - to increase the income coming in.

Of course, if you are someone who is an employee earning just above the minimum wage, you will be doing the latter example. Or, you may have opted to work on foreign shores.

Nonetheless, the precondition to going into increasing your passive income, is to have an adequate active income with spending for expenses that's just right. Unlike Greece and most other nations, you should have a personal budget surplus.

Now, where do you put this surplus in?

You must find something that makes your money grow while you work, eat, sleep, play, etc. In short, without increasing your work load, you have an instrument where your money works for you.

I would like to think that a lot more people are going into the investment bandwagon. Bank deposits are not considered an investment, but they serve a purpose because they provide liquidity AND capital protection (unless you put your money in LBC Bank).

If you would like to know what an investment is, at least to me, it is something that generates returns higher than the inflation rate. Ideally, it should not be too liquid so that you are not tempted to spend it right away. And, usually, the returns are not guaranteed.

So, until then, appreciate the risk, then appreciate the capital.

It's Mine!

The last few weeks and days were very volatile days for stock market traders, enthusiasts, investors and speculators. Some may have made money (given an equal amount of heightened risk); but, most, I believe, have lost money (or paper loss, depending on your circumstance).

Surprisingly or unsurprisingly for some, the mining index of the PSEi bucked the trend, albeit with the exception of the last few days of the week ending August 19.

In fact, a lot of the mining stocks have made 52 wk highs...

52 week highs -

LC hit 1.58 last August 19 (surprise!)

PX hit 28.95 last August 16

MA hit 0.072 last August 12

ZHI hit 1.37 last August 8

NI (special mention even though it didn't make 52 wk high, it's increased from 2.24 in August 1 to 3.43 this August 19)

ORE hit 5.12 last August 4

DIZ hit 11.76 last August 16

Did not make 52 wk highs

AT

NIKL

The list above is not extensive, but you should get the picture.

Most of the mining stocks with gold production or gold claims went up. Those with minerals meant for manufacturing like AT and NIKL (except NI and ORE) performed poorly vis-a-vis their mining peers because if the world should fall into recession then there'd be manufacturing slack. So there could be a rebalancing of portfolio by fund managers and investors.

I've no idea why NIKL is not performing given the good earnings report recently (sell on news perhaps?). NI and ORE outperformed the PSE index (and NIKL). ORE has just started reporting earnings (which obviously bodes well for a stock) and in fact if you read the news, there is FOREIGN BROKER coverage. What a big turnaround.. those of you might remember that after ORE listed, there were some questions about its mining claims. Going forward, should the uncertainty about the global economy subside, NIKL could be one big winner for those looking for quality mining stocks.

While NI. Hmm, I have to check more news on this one. NI was supposed to have some good story to tell but it never did materialize (i.e. no news). NI was part of the triumvirate of GEMINI speculation (i.e. GEO, MIC, NI) in the years 2006 to 2007.

There were other non mining issues which recovered well. Some index stocks just couldn't pick up though and instead fell through the roof. Have you seen MEG? Better not catch a falling knife.

If there's anything else that will be an offshoot of a successful mining industry renaissance, it would be the demand for geologists and engineers. Goodbye nursing hello engineering and geology? There could also be a demand for Chinese speaking translators as a big chunk of the demand for minerals would still be from China.

In the meantime, I think that a cautious approach is better especially if you are a trader. For investors, the time is almost ripe to continue to accumulate shares. If you can't stand the volatility, it's time you entrusted your funds to people more knowledgeable than you.

Until then, appreciate the (heightened) risk, then appreciate the capital!

United Shakes of America

So, the US averted a near default by raising the debt ceiling. But according to the same news source, ratings agency, Fitch, says that the prized AAA rating of US debt may still be downgraded. In just a matter of three days, the US (stock) market sank. The Dow Jones has fallen by over 1000 points since its peak. The S&P on the other hand, is no better and the bad news continue to pour in as there were people saying it has formed a head and shoulders formation (a bearish pattern in technical analysis). I imagine that if the debt ceiling was not raised, far worse things could have happened.

A lot of countries hold US debt, especially China. We (The Philippines) are no different and in fact, the BSP is contemplating diverting some of our funds away from US debt. So, will US debt become subprime as well? I am sure that they will get their acts together, otherwise, we will have a lot of countries none too happy with what is happening. Think about it, if you are holding US debt, and the debtor seems unlikely to meet his obligations, what would you do?

At a personal level, what is happening to the US is similar to you as a consumer maxing out your credit card limit. Further compounding this is that you only pay the minimum amount due. So by the time you are able to pay off all your outstanding debts, you would have been charged more interest than the principal amount.

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I had been thinking about whether or not to post that the local stock market would be in for a correction soon. But when the PSEi sank close to 60 points the other day, I knew that I had to.

We've been going up and reaching historic highs recently. So far, listed companies have had positive earnings. However, I know that some ominous signs are there.

Lately, it has been the basura stocks that are being actively traded. If I remember right, that's usually the last wave of the current bull run. Late entrants to the stock market may want to hold off on the purchase.

It doesn't help that Mr Mobius thinks our market is getting expensive.

So far though, with the exception of the correction the other day, our market has been holding up despite the worldwide sell off, especially the mining sector. Still, the skeptic in me thinks that our market will just need to take a breather for the meantime.

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The American Dream has now turned into a Nightmare. I just hope that we don't have our own bangungot.

Until then appreciate the (heightened) risk first, then appreciate the capital!

Risk Appetite is Back.. Yum Yum!

Since my post last May 5, the local stock market has risen quite substantially with mining stocks taking the spotlight.

I suppose that taking a vacation from my blogging was reasonable given that there wasn't much to talk about. Though on hindsight, it could've been a chance for me to trumpet to investors like you and me to take up positions on the cheap. Hindsight is not only 20/20 it's also 100% painful once you think about the things you should've but wouldn't.

Modesty aside though, I did take up small positions in the two stucks I was looking at during my last post, namely SMC and LC. At ngayon, hindi ako nag CCC heheh.

SMC did eventually fly, TWO MONTHS after; basing on my last post date. Then again, in that two months, my money earned more than what I would have earned if I had put it in a savings deposit 10 times over. If there were more people thinking along those lines, bank managers would face a major problem in maintaining their CASA objectives.

LC also gained quite substantially, along with other mining issues.

You see, if the PESO is increasing, so is the stock market, and so goes for commodity stocks. This trend I have noticed. This trend is also coupled with numerous positive news in the public.

One headline states -

UBS expects surge in IPOs

I recall that when there was a huge surge in IPOs, a huge downtrend also ensued thereafter. Hmmm. Gets me thinking that we can either earn some short term fast money; or, you can opt to liquidate your stuck positions at prices that are breakeven for you.

Another headline states -

PSE all set to extend trade hours

Well, the last time the PSE instituted a change, the market made a strong positive statement. Investors and traders alike saw their fortunes rise last year. The change I am referring to is the change in board lots; or rather, the elimination of it. Change is good!

Going back to my earlier point about having a chance for some short term gains; I say this because of this one other headline -

More portfolio investments coming Philippine's way - BSP

The last time that happened, you saw the stellar performance of equities in 2010. Traders are happy when there is an increase in foreign participation; however investors, may not be so happy because they know that foreigners can as easily sell off their shares.

Why is foreign participation a bane when it comes to selling? It's because the local market participants cannot absorb the volume. If we have major, major participation from local (i.e. Filipino) traders and investors, then the buying volume can match the selling volume. It's hard to explain this on paper. Perhaps I'll try in the future.

The syncing with the other ASEAN bourses should provide buoyancy for our market. Though I speculate that volatility will be the name of the game when that time does come.

Nonetheless, the next five months should be quite interesting. A lot of idle 'basura' stocks have just been resuscitated, like PWR and LIHC.

I am just amazed by the shortening cycle of the bull and the bear. Whereas before the transition from bear to bull was drawn out, now, it's only as long as three to four months. I'm excited with this development because that means there are now more local players compared to before. Products such as UITFs, Mutual Funds, and Variable Life Insurance have surely aided the information dissemination to the investing public. All good.

Perhaps now, Filipinos are gravitating towards non-guaranteed instruments (I use this term loosely of course).

After all, if you are in safe instruments, you are guaranteeing one thing - a sure rate of low return. It really depends on whether you want the risk or the return. Higher risk means higher returns; and vice versa.

Until then, thanks for reading... so appreciate the risk then appreciate the capital!

State of the Stock Market

Surprise, surprise.

It's either I wasn't any much interested in the local stock market anymore; or, I was just plain busy these days that I didn't notice that Megawide (Ticker MWIDE) listed just this Friday (Feb 18).

Or.... I just didn't have the funds.

Not that I lost a big opportunity anyways, as the title of the news article in PDI online says -

"Megawide lists stocks, closes at IPO price of P7.84/share "

It closed at the IPO price??

Even the fact that the owners of MEGAMall, i.e. the Sy family, buying a chunk of the shares did little to up its IPO performance.

If memory serves me right, the same thing happened with the listing of Anchor Land in 2007 I think. The IPO was lackluster even though the Sys bought a stake prior to its listing.

Oh well, as they say, history does repeat itself in the stock market.

Speaking of repeating itself, I remember during my class in RFP, Mr Efren Cruz did mention that stock markets are on its peak if there are many IPOs.

While I don't consider the recent IPOs as that many compared to 2006-7, it does mean that the conditions in the stock market have been ripe and, to quote an often used phrase of stock market analysts, "valuations are good". Or, in layman's terms, people are willing to part with higher amounts of money so the corporation gets more funds per share.

It also means that when the stock market is on its peak, it will be a prelude to a market correction. So, history is repeating itself. The key difference though is that the correction may not be as dragging as it was in 2008.

On hindsight, the correction set the stage for a banner year in the local stock market in 2009-10.
So will the second half of 2011 be like that? Hopefully...

To continue, since the conditions have worsened recently, Filinvest Development Corp deferred their planned secondary offering with no commitment date. San Miguel Corp. also deferred their plans, but said it would be sometime March.

Pertinent text from the news item -

Start quote

SMC president Ramon S. Ang earlier said the company wants to proceed with the sale of as many as 1 billion common shares valued at P200 to P250 per share within the first quarter.

At the high end of that price guidance, the follow-on offer will be worth P250 billion, proceeds of which will be used to accelerate SMC’s diversification away from its traditional businesses of food and drinks into infrastructure and mining.

Market watchers agreed with the sale postponement, saying the company can fetch better values once the market settles down.

End quote

Well. Even mighty SMC succumbed to the mightier stock market.

If I were you, I think it's best to take a vacation and just re-evaluate the stock market come second quarter.

My only hope is that the market doesn't sink lower; and, the BSP be clear whether or not they will raise interest rates, inflation will indeed go up.

I mean the taxi meter already started inching up. Others (food prices, toll, etc you name it) may soon follow suit.

Abangan.

Mine's Here!

Dear readers, thank you for being patient. As promised last week, I am back with a new post. I'll just make some stock market commentaries, a short review of my stock trade forecast, and another long term stock you may wish to add to your portfolio.

I hope stock market enthusiasts have made money in the recent weeks. For the others who don't know or care about the stock market, maybe it's about time you did. I'm not surprised that most haven't.

Continue stocking up on the stock market...

Based on this news piece from the Inquirer,

"THE Philippine Stock Exchange estimates that less than 1 percent of the Philippine population invest in the stock market, but exactly how many people are we talking about?
Based on the latest headcount, that figure may be about 400,000—slightly less than the holiday foot traffic at SM’s most populous malls. This number covers the active retail investors, defined conservatively as those who trade at least once a year.
By demographics, local stock market investors usually are aged 30 to 50, majority of whom are male. About 35 percent of them are Chinoys, according to the PSE. "
And, if you're worried that maybe it's too late to enter the stock market, perhaps the last paragraph of Dean Somera's post would calm your nerves. If you don't want to go to the link anymore, basically this is the meat of the entire article -

"With the oversubscription of the CEB IPO and very positive public reaction to the SMDC SRO, market outlook is encouraging. And, if the market bulletin of one stockbrokerage house is correct when it said that current “foreign participation is only about P50 billion monthly versus the P100 billion monthly in the 2007 rally,” it seems that there are more money available to bolster current market momentum and direction."

With regards the CEB IPO, according to a news article in Inquirer, the local portion of the offering were "all sold". Some more "praise release", I suppose -

"This will be the largest IPO by a low-cost carrier in the Asia-Pacific to date. Its parent firm JG Summit expects to raise as much as P23.3 billion ($539 million), without having to exercise an option to sell even more shares.
The IPO is one of the largest ever conducted in the Philippines, and the largest Philippine IPO in US dollar terms."
Now, the question is, what will these IPO takers do on listing date? Sell the shares for a quick buck or hold it for the long term? My oh my, Php 23 Billion, then there's that transaction between Mang Inasal and Jollibee worth Php 3 Billion. These piles of cash should go somewhere!
I sure hope I get to be the kind of entrepreneur Mr. Sia is.

Reviewing my recommendations...

These recommendations were made September 24.

1. Atlas doing a correction - I was right. What I was wrong with was that after the correction, it went even higher to hit 18.32. Then again, I did say that,

"But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50."

2. DGTL - I was right that you should not choose DGTL. This stock tanked after a gap up...

3. APC - And I was wrong with APC, as it also tanked on Monday, September 27. It opened higher than the Friday's close only to close lower than Friday. Then a week later, it just broke out to 0.86... only to fall back down to 0.76.

4. MPI - It didn't correct. I was anticipating a correction but it never made one. So if you're a long position trader, then I'm sure you're (still) happy with this stock.

The market didn't correct in the one to two weeks period I said after the Sept 24 post but this week, the market has taken a breather. This is a good respite so that people "late in the game" can still come in to participate in the stock market. The correction has been slow in force, and I suppose that's a good sign, rather than a one time steep correction.

Long term stock

I've said that I look at holding long term growth stocks based on common sense and reading the news. These are the primary reasons why I chose Atlas and Metro Pacific.

One stock that has caught my attention is DGTL. I don't know much about fundamental analysis so I won't try to be a genius and interpret their FS. What I know is that part of their business is the Sun Cellular brand - which recently claimed that they already led the other cellular networks in postpaid subscribers.

If you pass by any Sun Shop, you'll note that there are many people queuing in line to transact business, be it to pay bills or to apply for a postpaid line. With just a Php 250.00 monthly bill, anyone can get a postpaid line from them.

The story for DGTL at least for me is something like Cebu Pacific. Cebu Pacific has certainly come a long way. It took years to build but their business has certainly paid handsomely for its principals. Similarly, Sun Cellular was once a small player in the local duopoly of Globe and Smart. Look at where it is today and you'll know that in 1 to 2 years time, DGTL may fly the way PLTL did in the early years of this century.

The two problems with DGTL is

(1) their landline business, which probably pales in comparison to PLDT. Nonetheless, their venture into broadband internet should provide ample opportunities for growth.

(2) playing in a mature industry - the telco industry. The only thing these guys are doing is eating away at each other's market share. I doubt there's much growth in this sector, compared to the mining industry.

Some dark horses

GLO, a battered telco stock has recovered much from its low of 773, more or less, this year. A part of me is telling me that GLO may come out as a surprise by 2011. GLO is a dividend stock and is also an Ayala company. Ayala companies are known to give value to shareholders. They recently announced a share buy back program for AC.

Why GLO? Have you seen the number of people flocking to Globe business centers? Their aggressive marketing seems to be paying off. A company that invests in marketing will certainly see results. I think that they have a chance at eating at Smart's share of the postpaid business (and not Sun).

Another dark horse is ORE, which is why my title is "mine's here". M-ORE on this in the next post. ORE, unlike GLO, is a purely speculative play. If you consider Atlas to be speculative, then ORE may already border on gambling for you.

Until then!

Stock up on Stocks!

My Dear Guerilla Investing readers, thank you for being patient and coming by every so often. I've been busy with my 8-5 that I just couldn't find time to blog the past two weeks. For this week's post, I'll take a break first from my post about using credit cards to comment about the recent activity in the stock market.

I'm happy and surprised about the way the stock market has been performing since my last blog post. It's made a new historical high already and everybody seems to be in euphoria expecting the index to track higher and higher.

A local brokerage report anticipates the PSEi to go to about 5,100 by 2011, then there's another report by a foreign brokerage house that the PSEi will go beyond that to about 6,000 or more.

In fact, as a testament to the growing interest in the local stock market, Credit Suisse will open business here, to quote an Inquirer news item -

"Zurich-based global financial services group Credit Suisse is setting up a stock brokerage in the Philippines, reflecting the resurgence of foreign investor interest in local equities, which are now trading at record highs."

Exciting and interesting times are indeed ahead.

You can bet that a lot of the financial institutions - banks, insurance companies, brokerages - will earn big bucks in the year to come as interest by the investing public gains momentum. The momentum will surely boost the financial houses' trading gains.

Local Flavor

I've always maintained that there are now more local investors compared to years past; and, while foreign "hot money" is needed to elevate the stock market and perk up trading volume, we don't have to rely on them as much as we had to in the past.

Check out this piece of news -

Since the start of the year, the PSEi had gained by another 1,000.64 points or about 33 percent, making it one of the best performing bourses in the region. In 2009, the PSEi rose by 63 percent but mostly on thinner trading dominated by local investors.

While the volume was thin in 2009, our index still rose 63% - mostly due to local investors. Now imagine, with hot money flowing into the country then most likely the PSEi will make history again and again in the coming months, if not years. With the hot money coming in, the peso will also most likely appreciate.

This scenario is similar to the years 2006 - 2007, in my opinion.

Don't be too greedy

Right now, the market should be poised to correct.

All the index bellwether stocks have already gone up a mile and the second liners have also ran their course. The basura stocks are gaining momentum, which to my memory usually precedes a market correction.

Most of the counters gaining recently were the mining stocks, with one of my recommended stocks - Atlas Mining - leading the way (prior to Lepanto, that is). Even some mining stocks with no "stories to tell" (at least to me) went up like CPM, NI, and ORE. PX has since sputtered a bit after hitting a 2010 high of 17.

Atlas Mining may also correct in the week ahead. While I've recommended that this is a long term hold, you may do well to join the profit taking for your trading positions, if any. But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50.

My other recommended stock may also be teetering on the brink of a major correction. I'm pointing to Metro Pacific or MPI. I'm closely monitoring it.

What I missed though was the major major (hehe) run-up of Lepanto Mining. I really felt bad that I was not able to join in, but I felt better when I read Mr. Gus Cosio's blog post last September 22, and I quote -

"Unfortunately, I was not able to take advantage of the big move in LC. I don’t mind because I do not flatter myself that I can spot every stock that moves."

I realized that I'm never going to be able to join in all the "gravy trains" of all the stocks. I just have to make sure that I'm able to gain a trading profit and always remember to cut losses, should the case be needed.

Trading Stock Focus

Mining stocks may really be one way to boost your portfolio. A report just came out recently that minerals outputs went up by 50%! Imagine that.

When the blue chips and second liners have made their uptrends , there's bound to be trading opportunities for the smaller stocks. Two stocks I saw that may be good to trade are APC and DGTL. APC suddenly went up near the closing hours for no reason and is pointing to an apparent breakout from its recent downtrend.

As my experience tells me, breakouts are always good trading opportunities and usually run their course for 3 days. With Wall Street trekking triple digits this Friday, I'm sure APC will have a follow through buying on Monday. Keep your fingers crossed, mine are.

On to DGTL. DGTL made a nice move on Thursday close. Then followed it up on Friday after news came out with Sun Cellular claiming the lead in postpaid versus giants Globe and Smart. The stock swung wildly, going up and down and up.

I checked the chart today, there's a gap up on Friday. On Monday we will know if DGTL will continue going up, or it was just a one day wonder. Gap ups, as far as I can remember, are a positive sign.

Between APC and DGTL though, I'd choose APC.

Of course, I'm assuming that if you, dear reader, plan to trade any of the two stocks, you have at least three to six months of trading experience.

You need at least some trading experience to know how to time your entry and exit points.

I can't teach you how to time, as I'm still learning the skill as well. It won't be perfect, so don't fret if you don't buy at the lowest price and sell at the highest price. If you do, then chances are, it's greed that's driving your motive.

Some guerilla tips on trading

For those who don't have as much experience, I proffer the following guerilla tips on stock trading -

(1) You don't have to buy the stock at the open. I've noticed that the time between 10AM to 11AM is a window of opportunity to buy a stock at a better price.

(2) Compare the buy up and sell down volume. If there's more sell down, it can mean two things - the insiders don't want it to go up yet; or, it's just a one day wonder. Better choose fear over greed. There'll be other stocks to trade anyways.

(3) Look at the quality of the buyers. Who are the brokerage houses buying? Of course, you will have to expect that if these are small stocks or basura stocks, there will be no foreign stock brokerages buying that stock. Try to know if the brokers are familiar names.

I think I've said too much already. Remember, the market is most likely going to correct soon since the blue chips and second liners have already started tapering off their gains. The second sign is that the small stocks have really gone up so much. I can't point to the exact date of the correction, but it will happen next week or the week after, so tread carefully.

As I always say, appreciate the risk, then appreciate the capital!

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.

The Great Unwinding?

Greetings readers! Sorry for not being able to post last week. I think I stayed too long in the office last week and just wanted to enjoy my weekend. Hehe.

In my previous post I mentioned that the blue chips were about to run out of steam and that it will pave the way for the second wave and third wave - the second liners and the basuras will be moving up soon. After my post, the market went up to a new high and then had some pretty big corrections along the way. Proof positive that the blue chips are not the place to be in at this point in the game.

Positive earnings news in the US were doused by the US government hounding Goldman Sachs and the looming default of Greece. Locally, a lot of companies have started publishing their quarterly results as well.

If you are a first time stock investor, I would like to advise you that if you read in the papers that XYZ company booked revenues and / or net income of so and so, DO NOT buy the stocks of XYZ company. You should learn from this stock market cliche - buy the rumor, sell the news. In the US, very good earnings serve as catalysts for propelling stocks higher. Locally though, it's another story.

This is perhaps because local companies are not so generous with their dividends. You see, in the US it follows that when a company reports "blowout earnings", a dividend is not too far away. Since investors anticipate that a particular company would distribute dividends, he/she will buy the stock now, driving and pushing up the stock price.

Locally, dividends aren't that common. The only way most Filipinos earn in the stock market is through stock price appreciation. Some people call it capital appreciation.

That's what I did (buying XYZ company because I was impressed by the earnings) when I started investing in stocks about 6 years or so back. I do not want you to do the same mistake I did. Of course, this should form part of your decision to buy the stocks of XYZ, but not right after earnings have been reported. The price will most often decline from its high.

When it's settled at a comfortable support price level, then you can start accumulating.

Let's try to acid test my hypothesis last week that you shouldn't be in blue chips. The following are their closing prices. Prices were sourced through PSE website.

April 8 April 23
ALI 13.75 13.75
AC 347.50 347.50
SMPH 9.70 10.00
TEL 2490 2445
GLO 1015 970
SM 392.50 397.50
BDO 43.50 41.50
MBT 50.50 50.50
BPI 45.50 45.50


The property stocks may have been buoyed by the prospects of the launching of the REIT product later in the year. Filipinos will then gain access again to a new investment vehicle. This is certainly good news because now, we have another avenue to multiply our wealth.

This data table of course does not mean that there were no trading opportunities in between. During the correction for example, ALI fell to 13 in April 20 and 13.25 April 21. So technically speaking, you could still have earned money if you were able to sell today.

Of course, there's that downside risk so why would you buy during the week of April 8? Sometimes there's a thin line between taking risks and being foolish.

The darling of the traders this week would have probably been CPM and ORE. CPM went from 3.25 last week to 3.65 this week. ORE on the other hand went from 1.56 last week to 1.90 at the close of today. Amazing huh? Yes, but it could go both ways, that is why I never want to make a recommendation for these sort of stocks. They're far too risky for the newbie traders.

At this point, the money will most likely be in the basura stocks. VLL today was a good daytrade so for those who grit their teeth today, they were rewarded handsomely. I didn't join the fray though so congratulations to those who did! Opportunities like this do not come so very often.

I still think that the market will correct soon, if not next week, then the week after next. The key thing to remember is - Don't give in to greed!

Trading with Caution Next Week

It's another long weekend this week coming from the Holy Week-end. For out of town trippers who took their long vacation last week, they should be rejoicing because soon, domestic travel will hurt their pockets due to the imposition of VAT. If Singapore is a fine city, then the Philippines is a taxing place to live in.

So if this is the case, then this will put a crimp on MPI, although not directly. I am recommending MPI as a long term buy but of course this is just my opinion. You should consult your own financial advisor. Investments have risks, whether you invest directly in a stock, or through mutual funds.

Recently, the stock market rose to a new high due to the increasingly bullish outlook... and supposedly an improving economy. The latter is hard to say but the DOW is going up so that could have been the inspiration for our stock market's recent incredible run. I'd still recommend taking a wait and see approach to buying any stocks at the moment for trading.

The blue chips having run up so much means that the first wave is almost over. The second wave and third wave is upon us so that means a lot of the basuras will be moving, along with the second liners. I don't know exactly what stocks can be considered second liners but I think these are stocks that don't have large capitalizations like the blue chip stocks like Ayala Corp, Ayala Land, SM Prime, etc.

In short, if you want to trade the local stock market, then you shouldn't be buying blue chips. Most blue chips are included in the PHISIX (index), so these are the stocks you will be staying away from in the near term.

If you plan to invest in an equity/stock mutual fund; then, now isn't the time to invest if you want to "time" your placement. Wait for a while further before you plunk down your money. Of course, this does not mean that you will be able to time it perfectly. In fact, it's better if you just invest and not think about whether if it's high or low as long as you utilize peso cost averaging.

If you are the type of person who has an account with a broker; then, if you want to earn a quick buck then look for basura stocks on the move. I don't give any hints on basura stocks because these are highly volatile stocks and you might have a heart attack just looking at the movement of their prices.

I think that the coming week will be a consolidation mode for the index or worse, a correction phase. If the index continues to go up, then there's the risk of "overheating" and thus set our market up for an even bigger correction. Tread (trade) with caution.

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.

Some Trading Insights

Apologies that I wasn't able to post anything last week.

I live a double life. The other life is that of excitement, espionage and entrigue hehehe.

Seriously, There were just too many activities at work that my personal time was spent on resting.

I wish I'd be able to quit my job and just focus my efforts on trading for a living. Supposedly, that's possible. Perhaps in a bull market, you can. But only with proper tools like Technistock. It's an expensive tool though as you are required to pay a monthly subscription fee. But it's well worth the investment for as long as you're running with the bulls.

When I was a subscriber in the past, I let my technical analysis lessons take a backseat and just focused on the price action and the buying momentum. I believe this is a technique called tape reading. I was able to trade with greater success.

Of course, being in a bull market certainly helps a lot.

Personally, even if trading for a living were possible, it's still better to have a regular source of income called a salary. Besides, if you're employed in a good company you also get some benefits like company health insurance and then some.

However, when you're working, you can't afford to trade, at least the short term trading sort. Short term, at least for me, are the trades you do in one day called day trading - you're in and out the same day - or those you hold on for not more than 3 days.

The reason why you buy these particular stocks is called "buying on breakout". You don't know the story or why it's going up but you just buy it because it's gone up substantially from its normal price range. Even if you have a crude charting tool such as the one in the PSE website, you can more or less gauge if it's a breakout.

Of course, you should not discount the other indicator - volume. Volume should also be higher than its usual volume. Both indicators - the price chart and the volume are all available in the website.

Breakouts last for not more than 3 days, as experience reminds me. There can be exceptions of course, but if I were you don't tempt fate and be content with your earnings. Greed kills. Really, it does.

You can still trade even if you're employed but you will have to trade the "big waves" so to speak. Since your work is 8-5, and trading hours is 930-1210, you can't possibly look at the ticker.

What you can do though is select a few stocks that you can monitor after office hours. Of course this goes without saying that you have some sort of charting software. You might try using the charting available at PSE.

By selecting a few stocks, you are focused in your approach. You know more or less when they hit their highs or their lows. This means limiting also your exposure to the stocks that you know. This requires the highest level of discipline as most, if not all, are always tempted to make a quick profit by trading speculative stocks.

Remember greed? Greed happens both ways - when you're holding on to a stock or when you're just about to get in.

Now if you don't have a charting software, the other alternative is to just read the newspaper. Look at the prices and what the index level is currently at.

Wait for that correction, it will necessarily come.

Then wait until the market index correction has been substantial, usually about 5% and start buying some quality stocks, ie the blue chip stocks. Remember, wave 1 = blue chips, wave 2 = second liners, wave 3 = basura stocks, wave 4 = it's your turn to wave goodbye (at least momentarily) to buying stocks.

While the index is down by "just" 5% the stocks may have lost even more. This is tricky though as you also have to know if the entire market is in a bullish, bearish, or sideway mode. Read the news, watch CNBC, watch Bloomberg. It takes some time but once you've watched them a couple of times you'll know if the market is in either one of those modes I mentioned.

I hope I was able to offer something new and useful to you. I also recently finished an article about investing in stock / equity mutual funds, so my mind has been lacking as of late with regards things to write about. Until then...

The Breakout ... then the Breakdown

For local stock market players, they saw this week the meteoric rise and spectacular fall of IP - all in one week. The lucky speculators made money while newbies may have lost money and are now IPit. Tough luck? I suppose.

I'm not surprised most people are still turned off by the stock market. With movements like these, most of the general public still think that the stock market is just one form of gambling. It can be... only if you are a speculator and not an investor.

When you're a speculator, you can gain a lot, and lose a lot more if you're not careful and especially when you're greedy.

As previously mentioned, I don't review charts anymore for the simple fact that I don't have the software. When I trade, I just employ hit and run tactics, or buy on breakout and sell once it hits the second or third day. On average, I've noticed that stocks that breakout (i.e. price goes up from the usual trend of more than 5%) only last for up to three days at the most.

There are some stocks though that go up continually and if I'm not mistaken this was what happened to ORE recently. I don't know why it went up.

Mostly, these breakouts are fueled by speculation and stories of interest. If you didn't already know, E-Games (EG) was listed this week via introduction (don't ask me, I'm not particularly familiar with what it means). Since IPVG (IP) is the owner, its shares went up. Again, I don't know why. Perhaps it would add value to the mother company since listing of shares is one way of raising capital.

Whatever the reason, the stock went up. And it went up in style.

It went from 2.02 last Feb 15, to 2.70 to a high of 2.80 on Feb 16. That's a one day profit of almost 40%! You can't get that deal from a savings account nor a time deposit. Of course, with great price swings come great risks. After Feb 16, the stock just went downhill.

On Feb 17, it opened 2.70 only to close at 2.36. Following the bearish close of 2.36, it fell further to 2.12 on Thursday. By Friday Feb 19, the stock was only worth 1.98.

So if you did not sell on Feb 16, you actually lost money!

How will you know when to get out? I don't but charts can help.

I didn't read the chart in the first place though I doubt chart reading mattered for this stock. Again, while technical analysis (TA) is a good friend for any trader, you must also understand that at any given point, you should also be aware of the story. The story for IP was EG. There was no other compelling reason to buy the stock.

I guess common sense and having an honest and objective broker (yeah they exist) can save the day for you.

I'm still a believer in TA, but you also have to combine it with other disciplines, whether it be fundamental analysis, or just simple common sense. Of course, being less greedy would help a lot as well.

Until the next post...

What stocks to invest in 2010?

It's a good thing the market has rebounded from its lows. The 3,000 level would prove to be a psychological resistance in the near term. The market apparently shrugged off the news of potential brownouts in the nation's capital due to positive movements in global indexes (and the possible rescue of Greece).

The market will probably have some pretty wild swings in the first - and probably second - quarter of the year as the Philippine election story starts to unfold. In an ideal world, i.e. a world sans the financial crisis, there are supposed to be stocks that should pick up in an election year. (I think we're still in a crisis, but as governments worldwide start planning their exit strategies, it's a surer sign that economies are stabilizing.)

What stocks could these be?

Well, let me first give a disclaimer. I don't have any charting software. I don't have access to brokerage reports. And, I also don't have any inside dibs in any of the stocks/companies I'll mention in a short while. I'm just basing these suggestions purely on common sense. Buyer beware please. Investments entail risk and if you make a wrong move, you can see your capital losing worth by double digits.

Continue to buy "defensive" stocks. If I understand correctly, defensive stocks are utility companies - power generation, power distribution, water distribution, telecoms and healthcare. Of those listed I am looking at AP, EDC, FGEN, MWC, MPI, and of course TEL.

The reasoning is that even if the economy stays flat, companies and individuals will continue to use the phone, take a bath or use the computer. If the economy picks up, power usage goes up, people eat out more so water usage will follow, there'll be more cellphone usage as opposed to landline. The problem for the power and water distribution sector this year? El Niño baby.

What about election plays? Well I suppose that'll be the media stocks, that is - GMA and ABS CBN. I'm pretty sure their first half revenues will shoot up due to the ad spend by the "friends of (insert politician's name)". Another possible stock that may rise could be JFC. Perhaps those running for office would distribute Chicken Joy whenever they make their campaign runs? URC / SMC / PIP could also benefit.

Pure speculation stock for 2010? VLL! I'm sure the stock will fly if Villar wins the presidency. Hehehe.

One caveat for investors is that unlike foreign exchanges, ours is quite volatile because we are at the mercy of foreign brokerages. If something pushes up their fears about our market, they dump even the above quality stocks like there's no tomorrow. Of course, if you're a investing for the long term, this is of no concern to you. In fact, these could be buying opportunities.

Also, most of the local major companies and conglomerates have tightly held shares, and the owners and the management team don't always change. This means whatever they're doing good will continue for as long as they're led by the same group of people. So, if their businesses are doing well under their management, you can more or less predict that this will still be the case in the foreseeable future.

Fall from Greece

And you thought that the market would go up January. Historically, the stock market goes up in December and there's a follow through in January. After reaching a high of 3,121 last January 14, the market has tripped all the way to 2,855 last February 5.

A 9% drop in value.

This is just the index. What about individual stocks? Well, they're definitely much worse, sad to say. A few posts back, we mentioned that the market was ripe for a correction. One of the critical signs that the market is about to peak is when basura stocks are going up like crazy.

Who would have known that we'll be where we are today? Markets worldwide just fell through the roof.

Of course, warnings are just that... warnings. Nobody can predict with precision when exactly these corrections happen. It's just wise to stay ahead of the curve. But how?

I suppose when you're more careful, you'll be less and less exposed (i.e. invested) when you have a nagging feeling that the market is close to a peak. One way of staying ahead of the curve is to be able to read charts. Now, a charting software is in order.

The PSE has its a site with crude charting available. If you don't have a full fledged software, you can just stick to what they can offer.

The first step is not just looking at your favorite stock's chart but to look at the entire index first. Your stock will just follow the direction of the index.

If you don't have the patience or attitude for chart reading, you can just read the news and just look at the overall trending. Obviously most of the news have been negative, recently, there's been a focus on Greece and its potential for debt default.

Because they're part of the EU, most of the European share markets fell. For one reason or another, other markets in the world, notably Asia were also dragged down. The US market is also in the brink of falling through the 10,000 level. Wonder if that will happen.

Of course, the falling of these markets is not entirely due to the default risk of Greece. Unemployment in the US is still high, the Chinese wants to impose tightening, metal prices and oil are falling across the board. Perhaps people are doubting the recovery story.

Most of the markets may have gone way ahead of themselves last year. Now that people realize that the recovery isn't one straight line up, doubt and fear have set in. When that happens markets fall.

If you're a trader, now is not the time to be buying. Wait for some signs of stability.

Just a Commentary

I wasn't able to trade much of the stock market rally this year primarily because I was driven away by fear. I only started to take notice of the stock market when it was already July, and by then a lot of stocks already had a good run up, particularly the blue chip stocks.

I also dropped my Technistock service due to the lackluster performance of the stock market in 2008. There was no money to be made, only money to be lost.

Technistock was a great service because not only did it have charting (although incomparable to Metastock), it was linked to the stock market. The ticker moves in sync with the main board at the PSE so if there's a hot stock for the day, you can become an instant day trader. You know what stock to buy based on the momentum of buying.

Perhaps if the bull market returns, then I'd reconsider booking my subscription to their service.

So now, I just rely on the Reuters website (thanks to a friend for the tip) and read the news from time to time. The chart gets some getting used to, but it does serve the same purpose, albeit not 100% as efficient as I'd like it to be.

Last week was a dull week, at least for me. I missed out on ACR which made a nice move in a span of about 2-3 days. I don't know why it did though. I think there was something about mining rights there.

I'm still on my toes when it comes to the stock market as most of the stocks going up are the third liners and basura stocks. I would believe that the bull run still has legs if the blue chip stocks can inch higher and the volume is high. Remember, the index has risen by a substantial amount since the 2nd quarter of this year.

I personally think that the stock market has three waves -

The blue chip wave - bullishness creeps into the market, foreign buying is back

The mid cap wave - local players follow the lead of the foreigners, and they also start buying the mid cap stocks or second liners

The tidal wave - all sorts of rumors of backdoor listing, new mine find, speculation, enters the market and a lot of basura stocks and "dead" stocks are reincarnated. This signals the end of the bull market and means that the market is already at its peak

I think most of the stock prices have gotten way ahead of the actual profits the companies will be declaring. So that's a cause for concern, definitely. Then again, our index is still above 3000 so bullishness may still be alive.

Against a backdrop of lousy economic data, I wonder if there should be reason to be bullish for next year.

One thing I'd propose you to look at is the level of money supply. These days I'm sure people are out hunting for good returns. If there is excess money, then obviously, some of them may find its way into the stock market, thus spurring another run. And it doesn't have to be directly invested in stocks. Money can find its way to mutual funds, UITFs, insurance policies, etc, and the fund managers of all of these will just invest them in either the bond market... or the stock market.

Dubai was supposed to be a shocker, but the markets (outside of Dubai) seem to ignore it. I think that if there's another country that faces debt payment difficulties, then it just goes to show that the world economy still has a long ways to go in terms of recovery. It seems people are ignoring the bad news, and perking up their hopes based on the little good news that's out there.

The problem for next year could be oil prices. Due to speculation that the world economy will recover, buying up the contracts and what not may cause oil prices to rise faster than most economies' ability to grow.

The problem will just begin when that time comes. So don't forget to set money aside for a stormy day. The time for joyous celebration has not yet arrived.

Investing ... or speculating? (continued)

I was that blunt and the friend pondered about what I said. The friend agreed that that was true.

So that was my cue to say that there were more to investment decision making than just listening to what your other friends are doing. I also told the friend that before deciding on what kind of investment to take, an emergency fund should be put up first.

People are far more interested to get into the action rather than planning ahead. What does this mean? People want to see their money grow right away without considering if they have money set aside for a stormy day. Humans are generally a greedy bunch.

Instead of asking, where can I invest? You should first ask, where can I invest without risking my near term prospects? I.e., if you have paper loss sometime down the road, do you have money to keep you going (and living) if you should lose your job or lose a business?

To know if you are just speculating or actually investing with your investible funds, here are some possible "indicators". -

1. You focus on the short term, rather than the long term

2. Fear drives your decision to sell...

3. ...and Greed drives your decision to buy a new investment

4. Your decision is anchored on hope and slight delusion (a stock has fallen by 15% and you still think that those behind the stock will support it and it'll eventually recover more than 15% sometime soon)

5. Where there's smoke, there's fire, and more often than not, you get burned

6. You are fidgety, checking your investments more often than you have to

7. You boast when you have paper gains, and then gloat when you realize them...

8. ... and you don't tell anybody when you take a loss or have a paper loss...

9. ... or if you did tell someone, you just go back to telling your "war stories" of "I earned so and so in the past"

Speculation is gambling. You might have better chances at the casino than in the investment world.

Investing is based on logical decisions. You don't have to be a fundie or a technician to become an excellent investor. If you know how to save money, then you're already on your way to becoming one.

MP, Metro Pacific and Manny Pacquiao

The index recently broke the 3,000 barrier and closed up at 3,034 last Friday for the year. Due to losses in the US (and perhaps people cashing in to bet for Pacquiao-Cotto fight) the market lost momentum on the 13th. Philex also lost its luster Friday and fell by 14% to 16.75, bringing down with it the mining index. Those who bought at the 19 range better be wary.

Having risen by 100% in such a short time may mean a free fall in also the same short period to God knows where. There is no strong support for the stock having risen continuously when it breached the 10 barrier. The good thing though, at least for those who bought at the 13 level, is that they still made money (assuming they exited at 19). That's still almost 50%.

I could be wrong.

The performance of these two stocks this year - Meralco and Philex - reflects the state of our market. It is both bullish and speculative. Basura stocks are gaining and even blue chip stocks are being speculated upon. Some of the other winners for this year was WEB, and the Angping stocks, especially Nihao is back with a vengeance. As we reach the year end rally (hopefully), you may wish to take the time to think about 2010.

If you think 2010 will be a better year, then hold on to your stocks and buy the corrections. Otherwise, this could be your time to scale back and take profits while there is one. I wanted to look at the volume, as well as the amount of foreign buying for this year, but I don't have access to those information. Those are also good indicators as to the sustainability of the recent bullishness in the market.

Winners during the past week were Philex (double your money in less than a month, code: PX), Century Peak Minerals (code: CPM), Alsons Consolidated (Code: ACR), I-remit (I), and TK Steel (T). There were also other stocks that rose, mostly basura stocks, and index issues. The worst performer, at least based on the stocks that I monitor, was Metro Pacific, falling by almost 30%. What's amazing is that they recorded huge revenues.

The stock price perhaps does not reflect the correct value. At least for now. Having made so many acquisitions, as well as the possibility of diluting shareholders, bearish sentiment has killed the stock. But as Buffett is says, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

I visited their website and looked at the businesses they now hold - hospitals, toll roads, water utilities. These are businesses that do well when the economy is good, and don't suffer as much when the economy is bad.

Using common sense, I think Metro Pacific is a buy, although it will definitely be a long term buy (as long as 2-3 years from today) as we still have to wait what happens when they list new shares (unless they've done so already, I don't track the news that much). Its 52-week high is 7.10 and 52-week low is 2.08. Trading volume for the stock has increased substantially this year. But of course, there's the threat by GSIS over the recent acquisition of Meralco shares.

GSIS killed Meralco last year and they migh very well do the same for MPI this year. Sniff the news whenever it's out in the press.

I also don't know much about financial ratios so I don't bother reviewing them. What I do know is that perhaps, there's a lot of debt going around at MPI.

Of course, this is just my opinion. Investor discretion is advised and you should consult with your own financial advisor. Investments take time to generate consistent cash flows and 3 years is about the right time frame to expect the kind of revenues that MPI holdings should have with its current portfolio of companies.

**************
At least the other MP (not listed in the PSE) made winners of those who betted for him in today's fight. I'm talking about Manny Pacquiao. He beat Cotto with a TKO (hey that rhymes).

Congratulations to Pacquiao! I just hope he doesn't enter politics.

In the U.S., there's been an attempt to correlate Tiger Wood's golf games to the performance of the Dow Jones. Perhaps, we should do one for Manny Pacquiao and the Philippine Index.

Until then, be careful where you invest. Tomorrow may be another up day because of the euphoria as well as the positive end for the Dow last Friday.

Bonda rito lang po

I write for Tulay, an English fortnightly publication of World News (a local Chinese language daily). For some time now, I've been writing business articles after doing features and what not in the previous issues. I am supposed to contribute also to Money Sense, a personal finance magazine, but due to my work, I experience difficulties submitting articles. It disappoints me that I can't contribute as much. It means I have less time to give people ideas about investments, savings, et. al. (likewise for this blog)

Most of my later business articles with Tulay were about personal finance and retail investment opportunities for the local market. As I began doing those articles, it became obvious that the available instruments are redundant. There are too many providers offering you the same stuff. But don't get me wrong, these are all good and the fund managers and the banks managing the UITFs or mutual funds actually serve as institutional investors, particularly for the stock market.

The one market I would like to understand is the bond market. It's not as exciting as the stock market but bonds are generally accepted as safer security investments. Usually, most of the bonds issued are gobbled up by banks and financial institutions, and there's really nothing left for the retail investors.

Every now and then though, something does pop up as opportunities for the small investors. These are the corporate bonds and retail treasury bonds. The problem with these two types of bonds, at least to my knowledge, is that they do not offer this neat investment trick called compounding.

Why?

Upon investment of a bond, the interest is credited monthly to your account. So in effect, you're giving your money to the lender, letting him use it, and then returning it to you after 3 or 5 years - but only the principal because the interest has been credited to you already. Classic case of OPM, other people's money. Of course, that's just a jaded view of bonds.

The plus side of investing in these kinds of bonds is that you let your money work for you. So at least you can expect something quarterly that's higher than the regular savings or time deposit. But in the long run, you should also be looking at investments that have a compounding effect.

Compounding means that the interest you earn is rolled back into the principal, thus earning you more each time there's additional interest applied to it. Supposedly, stocks and mutual funds have a compounding effect.

What I do know is that they appreciate in value over the long term, so your original investment is getting bigger. So there's capital appreciation, but not necessarily compounding. Compounding will happen though, if there were dividends, and you invest it back to the fund or stock.

Compounding is also one way, if not the only way, you can escape the dangers of inflation.

Until the next post, invest wisely.

Spandau Ballet

Recently, the stock market reached a new high for 2009.

Amidst the global recovery (of the stock market, not necessarily of the world economy), one metal has been shining - no pun intended. We're talking about gold. Gold has gone past the $1000 mark and is - according to experts and analysts - to continue its upward flight. Unfortunately, its performance is inversely related to the US dollar.

The dollar has continued to drop, due to concerns over the long term effects of the government bailout and inflation fears. There's also rumors circulating that some of countries round the world are considering dropping the dollar. Where there's smoke, there's fire. If that happens, then a new world order will be - err - in order.

Unfortunately, in the Philippines the closest a retail investor can get to gold is gold stocks. There's no exchange for gold, even though our country has some very good gold deposits. Buy jewelry? Word on the street is that jewelry shops don't buy back jewelry anymore.

If I'm not mistaken, Philex went up even before gold went to its current levels. And now, that gold is this high, Philex is.... flat at 9, falling through the roof from a high of 10.50. Sell on news that gold is high? Haha.