After trying our best to withstand the sell off of the stock markets in other countries, our local index succumbed to the pressure. It comes as no surprise because as the cliche goes, no man (or stock market) is an island, even if you're an archipelago.
Investors and traders who witnessed the bloodbath in 2008 must be saying to themselves, "eto nanaman tayo" (here we go again).
Well, not exactly.
My opinion is that the government interventions made in 2009 paved the way for extra money to flow into the markets - whether in equities, minerals, etc. Now that uncertainty is back, the big players may be liquidating their positions, preferring to stay put in cash, hence the sell off.
Further, what's different is that governments worldwide have already used quite a bit of arsenal already. Injecting loads of money into their economies to stave off individual recessions in 2009.
So now, if governments can't do anything else, everybody's wondering if there's going to be a double dip.
And we're not talking about Oreos here.
What's left to do? Perhaps it's time to let the markets play out on its own.
Certainly, governments are scrambling to find ways to mitigate the crisis. What's an investor to do? Wait and see or do like Buffett - but when everybody's selling.
Stocks are usually forward looking, so the crash lately could mean economic hard times in the next few months.
Time to tighten your belt? Perhaps.
You wouldn't be hard pressed if you were able to set an emergency fund first before plunking hard earned money on real estate, stocks, bonds, or managed funds.
People have this notion that the best way to grow their money is to invest it right away.
That's not entirely correct. Before you decide on your investment instruments, you should set aside an emergency or savings fund.
An emergency fund represents 3-4 months of your monthly expenses. However, if you would like to be on the safe side, instead of expenses, use your monthly salary as your guide.
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LBC Bank recently closed shop. According to the news report, the reason is attributable to them offering higher interest rates than their peers.
As you know, if a deal sounds too good to be true, it probably is.
During financial crises, poorly managed financial institutions fold up.
The last time that happened locally, it was during the height of the US financial crisis.
Remember Legacy?
********************************
I'm elated that some of the stocks I was talking about last year went up substantially, namely GLO and ORE. My mistake was with MPI (I will have to uncover why it is underperforming).
Until then, appreciate the (heightened) risk, then appreciate the capital!
*** Blogger is a lousy blog service. Truly. I had a long text and it just disappeared. I hope to use a more reliable service in the future. Sorry I just had to say it. ***
Showing posts with label Guerilla Investing's Commentaries. Show all posts
Showing posts with label Guerilla Investing's Commentaries. Show all posts
Thursday, September 22, 2011
Thursday, September 8, 2011
Market Mover?
The mining superstar, or, at least one of the superstars, Lepanto Mining, saw its shares drop from a high of 1.82 last August 24 to a low of 1.28 today ("A" shares).
What is disturbing is the volume of transaction in the past few days, especially when the stock saw heavy selling.
What's happening? Well, basically there are two rumors daw. I say daw because that's what I heard. So it's up to you if you want to take it with a grain of salt. First is that the company is looking at doing a stock right. Second, there will be a postponement of the announcement to be made by their foreign investor Gold Fields.
Then of course, there's that unloading of LC shares because it's not part of the PSEi anymore. This is a fact. So index funds need to unload their LC to mimic the composition of the PSEi.
What happened in the past few days of course, forces traders to rethink their positions in LC. Today's recovery may just be a dead cat bounce. Investors, on the other hand, who truly believe that LC will become a profitable company one day may want to forget what has happened and just look to the future. Easy to say, I am sure.
There was also a columnist in the Inquirer who said that "According to unverified reports, the company is slated for a secondary offering—a development that could only be interpreted to mean that the principals of the company are taking their profits which, in turn, may send the message that no further initiatives are at hand to assure the continued growth of the company."
In my young experience with the stock market, stock rights usually negatively weigh on the shares of the company. It will take some time for its stock price to go up - - should it happen.
His article came out Monday. LC had a bloodbath the following days. Market mover?
Nah. Most likely it's the moves made by fund managers in anticipation of the Sept 12 shake up of the index. LC is being removed by then. If you're an index mutual fund with loads of LC, you can't sell those shares in just one day. I'm sure it is spread over numerous days.
San Miguel and Semirara will join the index, along with others who'll replace those that'll be exiting.
*******************************
It's interesting and also an encouraging sign to note that more and more Filipinos are looking for ways to build wealth (not just spend wealth). This is why paper investments have increased as well as hard assets like condominiums. The next logical step will be to have even more forms of paper investments and an increase in home equity loans.
When you buy property, you can actually increase your net worth right away by taking out a home equity loan. Unfortunately though, this money is fake money because it's not yours. I use the word fake loosely, of course.
Americans used this fake money to buy goods they didn't need. Look at what happened to their economy now.
The continued launch of new projects is sure to increase property prices. Because logically, you can't sell new projects at a cheaper price right? For one, prices of construction materials will go up as construction demand goes up. Further, the developer can't price its new projects lower than their old projects because that will be saying that their old projects are overvalued. They will also risk the ire of their investors.
Property, while generally safe, is not immune to price activity. Prices do not fall on a straight line upwards. Time will come that it will plateau, or, actually go down.
I'm sure property advocates will not agree with me. hehe.
But ponder on this, if stocks are priced based on earnings, what or who determines the price of a property? The developer or the market? Ultimately it will be the market. So when the market is riddled with sellers, like the stock market, prices will go down.
Anyway, that's it for now.
Until then, appreciate the risk, then appreciate the capital!
What is disturbing is the volume of transaction in the past few days, especially when the stock saw heavy selling.
What's happening? Well, basically there are two rumors daw. I say daw because that's what I heard. So it's up to you if you want to take it with a grain of salt. First is that the company is looking at doing a stock right. Second, there will be a postponement of the announcement to be made by their foreign investor Gold Fields.
Then of course, there's that unloading of LC shares because it's not part of the PSEi anymore. This is a fact. So index funds need to unload their LC to mimic the composition of the PSEi.
What happened in the past few days of course, forces traders to rethink their positions in LC. Today's recovery may just be a dead cat bounce. Investors, on the other hand, who truly believe that LC will become a profitable company one day may want to forget what has happened and just look to the future. Easy to say, I am sure.
There was also a columnist in the Inquirer who said that "According to unverified reports, the company is slated for a secondary offering—a development that could only be interpreted to mean that the principals of the company are taking their profits which, in turn, may send the message that no further initiatives are at hand to assure the continued growth of the company."
In my young experience with the stock market, stock rights usually negatively weigh on the shares of the company. It will take some time for its stock price to go up - - should it happen.
His article came out Monday. LC had a bloodbath the following days. Market mover?
Nah. Most likely it's the moves made by fund managers in anticipation of the Sept 12 shake up of the index. LC is being removed by then. If you're an index mutual fund with loads of LC, you can't sell those shares in just one day. I'm sure it is spread over numerous days.
San Miguel and Semirara will join the index, along with others who'll replace those that'll be exiting.
*******************************
It's interesting and also an encouraging sign to note that more and more Filipinos are looking for ways to build wealth (not just spend wealth). This is why paper investments have increased as well as hard assets like condominiums. The next logical step will be to have even more forms of paper investments and an increase in home equity loans.
When you buy property, you can actually increase your net worth right away by taking out a home equity loan. Unfortunately though, this money is fake money because it's not yours. I use the word fake loosely, of course.
Americans used this fake money to buy goods they didn't need. Look at what happened to their economy now.
The continued launch of new projects is sure to increase property prices. Because logically, you can't sell new projects at a cheaper price right? For one, prices of construction materials will go up as construction demand goes up. Further, the developer can't price its new projects lower than their old projects because that will be saying that their old projects are overvalued. They will also risk the ire of their investors.
Property, while generally safe, is not immune to price activity. Prices do not fall on a straight line upwards. Time will come that it will plateau, or, actually go down.
I'm sure property advocates will not agree with me. hehe.
But ponder on this, if stocks are priced based on earnings, what or who determines the price of a property? The developer or the market? Ultimately it will be the market. So when the market is riddled with sellers, like the stock market, prices will go down.
Anyway, that's it for now.
Until then, appreciate the risk, then appreciate the capital!
Sunday, August 21, 2011
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!
Sunday, July 31, 2011
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.
************
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.
*****************
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!
Thursday, May 5, 2011
SMC, sleep muna corporation
I've been so out of touch with the local stock market and more so with my blog for quite some time. There were some opportunities in the stock market but slowly, I am realizing that if you don't have the time, you just entrust your money to fund managers via mutual funds.
However, greed is preventing me from going the route of investing in mutual funds. Hehe.
I know I've got lots of things and ideas I'd like to share about personal finance; unfortunately, as I've come to realize, interest and time is usually inversely proportional.
On top of this, when I started this blog, I failed to plan ahead. I didn't come up with a list of topics to talk about. So there were periods of drought, as was the previous month/s. I hope that stops.
I've been out of touch that I didn't know (nor feel) the secondary offering of SMC. Prior to its closing, it was trading between 150 to 170. Since it was offered at only 110, it closed down today at 109.50. At one point it was at the low of 105.70. I do have faith that the share price will make a strong rebound; but, it will take some time, given the volume of shares that just made a tsunami in the market.
I also had plans of taking positions in LC (Lepanto, a mining stock) with the strategy of buying and forgetting all about it. I just didn't do it yet due to one, lack of funds hehe; and, two, I'm waiting for a good entry point (will I still get it?). I'm hoping it would.
I fear of recommending anything for the mere fact that I have not been actively monitoring stocks for some time now. Couple that with the lack of a good charting software, I'd be wary of touching anything that I don't plan on holding for a long time. So basura stocks, it may be time to say good bye and not good buy.
It's funny, during the first quarter, I was waiting for the market to rebound. Now, I'm waiting for the market to correct. Every time I'm about to make a decision, the market isn't cooperating. Mutual funds, here I come?
If there's anything I'd like to impart, investing in mutual funds is the easiest boring way to earn passive income.
See you soon and do constantly drop by. I hope your patience doesn't wear thin. =p
However, greed is preventing me from going the route of investing in mutual funds. Hehe.
I know I've got lots of things and ideas I'd like to share about personal finance; unfortunately, as I've come to realize, interest and time is usually inversely proportional.
On top of this, when I started this blog, I failed to plan ahead. I didn't come up with a list of topics to talk about. So there were periods of drought, as was the previous month/s. I hope that stops.
I've been out of touch that I didn't know (nor feel) the secondary offering of SMC. Prior to its closing, it was trading between 150 to 170. Since it was offered at only 110, it closed down today at 109.50. At one point it was at the low of 105.70. I do have faith that the share price will make a strong rebound; but, it will take some time, given the volume of shares that just made a tsunami in the market.
I also had plans of taking positions in LC (Lepanto, a mining stock) with the strategy of buying and forgetting all about it. I just didn't do it yet due to one, lack of funds hehe; and, two, I'm waiting for a good entry point (will I still get it?). I'm hoping it would.
I fear of recommending anything for the mere fact that I have not been actively monitoring stocks for some time now. Couple that with the lack of a good charting software, I'd be wary of touching anything that I don't plan on holding for a long time. So basura stocks, it may be time to say good bye and not good buy.
It's funny, during the first quarter, I was waiting for the market to rebound. Now, I'm waiting for the market to correct. Every time I'm about to make a decision, the market isn't cooperating. Mutual funds, here I come?
If there's anything I'd like to impart, investing in mutual funds is the easiest boring way to earn passive income.
See you soon and do constantly drop by. I hope your patience doesn't wear thin. =p
Wednesday, March 23, 2011
Hello, Hello!
Wow, it's been a month since I last posted.
My posting and updates have been intermittent since 2011 started. I won't offer excuses.
Everything has been a blur for me, with the stock market down. I got a bit emotionally attached to the market, hence, I became detached from my blog. Tsk tsk.
And in between, there's the chaos in the Middle East, the quake in Japan. So much happening and it's just three months into the year!
As for the local stock market, it seems to be gaining some direction, at least for some select stocks.
So, perhaps it is safe to say that by 2nd quarter, people may start to accumulate stocks again. Of course, barring any more natural disasters and geopolitical issues. Worrisome also are the OFWs' job security. Key indicator to look at going forward would be the growth (or flattish?) remittances compared to 2010.
Anyhow, back to my real work. I shall update you once again, my dear blog, and of course, for the benefit of you, my faithful readers.
Until then, don't forget to increase your emergency fund and invest wisely.
My posting and updates have been intermittent since 2011 started. I won't offer excuses.
Everything has been a blur for me, with the stock market down. I got a bit emotionally attached to the market, hence, I became detached from my blog. Tsk tsk.
And in between, there's the chaos in the Middle East, the quake in Japan. So much happening and it's just three months into the year!
As for the local stock market, it seems to be gaining some direction, at least for some select stocks.
So, perhaps it is safe to say that by 2nd quarter, people may start to accumulate stocks again. Of course, barring any more natural disasters and geopolitical issues. Worrisome also are the OFWs' job security. Key indicator to look at going forward would be the growth (or flattish?) remittances compared to 2010.
Anyhow, back to my real work. I shall update you once again, my dear blog, and of course, for the benefit of you, my faithful readers.
Until then, don't forget to increase your emergency fund and invest wisely.
Saturday, February 19, 2011
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
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.
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 quoteWell. 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.
Tuesday, February 8, 2011
Down..on your luck?
The market now has a direction: Down.
Last year, the PSEi went up by more than 30%. Now, we're down by about 10% already, if I remember the news correctly.
In between there were a lot of superstar stocks like Aboitiz Power (AP), Semirara (SCC), DMCI (DMC), among others, that went up more than 50%.
I don't know how many were able to enjoy the ride of the aforementioned stocks. If you're one of them, then congratulations to you!
While experts and pundits will say that stock selection is a skill, you still need an element of luck on your side.
Few - if not none - business books will tell you that luck is also needed to be successful in business. I think that applies also to stock trading (and not investing).
People of course will question the credibility of a business book if luck was somehow placed in the equation of success.
I say that luck is important because I've had experiences in the past when I bought a stock and then it just goes up. I've also had experiences counter to that of course, i.e. for no reason it goes down. And when I say "going up" or "going down", it's more than 10%.
Mostly these are small to medium companies that get jockeyed for what reason, I don't know.
Of course, this is not to say that you if you are "unlucky" in stocks you should choose to avoid it completely. By unlucky, I mean if you have only made money 1 out of 10 trades you've made.
You don't have to stress yourself by choosing what to buy. Go to a professional and get yourself a mutual fund or UITF.
The commission, fees, charges that you get billed for are well worth the stress.
Until the next post!
Last year, the PSEi went up by more than 30%. Now, we're down by about 10% already, if I remember the news correctly.
In between there were a lot of superstar stocks like Aboitiz Power (AP), Semirara (SCC), DMCI (DMC), among others, that went up more than 50%.
I don't know how many were able to enjoy the ride of the aforementioned stocks. If you're one of them, then congratulations to you!
While experts and pundits will say that stock selection is a skill, you still need an element of luck on your side.
Few - if not none - business books will tell you that luck is also needed to be successful in business. I think that applies also to stock trading (and not investing).
People of course will question the credibility of a business book if luck was somehow placed in the equation of success.
I say that luck is important because I've had experiences in the past when I bought a stock and then it just goes up. I've also had experiences counter to that of course, i.e. for no reason it goes down. And when I say "going up" or "going down", it's more than 10%.
Mostly these are small to medium companies that get jockeyed for what reason, I don't know.
Of course, this is not to say that you if you are "unlucky" in stocks you should choose to avoid it completely. By unlucky, I mean if you have only made money 1 out of 10 trades you've made.
You don't have to stress yourself by choosing what to buy. Go to a professional and get yourself a mutual fund or UITF.
The commission, fees, charges that you get billed for are well worth the stress.
Until the next post!
Thursday, January 27, 2011
Izzzz baaaacccckkk!
Dear faithful readers and visitors,
I'll be back to my posting ways soon...
My last post was November 23, 2010. Today is January 28, technically.
I've been busy and in the midst of some changes; but, once this is behind me, I shall resume my posting schedule, which is once a week.
The market has made a lot of noise (not) last December up to today. Now the index is below 4,000 if I remember correctly.
Sentiment has turned sour (for the local scene), I'm sure. But it's just how money is in the world.
Once upon a blue moon, money was in this side of the world. Now, it's going back to the States. If you haven't read the news, "hot money" was at an historic high in the Philippines last 2010.
These are just funds which pour into investments, usually paper investments like stocks. That's why everything was going up last year. So, you can say that the stock prices went way ahead of the companies' ability to earn and make money.
So what does it mean to us Juan dela Cruzes?
Now, we local folks with only a few bucks joined the ride last 2010 thinking that the joyride would never end. Well, local folks, the rug has been pulled under our feet.
Let's say foreign fund invested 1,000,000 pesos in Stock XXX. You on the other hand, invested 10,000 pesos. Assume for an instance that the stock price is at Php 1.00.
The foreign fund wants to liquidate his/her entire position. If the posted buyers for Stock XXX at a certain price point is only at 100,000, then the foreign fund will sell all the way down just to satiate the 1,000,000 position. That's why falling stock prices are painful for small fries like you and me, suwertehan din minsan, kung nakapost ka sa magandang presyo..
So when foreign funds are exiting the country, there is indiscriminate selling. Consequentially, us locals will just see our paper gains disintegrate to more realistic levels.
Good long term, bad short term I suppose. Will happier days return? Perhaps towards the latter part of the year.
I mean everything's going up, primarily in the transport sector, not only in terms of prices but also in attempts to blow them UP.
If the transport sector charges higher fares, then it's natural that food costs will also increase since food is delivered port to port, manufacturer to outlet via transportation. Transportation is the backbone. This would then start a cascading of price increases.
As one broker friend once told me, inflation is a given.
The crucial thing though is that people will get used to higher prices, but it will take some time.
And when they do, then corporate profits start trickling in, and eventually stock prices get propped up.
But you know what? Having worked in the FMCG sector in the past, January is almost always the month when most companies announce price increases. Just in time for retail outlets to flush out all their 2010 stocks.
New year, new stocks, new prices.
Speaking of stocks.... let's backtrack a bit....
When you're a small fry in the stock market, it's best you protect your gains. A lot of so called experts will always tell you about money management.
But personally, money management is dependent on the amount you are investing.
Some experts forget that not everyone can invest more than P 20,000 in the stock market. So money management for the conservative stock investor will strictly be a one-stock affair. It won't be about how you apportion your funds.
Oh well. Enough for now.
I'm back! Thank you for dropping by.
Sincerely,
Guerilla Investing Blogger
I'll be back to my posting ways soon...
My last post was November 23, 2010. Today is January 28, technically.
I've been busy and in the midst of some changes; but, once this is behind me, I shall resume my posting schedule, which is once a week.
The market has made a lot of noise (not) last December up to today. Now the index is below 4,000 if I remember correctly.
Sentiment has turned sour (for the local scene), I'm sure. But it's just how money is in the world.
Once upon a blue moon, money was in this side of the world. Now, it's going back to the States. If you haven't read the news, "hot money" was at an historic high in the Philippines last 2010.
These are just funds which pour into investments, usually paper investments like stocks. That's why everything was going up last year. So, you can say that the stock prices went way ahead of the companies' ability to earn and make money.
So what does it mean to us Juan dela Cruzes?
Now, we local folks with only a few bucks joined the ride last 2010 thinking that the joyride would never end. Well, local folks, the rug has been pulled under our feet.
Let's say foreign fund invested 1,000,000 pesos in Stock XXX. You on the other hand, invested 10,000 pesos. Assume for an instance that the stock price is at Php 1.00.
The foreign fund wants to liquidate his/her entire position. If the posted buyers for Stock XXX at a certain price point is only at 100,000, then the foreign fund will sell all the way down just to satiate the 1,000,000 position. That's why falling stock prices are painful for small fries like you and me, suwertehan din minsan, kung nakapost ka sa magandang presyo..
So when foreign funds are exiting the country, there is indiscriminate selling. Consequentially, us locals will just see our paper gains disintegrate to more realistic levels.
Good long term, bad short term I suppose. Will happier days return? Perhaps towards the latter part of the year.
I mean everything's going up, primarily in the transport sector, not only in terms of prices but also in attempts to blow them UP.
If the transport sector charges higher fares, then it's natural that food costs will also increase since food is delivered port to port, manufacturer to outlet via transportation. Transportation is the backbone. This would then start a cascading of price increases.
As one broker friend once told me, inflation is a given.
The crucial thing though is that people will get used to higher prices, but it will take some time.
And when they do, then corporate profits start trickling in, and eventually stock prices get propped up.
But you know what? Having worked in the FMCG sector in the past, January is almost always the month when most companies announce price increases. Just in time for retail outlets to flush out all their 2010 stocks.
New year, new stocks, new prices.
Speaking of stocks.... let's backtrack a bit....
When you're a small fry in the stock market, it's best you protect your gains. A lot of so called experts will always tell you about money management.
But personally, money management is dependent on the amount you are investing.
Some experts forget that not everyone can invest more than P 20,000 in the stock market. So money management for the conservative stock investor will strictly be a one-stock affair. It won't be about how you apportion your funds.
Oh well. Enough for now.
I'm back! Thank you for dropping by.
Sincerely,
Guerilla Investing Blogger
Thursday, October 28, 2010
IPOze
Last post I left with a teaser on ORE, a mining stock.
I don't have any information about the stock except that - from the grapevine (mostly online forum/s) - it has the highest grade nickel in the country.
Well, common sense dictates that if you have the highest grade of something, you get better prices for your goods. And, when you get better prices, that means you get better revenues, ladies and gentlemen.
Recently, by coincidence, there was a news release in the Inquirer (website), just this October 26, entitled "First nickel shipment eyed by December". For your ease, the meat of the news is found in these paragraphs -
The mining unit of publicly-listed Oriental Peninsula Resources Group Inc. (ORE) is scheduled to deliver its first shipment of high-grade nickel ore to Japan and Australia by December 2010.
ORE chairman and president Caroline Tanchay said ORE’s subsidiary Citinickel Mines has been operating since August. “If not for the heavy rains in Palawan, Citinickel could have produced more. However, I’m glad we can finally ship out high grade nickel ore which is good news for our shareholders,” Tanchay said.
The scheduled shipment follows the signing and submission before the Regional Trial Court last August of a compromise settlement that puts an end to the long running dispute between Citinickel and erstwhile rival Platinum Group Metals Corp. (PGMC).
Good news indeed? So far, this hasn't been a "sell on news" story.
Well, let's review the price action since my last post.
Oct 20: Open 3.28, High of 3.48, Close 3.40
Oct 26: Open 3.49, High of 3.69, Close 3.61
Oct 27: Open 3.70, High of 3.74, Close 3.65
Oct 28: Open 3.65, High of 3.70, Close 3.60
Notice anything?
What's the spread of October 26 and 20? 20 centavo run from the open to the high, then an 8 centavo retracement from the high to the close.
Then there's the .11 difference in the opening prices of Oct 20, 26, and 27.
The spread though on October 27 and 28 had been thinning. The closing price today suggests a bearish trend for the stock given the lower close vs. October 27's 3.70 opening price.
Prices don't lie. Then again, perhaps I'm just over-analyzing.
Even with the possible bearish trend of ORE, it may enjoy buoyancy in the coming days as Nickel Asia is listed through an IPO. I looked at the prospectus and my it's hundred pages. I suggest you also do your research. The link I put here has another link to their website and provides some legalese that's best read by you.
I remember though that there was a summary version of this and I was particularly interested with the item on dividends policy. I skimmed through the (new) hundred page document and found this instead -
"Upon completion of the Offer, our dividend policy entitles holders of Shares to receive annual cash dividends of up to 30% of the prior year’s recurring attributable net income based
on the recommendation of our Board of Directors. Such recommendation will take into consideration factors such as dividend income from subsidiaries, debt service requirements,
the implementation of business plans, operating expenses, budgets, funding for new investments and acquisitions, appropriate reserves and working capital, among others. See
“Dividends and Dividend Policy”."
Portion of the "Dividends and Dividend Policy"
"We paid cash dividends to our shareholders in 2007 and 2009 in the amounts of 81,611 million and 8142.2 million, respectively, and paid a 150,000,000 share common stock dividend in September 2010.
We did not pay dividends in 2008 because we were conserving our cash in anticipation of making an equity contribution in respect of the Taganito HPAL facility project. On August 13, 2010, our Board of Directors declared a cash dividend equal to the peso equivalent of US$70 million, which is scheduled to be paid no later than three days following the listing of the Offer Shares on the PSE to shareholders of record on August 31, 2010."
I cannot say with confidence and certainty that the CEBU PACIFIC IPO Prospectus contained no such information as I didn't bother to read it. I just happened to view the Nickel Asia prospectus recently so I wanted to learn more about their upcoming offering.
The IPO of Nickel Asia will spur interest in stocks that are in to the nickel business. This means ORE will attract attention, in my opinion. So, there may be trading opportunities for ORE even with the possible bearish move.
Anyway, that's it for now. To be continued in the next post. Until then, appreciate the risk, then appreciate the capital!
I don't have any information about the stock except that - from the grapevine (mostly online forum/s) - it has the highest grade nickel in the country.
Well, common sense dictates that if you have the highest grade of something, you get better prices for your goods. And, when you get better prices, that means you get better revenues, ladies and gentlemen.
Recently, by coincidence, there was a news release in the Inquirer (website), just this October 26, entitled "First nickel shipment eyed by December". For your ease, the meat of the news is found in these paragraphs -
The mining unit of publicly-listed Oriental Peninsula Resources Group Inc. (ORE) is scheduled to deliver its first shipment of high-grade nickel ore to Japan and Australia by December 2010.
ORE chairman and president Caroline Tanchay said ORE’s subsidiary Citinickel Mines has been operating since August. “If not for the heavy rains in Palawan, Citinickel could have produced more. However, I’m glad we can finally ship out high grade nickel ore which is good news for our shareholders,” Tanchay said.
The scheduled shipment follows the signing and submission before the Regional Trial Court last August of a compromise settlement that puts an end to the long running dispute between Citinickel and erstwhile rival Platinum Group Metals Corp. (PGMC).
Good news indeed? So far, this hasn't been a "sell on news" story.
Well, let's review the price action since my last post.
Oct 20: Open 3.28, High of 3.48, Close 3.40
Oct 26: Open 3.49, High of 3.69, Close 3.61
Oct 27: Open 3.70, High of 3.74, Close 3.65
Oct 28: Open 3.65, High of 3.70, Close 3.60
Notice anything?
What's the spread of October 26 and 20? 20 centavo run from the open to the high, then an 8 centavo retracement from the high to the close.
Then there's the .11 difference in the opening prices of Oct 20, 26, and 27.
The spread though on October 27 and 28 had been thinning. The closing price today suggests a bearish trend for the stock given the lower close vs. October 27's 3.70 opening price.
Prices don't lie. Then again, perhaps I'm just over-analyzing.
Even with the possible bearish trend of ORE, it may enjoy buoyancy in the coming days as Nickel Asia is listed through an IPO. I looked at the prospectus and my it's hundred pages. I suggest you also do your research. The link I put here has another link to their website and provides some legalese that's best read by you.
I remember though that there was a summary version of this and I was particularly interested with the item on dividends policy. I skimmed through the (new) hundred page document and found this instead -
"Upon completion of the Offer, our dividend policy entitles holders of Shares to receive annual cash dividends of up to 30% of the prior year’s recurring attributable net income based
on the recommendation of our Board of Directors. Such recommendation will take into consideration factors such as dividend income from subsidiaries, debt service requirements,
the implementation of business plans, operating expenses, budgets, funding for new investments and acquisitions, appropriate reserves and working capital, among others. See
“Dividends and Dividend Policy”."
Portion of the "Dividends and Dividend Policy"
"We paid cash dividends to our shareholders in 2007 and 2009 in the amounts of 81,611 million and 8142.2 million, respectively, and paid a 150,000,000 share common stock dividend in September 2010.
We did not pay dividends in 2008 because we were conserving our cash in anticipation of making an equity contribution in respect of the Taganito HPAL facility project. On August 13, 2010, our Board of Directors declared a cash dividend equal to the peso equivalent of US$70 million, which is scheduled to be paid no later than three days following the listing of the Offer Shares on the PSE to shareholders of record on August 31, 2010."
I cannot say with confidence and certainty that the CEBU PACIFIC IPO Prospectus contained no such information as I didn't bother to read it. I just happened to view the Nickel Asia prospectus recently so I wanted to learn more about their upcoming offering.
The IPO of Nickel Asia will spur interest in stocks that are in to the nickel business. This means ORE will attract attention, in my opinion. So, there may be trading opportunities for ORE even with the possible bearish move.
Anyway, that's it for now. To be continued in the next post. Until then, appreciate the risk, then appreciate the capital!
Wednesday, October 20, 2010
Mine's Here!
Dear readers, thank you for being patient. As promised last week, I am back with a new post. I'll just make some stock market commentaries, a short review of my stock trade forecast, and another long term stock you may wish to add to your portfolio.
I hope stock market enthusiasts have made money in the recent weeks. For the others who don't know or care about the stock market, maybe it's about time you did. I'm not surprised that most haven't.
Continue stocking up on the stock market...
Based on this news piece from the Inquirer,
"THE Philippine Stock Exchange estimates that less than 1 percent of the Philippine population invest in the stock market, but exactly how many people are we talking about?
Based on the latest headcount, that figure may be about 400,000—slightly less than the holiday foot traffic at SM’s most populous malls. This number covers the active retail investors, defined conservatively as those who trade at least once a year.
By demographics, local stock market investors usually are aged 30 to 50, majority of whom are male. About 35 percent of them are Chinoys, according to the PSE. "
And, if you're worried that maybe it's too late to enter the stock market, perhaps the last paragraph of Dean Somera's post would calm your nerves. If you don't want to go to the link anymore, basically this is the meat of the entire article -
"With the oversubscription of the CEB IPO and very positive public reaction to the SMDC SRO, market outlook is encouraging. And, if the market bulletin of one stockbrokerage house is correct when it said that current “foreign participation is only about P50 billion monthly versus the P100 billion monthly in the 2007 rally,” it seems that there are more money available to bolster current market momentum and direction."
With regards the CEB IPO, according to a news article in Inquirer, the local portion of the offering were "all sold". Some more "praise release", I suppose -
"This will be the largest IPO by a low-cost carrier in the Asia-Pacific to date. Its parent firm JG Summit expects to raise as much as P23.3 billion ($539 million), without having to exercise an option to sell even more shares.
The IPO is one of the largest ever conducted in the Philippines, and the largest Philippine IPO in US dollar terms."
Now, the question is, what will these IPO takers do on listing date? Sell the shares for a quick buck or hold it for the long term? My oh my, Php 23 Billion, then there's that transaction between Mang Inasal and Jollibee worth Php 3 Billion. These piles of cash should go somewhere!
I sure hope I get to be the kind of entrepreneur Mr. Sia is.
Reviewing my recommendations...
These recommendations were made September 24.
1. Atlas doing a correction - I was right. What I was wrong with was that after the correction, it went even higher to hit 18.32. Then again, I did say that,
"But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50."
2. DGTL - I was right that you should not choose DGTL. This stock tanked after a gap up...
3. APC - And I was wrong with APC, as it also tanked on Monday, September 27. It opened higher than the Friday's close only to close lower than Friday. Then a week later, it just broke out to 0.86... only to fall back down to 0.76.
4. MPI - It didn't correct. I was anticipating a correction but it never made one. So if you're a long position trader, then I'm sure you're (still) happy with this stock.
The market didn't correct in the one to two weeks period I said after the Sept 24 post but this week, the market has taken a breather. This is a good respite so that people "late in the game" can still come in to participate in the stock market. The correction has been slow in force, and I suppose that's a good sign, rather than a one time steep correction.
Long term stock
I've said that I look at holding long term growth stocks based on common sense and reading the news. These are the primary reasons why I chose Atlas and Metro Pacific.
One stock that has caught my attention is DGTL. I don't know much about fundamental analysis so I won't try to be a genius and interpret their FS. What I know is that part of their business is the Sun Cellular brand - which recently claimed that they already led the other cellular networks in postpaid subscribers.
If you pass by any Sun Shop, you'll note that there are many people queuing in line to transact business, be it to pay bills or to apply for a postpaid line. With just a Php 250.00 monthly bill, anyone can get a postpaid line from them.
The story for DGTL at least for me is something like Cebu Pacific. Cebu Pacific has certainly come a long way. It took years to build but their business has certainly paid handsomely for its principals. Similarly, Sun Cellular was once a small player in the local duopoly of Globe and Smart. Look at where it is today and you'll know that in 1 to 2 years time, DGTL may fly the way PLTL did in the early years of this century.
The two problems with DGTL is
(1) their landline business, which probably pales in comparison to PLDT. Nonetheless, their venture into broadband internet should provide ample opportunities for growth.
(2) playing in a mature industry - the telco industry. The only thing these guys are doing is eating away at each other's market share. I doubt there's much growth in this sector, compared to the mining industry.
Some dark horses
GLO, a battered telco stock has recovered much from its low of 773, more or less, this year. A part of me is telling me that GLO may come out as a surprise by 2011. GLO is a dividend stock and is also an Ayala company. Ayala companies are known to give value to shareholders. They recently announced a share buy back program for AC.
Why GLO? Have you seen the number of people flocking to Globe business centers? Their aggressive marketing seems to be paying off. A company that invests in marketing will certainly see results. I think that they have a chance at eating at Smart's share of the postpaid business (and not Sun).
Another dark horse is ORE, which is why my title is "mine's here". M-ORE on this in the next post. ORE, unlike GLO, is a purely speculative play. If you consider Atlas to be speculative, then ORE may already border on gambling for you.
Until then!
I hope stock market enthusiasts have made money in the recent weeks. For the others who don't know or care about the stock market, maybe it's about time you did. I'm not surprised that most haven't.
Continue stocking up on the stock market...
Based on this news piece from the Inquirer,
"THE Philippine Stock Exchange estimates that less than 1 percent of the Philippine population invest in the stock market, but exactly how many people are we talking about?
Based on the latest headcount, that figure may be about 400,000—slightly less than the holiday foot traffic at SM’s most populous malls. This number covers the active retail investors, defined conservatively as those who trade at least once a year.
By demographics, local stock market investors usually are aged 30 to 50, majority of whom are male. About 35 percent of them are Chinoys, according to the PSE. "
And, if you're worried that maybe it's too late to enter the stock market, perhaps the last paragraph of Dean Somera's post would calm your nerves. If you don't want to go to the link anymore, basically this is the meat of the entire article -
"With the oversubscription of the CEB IPO and very positive public reaction to the SMDC SRO, market outlook is encouraging. And, if the market bulletin of one stockbrokerage house is correct when it said that current “foreign participation is only about P50 billion monthly versus the P100 billion monthly in the 2007 rally,” it seems that there are more money available to bolster current market momentum and direction."
With regards the CEB IPO, according to a news article in Inquirer, the local portion of the offering were "all sold". Some more "praise release", I suppose -
"This will be the largest IPO by a low-cost carrier in the Asia-Pacific to date. Its parent firm JG Summit expects to raise as much as P23.3 billion ($539 million), without having to exercise an option to sell even more shares.
The IPO is one of the largest ever conducted in the Philippines, and the largest Philippine IPO in US dollar terms."
Now, the question is, what will these IPO takers do on listing date? Sell the shares for a quick buck or hold it for the long term? My oh my, Php 23 Billion, then there's that transaction between Mang Inasal and Jollibee worth Php 3 Billion. These piles of cash should go somewhere!
I sure hope I get to be the kind of entrepreneur Mr. Sia is.
Reviewing my recommendations...
These recommendations were made September 24.
1. Atlas doing a correction - I was right. What I was wrong with was that after the correction, it went even higher to hit 18.32. Then again, I did say that,
"But if you're no expert (like me), you might as well just hold on to it as long as you've padded that many profits since you bought it at 10.50."
2. DGTL - I was right that you should not choose DGTL. This stock tanked after a gap up...
3. APC - And I was wrong with APC, as it also tanked on Monday, September 27. It opened higher than the Friday's close only to close lower than Friday. Then a week later, it just broke out to 0.86... only to fall back down to 0.76.
4. MPI - It didn't correct. I was anticipating a correction but it never made one. So if you're a long position trader, then I'm sure you're (still) happy with this stock.
The market didn't correct in the one to two weeks period I said after the Sept 24 post but this week, the market has taken a breather. This is a good respite so that people "late in the game" can still come in to participate in the stock market. The correction has been slow in force, and I suppose that's a good sign, rather than a one time steep correction.
Long term stock
I've said that I look at holding long term growth stocks based on common sense and reading the news. These are the primary reasons why I chose Atlas and Metro Pacific.
One stock that has caught my attention is DGTL. I don't know much about fundamental analysis so I won't try to be a genius and interpret their FS. What I know is that part of their business is the Sun Cellular brand - which recently claimed that they already led the other cellular networks in postpaid subscribers.
If you pass by any Sun Shop, you'll note that there are many people queuing in line to transact business, be it to pay bills or to apply for a postpaid line. With just a Php 250.00 monthly bill, anyone can get a postpaid line from them.
The story for DGTL at least for me is something like Cebu Pacific. Cebu Pacific has certainly come a long way. It took years to build but their business has certainly paid handsomely for its principals. Similarly, Sun Cellular was once a small player in the local duopoly of Globe and Smart. Look at where it is today and you'll know that in 1 to 2 years time, DGTL may fly the way PLTL did in the early years of this century.
The two problems with DGTL is
(1) their landline business, which probably pales in comparison to PLDT. Nonetheless, their venture into broadband internet should provide ample opportunities for growth.
(2) playing in a mature industry - the telco industry. The only thing these guys are doing is eating away at each other's market share. I doubt there's much growth in this sector, compared to the mining industry.
Some dark horses
GLO, a battered telco stock has recovered much from its low of 773, more or less, this year. A part of me is telling me that GLO may come out as a surprise by 2011. GLO is a dividend stock and is also an Ayala company. Ayala companies are known to give value to shareholders. They recently announced a share buy back program for AC.
Why GLO? Have you seen the number of people flocking to Globe business centers? Their aggressive marketing seems to be paying off. A company that invests in marketing will certainly see results. I think that they have a chance at eating at Smart's share of the postpaid business (and not Sun).
Another dark horse is ORE, which is why my title is "mine's here". M-ORE on this in the next post. ORE, unlike GLO, is a purely speculative play. If you consider Atlas to be speculative, then ORE may already border on gambling for you.
Until then!
Wednesday, August 4, 2010
New Trading System, Old Tricks
Hi folks, apologies that I was not able to post anything last week. I was inundated with work and other things last week. Nonetheless, I tried my best to observe how the new system works so much that I forgot to buy WEB.
WEB.. that stock that was sold continuously for days or weeks and I always told myself, "I'll buy this soon." Suddenly it had a life of its own and from about 12.25 last week flew to 16.50 this week, more or less. I just sat, watched, and woefully, did nothing. 30% in just one week, beats the hell out of an 8-5 job right?
After some early personal skepticism, I realize now that you can still make money even with the new system. By system I mean the new board lots. System could be the program a broker is using. I'm not a broker. But I could be one soon, if I don't have any savings, hehe.
Stocks that had no fundamentals (I suppose), i.e. basura stocks were also active. One that caught my eye was SLI. Even with the new board lots, I'm sure that day traders still managed to rake in good profits. I just wonder about the accuracy of the charts. Perhaps this time around, instead of looking at the chart, just looking at the ticker would do the trick.
One thing about the new system was the very lackluster trading on its first day last July 26. The turnover was terrible, not that I traded anything. So far, it seems that the 1 centavo fluctuation (changes depending on the price of the stock) hasn't turned off that many traders. That's definitely a good thing.
I'm also happy and equally surprised that our index is now at 3,500. If there's follow through buying tomorrow, then I suppose this bull run still has four legs to go. If there's a correction, well, that's nothing to worry about. My technical analysis alma mater, Absolute Traders, has this absolutely interesting chart analysis.
I suppose what was said in the Money Talks seminar that a new President brings with him/her a strong stock market performance is holding true. History repeats itself. With Pres. Ramos, Pres. Estrada, Pres. Arroyo, and now P. Noy.
So, as I always say, appreciate the risk first, then appreciate that capital of yours!
WEB.. that stock that was sold continuously for days or weeks and I always told myself, "I'll buy this soon." Suddenly it had a life of its own and from about 12.25 last week flew to 16.50 this week, more or less. I just sat, watched, and woefully, did nothing. 30% in just one week, beats the hell out of an 8-5 job right?
After some early personal skepticism, I realize now that you can still make money even with the new system. By system I mean the new board lots. System could be the program a broker is using. I'm not a broker. But I could be one soon, if I don't have any savings, hehe.
Stocks that had no fundamentals (I suppose), i.e. basura stocks were also active. One that caught my eye was SLI. Even with the new board lots, I'm sure that day traders still managed to rake in good profits. I just wonder about the accuracy of the charts. Perhaps this time around, instead of looking at the chart, just looking at the ticker would do the trick.
One thing about the new system was the very lackluster trading on its first day last July 26. The turnover was terrible, not that I traded anything. So far, it seems that the 1 centavo fluctuation (changes depending on the price of the stock) hasn't turned off that many traders. That's definitely a good thing.
I'm also happy and equally surprised that our index is now at 3,500. If there's follow through buying tomorrow, then I suppose this bull run still has four legs to go. If there's a correction, well, that's nothing to worry about. My technical analysis alma mater, Absolute Traders, has this absolutely interesting chart analysis.
I suppose what was said in the Money Talks seminar that a new President brings with him/her a strong stock market performance is holding true. History repeats itself. With Pres. Ramos, Pres. Estrada, Pres. Arroyo, and now P. Noy.
So, as I always say, appreciate the risk first, then appreciate that capital of yours!
Thursday, July 22, 2010
The New Trading Rules of the PSE
On July 26, Monday, a new trading system takes over the PSE. I was still a baby (or probably still being made) when the existing system was already in place so I don't have any reactions - positive or negative - towards the new system. All I know is that there is silent (?) dissent from some brokers and traders about the new system due to its impact on day traders and traders in general.
The new trading rules are available at the PSE. Of course, reading through the report will test a bit of your patience if you're not someone who likes to go through all the details. Personally, what I found interesting and quite important is the change in the fluctuation table. Specifically, the board lot used to look like this -
By Monday, the board lot will look like this -
Notwithstanding the obvious difference in graphic layout, you will notice that the price fluctuations are a lot lot smaller now. For example, before, a stock with a price of 20 pesos would change every 25 centavos, such that a typical stock posting would look like this -
Bid Ask
10,000 20.00 20.25 5,000
Now, with the new system, a stock with a price of 20 pesos would look like this -
Bid Ask
10,000 20.00 20.05 5,000
What's the relevance?
Well, from an amateur stock trader's standpoint, depending on your broker, you already have a small profit with just ONE fluctuation if you were trading under the old system.
Now, assuming it's the same stock, you'd have to wait FIVE fluctuations just to get to the price of 20.25 for a profit with the new system. Further adding to the "difficulty" in making a buck is that there will be trading price limits based on what they call the Dynamic Price Threshold.
If I understand correctly, a stock will be frozen (i.e. temporary trading halt) once it hits its lower or upper Dynamic Price Threshold. Based on the information I got from Citiseconline.com -
- Dynamic price threshold (lower) = last traded price - (last traded price multiplied by the dynamic tick)
- Stock A dynamic price threshold (lower) = 5.00 - (5.00 x 0.05) = 4.75
I don't know why it's called a dynamic tick or if there's any connection to the dynamic duo, but this would make trading a bit, well, harder.
Without going further into the other details of the new trading system, this is the big question - Will the PSEi resume its uptrend come next week? The timing, at least to me, is off-putting. The ghost month is just over the horizon and based on my limited trading experience, is one of the bear months of the local market. It usually lasts until October before mounting what is known as a Santa's rally.
More importantly, will chart reading still be useful? I mean the price ranges now are different from the ones before. Will the prices of before be of any relevance to its future price action?
All these questions will be answered in the next few months, as old traders find ways to do new tricks and new traders probably adopting a wait-and-see mode.
I suppose given this, the market will most probably move sideways. I am not sure since I'm no fortune teller. Well, nobody said change was easy. I just hope that this is for the good and the new system would increase liquidity and volume of the market. If you think about it, volume would certainly pick up since based on my example, a trader will have to buy five fluctuations of a stock just to get to his profit target price.
Let's hope for the best.
The new trading rules are available at the PSE. Of course, reading through the report will test a bit of your patience if you're not someone who likes to go through all the details. Personally, what I found interesting and quite important is the change in the fluctuation table. Specifically, the board lot used to look like this -
| PRICE | MINIMUM FLUCTUATIONS | BOARD LOT |
| 0.001 to 0.0024 | 0.0002 | 1,000,000 |
| 0.0026 to 0.0050 | 0.0002 | 1,000,000 |
| 0.0055 to 0.0100 | 0.0005 | 1,000,000 |
| 0.0110 to 0.0250 | 0.001 | 100,000 |
| 0.0260 to 0.0500 | 0.001 | 100,000 |
| 0.0525 to 0.1000 | 0.0025 | 100,000 |
| 0.105 to 0.2500 | 0.005 | 10,000 |
| 0.2600 to 0.5000 | 0.01 | 10,000 |
| 0.5100 to 1.000 | 0.01 | 10,000 |
| 1.020 to 2.500 | 0.02 | 1,000 |
| 2.550 to 5.000 | 0.05 | 1,000 ** |
| 5.10 to 10.00 | 0.10 | 1,000 * |
| 10.25 to 25.00 | 0.25 | 100 |
| 25.50 to 50.00 | 0.50 | 100 |
| 50.50 to 100.00 | 0.50 | 100 |
| 101.00 to 250.00 | 1.00 | 10 |
| 252.50 to 500.00 | 2.50 | 10 |
| 505.00 and up | 5.00 | 10 |
By Monday, the board lot will look like this -
Notwithstanding the obvious difference in graphic layout, you will notice that the price fluctuations are a lot lot smaller now. For example, before, a stock with a price of 20 pesos would change every 25 centavos, such that a typical stock posting would look like this -
Bid Ask
10,000 20.00 20.25 5,000
Now, with the new system, a stock with a price of 20 pesos would look like this -
Bid Ask
10,000 20.00 20.05 5,000
What's the relevance?
Well, from an amateur stock trader's standpoint, depending on your broker, you already have a small profit with just ONE fluctuation if you were trading under the old system.
Now, assuming it's the same stock, you'd have to wait FIVE fluctuations just to get to the price of 20.25 for a profit with the new system. Further adding to the "difficulty" in making a buck is that there will be trading price limits based on what they call the Dynamic Price Threshold.
If I understand correctly, a stock will be frozen (i.e. temporary trading halt) once it hits its lower or upper Dynamic Price Threshold. Based on the information I got from Citiseconline.com -
The Dynamic Price Threshold** is computed as follows:
- Dynamic price threshold (upper) = last traded price + (last traded price multiplied by the dynamic tick)
Example:
If the last traded price for stock A is 5.00 pesos and it has a PSE defined dynamic tick of 0.05 then:
- Stock A dynamic price threshold (upper) = 5.00 + (5.00 x 0.05) = 5.25
I don't know why it's called a dynamic tick or if there's any connection to the dynamic duo, but this would make trading a bit, well, harder.
Without going further into the other details of the new trading system, this is the big question - Will the PSEi resume its uptrend come next week? The timing, at least to me, is off-putting. The ghost month is just over the horizon and based on my limited trading experience, is one of the bear months of the local market. It usually lasts until October before mounting what is known as a Santa's rally.
More importantly, will chart reading still be useful? I mean the price ranges now are different from the ones before. Will the prices of before be of any relevance to its future price action?
All these questions will be answered in the next few months, as old traders find ways to do new tricks and new traders probably adopting a wait-and-see mode.
I suppose given this, the market will most probably move sideways. I am not sure since I'm no fortune teller. Well, nobody said change was easy. I just hope that this is for the good and the new system would increase liquidity and volume of the market. If you think about it, volume would certainly pick up since based on my example, a trader will have to buy five fluctuations of a stock just to get to his profit target price.
Let's hope for the best.
Saturday, July 17, 2010
Guerilla Investing, 5000. PSE, 3400.
(Having the two numbers interchanged would also be fine by me hahaha)
Welcome to a fresh new Guerilla Investing!
I hope this more streamlined look and well arranged labels will help my readers sift through the glut of posts I've made since the start of this blog.
I was heartened by a blog milestone - 5000 visitors since I started blogging. Regardless if it's 5000 unique visitors or not, I hope in my own little way I was able to impart some knowledge on your road to financial independence.
Coupled with my personal bullishness on my blog is the bullishness of expectations of the new administration. To quote the news piece -
"According to ING’s quarterly Investor Dashboard Survey, the country experienced an 18-percentage-point increase in investor sentiment to 157 in the second quarter of 2010 from 139 in the first quarter."
Well recently, our stock market hit a new high breaking the 3,400 level after four tries to hit this level if I'm not mistaken. Given this, I would think that from an amateur technical analyst's understanding, we are going to hit high notes by the end of the year. This is not to say that the road ahead is full of roses.
Against this backdrop is that the BSP is keeping interest rates at lows due to uncertainties as well as the manageable inflation rate. This means that credit is cheap and it should help businesses expand. When businesses expand, then it can create jobs and potentially enjoy higher revenues. Bodes well for the stock market. This also bodes well for the fixed income market (bonds) because interest rate is the same.
Of course, contrarian thinkers will always say that this may have already been "priced in". If you don't already know, stock prices are always ahead of actual performance. This means that the price may have rose already with the anticipation of a news, a new project, a new high in revenues, etc. such that when the announcement is made to the press, the stock price doesn't move anymore.
In fact, from personal experience, it shows that - at least locally - when profits are announced, stock prices suddenly drop. This is why there's this oft quoted cliche, "Buy the rumor, sell the news".
So far our stock market has been insulated from what is happening worldwide. The DOW recently fell triple digits (again) so I wonder if we'll keep on being insulated by next week.
But the following data should give us confidence the the Philippine economy is still above water.
Remittances reached record level of $1.58B in May
In this article, noteworthy is this fact -
"The main sources of remittances in May were the United States, Canada, Saudi Arabia, Japan, the United Kingdom, Singapore, UAE and Italy. Combined inflows from these countries accounted for 81.5 percent of total for the five months to May."
With the continued influx of remittances and strong consumer confidence -
Auto sales jump 37% in 1st half of 2010
Salient points -
Commercial vehicle sales went up 39.8% over the past six months comparative period while passenger sales went up 32.2%. This to me is good news because it means both businesses and consumers are spending.
In an old post, I've said that key indicators for the lay investor include OFW remittances and car sales. Screen out the rosy news you read and focus on these hard numbers. If the stock market doesn't perform at par with these indicators, it could be a chance for you to buy stocks at their lows.
However, now that the index is at 3,400, I anticipate the market to move sideways. It can go higher but I'd rather it going sideways so there's a strong base at 3,400 before we continue hiking. Most of the blue chips have risen so it could be the second liner's chance to shine. Most of the second liner stocks are those not part of the PSE index that have recorded blowout revenues.
Notwithstanding all these positive news of late, the trouble with the local economy is the anticipated huge budget deficit. Investors both foreign and local will be looking to P Noy's first SONA with high hopes. Wang wangs are symbolic but we also need strong economic programs that promote investor confidence and generate jobs.
Welcome to a fresh new Guerilla Investing!
I hope this more streamlined look and well arranged labels will help my readers sift through the glut of posts I've made since the start of this blog.
I was heartened by a blog milestone - 5000 visitors since I started blogging. Regardless if it's 5000 unique visitors or not, I hope in my own little way I was able to impart some knowledge on your road to financial independence.
Coupled with my personal bullishness on my blog is the bullishness of expectations of the new administration. To quote the news piece -
"According to ING’s quarterly Investor Dashboard Survey, the country experienced an 18-percentage-point increase in investor sentiment to 157 in the second quarter of 2010 from 139 in the first quarter."
Well recently, our stock market hit a new high breaking the 3,400 level after four tries to hit this level if I'm not mistaken. Given this, I would think that from an amateur technical analyst's understanding, we are going to hit high notes by the end of the year. This is not to say that the road ahead is full of roses.
Against this backdrop is that the BSP is keeping interest rates at lows due to uncertainties as well as the manageable inflation rate. This means that credit is cheap and it should help businesses expand. When businesses expand, then it can create jobs and potentially enjoy higher revenues. Bodes well for the stock market. This also bodes well for the fixed income market (bonds) because interest rate is the same.
Of course, contrarian thinkers will always say that this may have already been "priced in". If you don't already know, stock prices are always ahead of actual performance. This means that the price may have rose already with the anticipation of a news, a new project, a new high in revenues, etc. such that when the announcement is made to the press, the stock price doesn't move anymore.
In fact, from personal experience, it shows that - at least locally - when profits are announced, stock prices suddenly drop. This is why there's this oft quoted cliche, "Buy the rumor, sell the news".
So far our stock market has been insulated from what is happening worldwide. The DOW recently fell triple digits (again) so I wonder if we'll keep on being insulated by next week.
But the following data should give us confidence the the Philippine economy is still above water.
Remittances reached record level of $1.58B in May
In this article, noteworthy is this fact -
"The main sources of remittances in May were the United States, Canada, Saudi Arabia, Japan, the United Kingdom, Singapore, UAE and Italy. Combined inflows from these countries accounted for 81.5 percent of total for the five months to May."
With the continued influx of remittances and strong consumer confidence -
Auto sales jump 37% in 1st half of 2010
Salient points -
Commercial vehicle sales went up 39.8% over the past six months comparative period while passenger sales went up 32.2%. This to me is good news because it means both businesses and consumers are spending.
In an old post, I've said that key indicators for the lay investor include OFW remittances and car sales. Screen out the rosy news you read and focus on these hard numbers. If the stock market doesn't perform at par with these indicators, it could be a chance for you to buy stocks at their lows.
However, now that the index is at 3,400, I anticipate the market to move sideways. It can go higher but I'd rather it going sideways so there's a strong base at 3,400 before we continue hiking. Most of the blue chips have risen so it could be the second liner's chance to shine. Most of the second liner stocks are those not part of the PSE index that have recorded blowout revenues.
Notwithstanding all these positive news of late, the trouble with the local economy is the anticipated huge budget deficit. Investors both foreign and local will be looking to P Noy's first SONA with high hopes. Wang wangs are symbolic but we also need strong economic programs that promote investor confidence and generate jobs.
Wednesday, July 7, 2010
I Talk "Money Talks" (Part Three)
It's been a week since the proclamation of P. Noy and the market is now... well it's moving sideways with no clear direction yet as to whether it continue its flight... or your fright. Last Friday, the US market fell triple digit (if I remember right) just before their July 4 celebrations.
For quite some time now, the Philippine stock market has actually lived up to the decoupling theory. No, decoupling is not related to making babies.
My humble layman interpretation is that it means that the Philippine market is somewhat insulated from whatever happens to the US market. That is, if the US market goes down, we won't. If we do, it's not going to be as bad.
That's been the case, but perhaps because the proclamation was over and the market touched a 2-year high, it was reason for it to correct and "build a base" or support. If I read analysts correctly (in the news or forums), the Philippine market is still in an uptrend channel and it's just taking a breather now.
Time to go in? I don't know. Even Nostradamus cannot tell you if he were alive today. If you are investing, then anytime is a good time since you're investing your money and not touching it until you hit retirement or when your emergency fund is depleted.
With that said, let me list down for your benefit the stocks recommended in the previously concluded Money Talks.
Investor's caveat: Investment entails risks and you should be aware that returns and your capital are not guaranteed.
The stocks were selected by First Asset Metro based on their PE Ratio. An elaborate definition on PE Ratio can be found here. But for your benefit, it's one possible tool for an investor to use prior to investing in a particular company. However, it should not be your only basis for investing in one.
As Investopedia states, "it would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects."
Now, having said that, please also note that the P/E ratio is a mathematical formula which translates as -
The market value per share is the current stock price while earnings per share is computed
More or less, EPS is static depending on your time frame. The market value though is what's erratic.
So what's the relevance Mr. Guerilla Investing Blog? Well, my dear investor, if the stock price has increased, then simple math tells us that the PE ratio will increase. When a stock has a high PE ratio, it may mean that the stock has become "expensive" relatively to other stocks in the same industry.
At the time of the presentation, the stocks may have been trading at a particular PE Ratio. So since the market prices of the stocks indicated have changed already, then I don't see the point of having to list down the respective PE ratios of the stocks listed.
Confused about the multitude of terms? Anyways, I was also confused when I started reading up all the terms available in Finance 101. I learned the hard way - through reading and personal experience. But it's an investment in time that's well worth it.
So here goes the list (Based on ticker symbols) -
MBT
DMCI
AP
AEV
FGEN
PNB
EDC
SCC
AGI
Please note that just because the above are stock picks, it means that if you buy today, you gain tomorrow. The gains can happen in a matter of days, weeks, months, or even years. Further, since stock prices have fluctuations, then there can be instances where the market price will fall below your purchase price.
But it's specifically that sort of caveat given that makes you sleep soundly at night. If somebody is presenting a "financial" product to you with guaranteed returns higher than banks, then be wary. It could be a scam.
Whew, that was a lengthy post! I hope you learned something. Happy investing!
For quite some time now, the Philippine stock market has actually lived up to the decoupling theory. No, decoupling is not related to making babies.
My humble layman interpretation is that it means that the Philippine market is somewhat insulated from whatever happens to the US market. That is, if the US market goes down, we won't. If we do, it's not going to be as bad.
That's been the case, but perhaps because the proclamation was over and the market touched a 2-year high, it was reason for it to correct and "build a base" or support. If I read analysts correctly (in the news or forums), the Philippine market is still in an uptrend channel and it's just taking a breather now.
Time to go in? I don't know. Even Nostradamus cannot tell you if he were alive today. If you are investing, then anytime is a good time since you're investing your money and not touching it until you hit retirement or when your emergency fund is depleted.
With that said, let me list down for your benefit the stocks recommended in the previously concluded Money Talks.
Investor's caveat: Investment entails risks and you should be aware that returns and your capital are not guaranteed.
The stocks were selected by First Asset Metro based on their PE Ratio. An elaborate definition on PE Ratio can be found here. But for your benefit, it's one possible tool for an investor to use prior to investing in a particular company. However, it should not be your only basis for investing in one.
As Investopedia states, "it would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects."
Now, having said that, please also note that the P/E ratio is a mathematical formula which translates as -
The market value per share is the current stock price while earnings per share is computed
More or less, EPS is static depending on your time frame. The market value though is what's erratic.
So what's the relevance Mr. Guerilla Investing Blog? Well, my dear investor, if the stock price has increased, then simple math tells us that the PE ratio will increase. When a stock has a high PE ratio, it may mean that the stock has become "expensive" relatively to other stocks in the same industry.
At the time of the presentation, the stocks may have been trading at a particular PE Ratio. So since the market prices of the stocks indicated have changed already, then I don't see the point of having to list down the respective PE ratios of the stocks listed.
Confused about the multitude of terms? Anyways, I was also confused when I started reading up all the terms available in Finance 101. I learned the hard way - through reading and personal experience. But it's an investment in time that's well worth it.
So here goes the list (Based on ticker symbols) -
MBT
DMCI
AP
AEV
FGEN
PNB
EDC
SCC
AGI
Please note that just because the above are stock picks, it means that if you buy today, you gain tomorrow. The gains can happen in a matter of days, weeks, months, or even years. Further, since stock prices have fluctuations, then there can be instances where the market price will fall below your purchase price.
But it's specifically that sort of caveat given that makes you sleep soundly at night. If somebody is presenting a "financial" product to you with guaranteed returns higher than banks, then be wary. It could be a scam.
Whew, that was a lengthy post! I hope you learned something. Happy investing!
Wednesday, June 30, 2010
I Talk "Money Talks" (Part Two)
Prior to today's inauguration of the 15th President of the Philippines, the stock market hit a 2-year high at 3,374. The index had been testing the resistance of 3,365 for some time now and if you want further analysis, check out this index TA by Absolute Traders. Bright prospects remain for the local index. In fact, the local stock market has not been moving in sync with the US market and that's a good thing.
But, how our market will withstand the triple digit drop of the DOW (below 10,000) the other night remains to be seen. With the weak June jobs data in the US, I'm doubtful the US markets will recover from Tuesday's fall. The resilience of the Philippine market will surely be tested tomorrow.
The new President's speech was laden with the usual big promises like fighting poverty, tackling corruption, and us becoming an investor friendly nation. While I hope the President can deliver on all three, the last one is something I hope he can really achieve. The Philippines has been the cellar dweller in Asia as investors poured money into China, Vietnam, and even Thailand. I'm quite optimistic that we have more to offer given our English language advantage.
Being a lover of words, I also loved the coining of the word P. Noy, a word play on the term for the Filipino everyman and President Noynoy. Amazing.
Then, there was the part on the wangwang and counterflow in the President's speech. I think that struck a chord in a lot of people and I hope he takes up that promise. I long for the day when PUV's follow simple traffic rules. If you want to see how brazen they are, just go to the corner of Recto and J Abad Santos Streets. The entire Recto acts like a jeepney terminal.
I'm making all these Presidential talk because in the Money Talks forum, it was said that the local stock market rose in each of the first year of a new Administration. Against this backdrop are healthy profits from local corporations. This should continue to provide impetus for the market.
Apart from this, it was also mentioned that local money is the one leading the rally in the local market. I've been harboring that idea and I think I blogged about it in one of my older posts (I will have to look through them though). This means Filipinos are looking beyond savings deposits, time deposits, and real estate as means to realize their financial dreams.
And, that to me is a very good thing.
P.S. Stock picks from Money Talks to be featured in my next post. See you there!
But, how our market will withstand the triple digit drop of the DOW (below 10,000) the other night remains to be seen. With the weak June jobs data in the US, I'm doubtful the US markets will recover from Tuesday's fall. The resilience of the Philippine market will surely be tested tomorrow.
The new President's speech was laden with the usual big promises like fighting poverty, tackling corruption, and us becoming an investor friendly nation. While I hope the President can deliver on all three, the last one is something I hope he can really achieve. The Philippines has been the cellar dweller in Asia as investors poured money into China, Vietnam, and even Thailand. I'm quite optimistic that we have more to offer given our English language advantage.
Being a lover of words, I also loved the coining of the word P. Noy, a word play on the term for the Filipino everyman and President Noynoy. Amazing.
Then, there was the part on the wangwang and counterflow in the President's speech. I think that struck a chord in a lot of people and I hope he takes up that promise. I long for the day when PUV's follow simple traffic rules. If you want to see how brazen they are, just go to the corner of Recto and J Abad Santos Streets. The entire Recto acts like a jeepney terminal.
I'm making all these Presidential talk because in the Money Talks forum, it was said that the local stock market rose in each of the first year of a new Administration. Against this backdrop are healthy profits from local corporations. This should continue to provide impetus for the market.
Apart from this, it was also mentioned that local money is the one leading the rally in the local market. I've been harboring that idea and I think I blogged about it in one of my older posts (I will have to look through them though). This means Filipinos are looking beyond savings deposits, time deposits, and real estate as means to realize their financial dreams.
And, that to me is a very good thing.
P.S. Stock picks from Money Talks to be featured in my next post. See you there!
Thursday, June 24, 2010
I Talk "Money Talks" (Part One)
As promised in my last blog post, I'll share some of the insights and even some stock picks from the Money Talks seminar I attended recently. The seminar was held last June 11 at the PSBank Tower along Paseo in Makati.
Overall, it was a good session.
I understand that First Metro Asset has a partnership with UA&P and that's why Dr Vic Abola was present to discuss the Philippine economy as well as the adverse impact (if any) of the Greek/European debt crisis. There was then a presentation of the outlook of the Philippine Stock Market, stock picks, mutual fund investing 101, and how to trade stocks online via First Metro.
In a nutshell, it's good to be in Asia.
On a personal note though, that's the great paradox for the Philippines. The West seems to be on the decline mounting huge debts while Asia is rising. Yet locally, a lot of Filipinos still yearn to Go West. Oh well. That's a challenge for the new Philippine President.
The Philippine economy is expected to weather the external problems. Low interest rates are favorable for business expansion. Low inflation rate will mean that the BSP maintains the low interest rates. Construction is still picking up both in the public and private sector.
SMDC is supposed to build 100,000 UNITS per year. Before SMDC, the entire real estate industry generates about 250,000 a year.
Imagine the glut in the coming years assuming the buyers of these units are looking forward to rent units out rather to live in it. Location and project development will be key to long term appreciation of property prices. This is my personal opinion of course.
Consumer spending is also alive in the country. Proof positive is that (if memory serves me right), car sales and ad spend are up. The almost weekly sale in SM is probably another key driver.
Another interesting data I got was that East Asia accounts for 42% of Philippine exports. Europe? Just 18%. The US continues to be our #1 export destination.
One more trivia - China is going bananas over Philippine bananas as we supply 60% of their requirements.
A side effect of the debt crisis and US recession was that gas prices did not go up since the demand for it slacked. This bodes well for the Phils. since we import our requirements. Low gas prices mean lower inflation. Projected inflation for this year (vs the previous year) is 4.5%
Challenges for the Philippine economy remain to be the power crisis (yes we have one) in the South, the growing government deficit, the peso appreciation (OFW remittances lose value), among others.
That's it for now. That's probably info overload already for you. More in the next post!
Overall, it was a good session.
I understand that First Metro Asset has a partnership with UA&P and that's why Dr Vic Abola was present to discuss the Philippine economy as well as the adverse impact (if any) of the Greek/European debt crisis. There was then a presentation of the outlook of the Philippine Stock Market, stock picks, mutual fund investing 101, and how to trade stocks online via First Metro.
In a nutshell, it's good to be in Asia.
On a personal note though, that's the great paradox for the Philippines. The West seems to be on the decline mounting huge debts while Asia is rising. Yet locally, a lot of Filipinos still yearn to Go West. Oh well. That's a challenge for the new Philippine President.
The Philippine economy is expected to weather the external problems. Low interest rates are favorable for business expansion. Low inflation rate will mean that the BSP maintains the low interest rates. Construction is still picking up both in the public and private sector.
SMDC is supposed to build 100,000 UNITS per year. Before SMDC, the entire real estate industry generates about 250,000 a year.
Imagine the glut in the coming years assuming the buyers of these units are looking forward to rent units out rather to live in it. Location and project development will be key to long term appreciation of property prices. This is my personal opinion of course.
Consumer spending is also alive in the country. Proof positive is that (if memory serves me right), car sales and ad spend are up. The almost weekly sale in SM is probably another key driver.
Another interesting data I got was that East Asia accounts for 42% of Philippine exports. Europe? Just 18%. The US continues to be our #1 export destination.
One more trivia - China is going bananas over Philippine bananas as we supply 60% of their requirements.
A side effect of the debt crisis and US recession was that gas prices did not go up since the demand for it slacked. This bodes well for the Phils. since we import our requirements. Low gas prices mean lower inflation. Projected inflation for this year (vs the previous year) is 4.5%
Challenges for the Philippine economy remain to be the power crisis (yes we have one) in the South, the growing government deficit, the peso appreciation (OFW remittances lose value), among others.
That's it for now. That's probably info overload already for you. More in the next post!
Thursday, June 17, 2010
I'm Back!
Hello dear reader. It's been quite sometime since I blogged. My computer crashed so I had no means to update this here blog. Now that it's back and running, I can go back to my blogging ways.
It's been a long month for the local stock market since I last posted. As far as I could recall, the only exciting trade between the time I last posted and today was ORE. Some blue chips also traded higher as the index is already at 3335 today's close, a few points off from the June 4 high of 3,355.
This week, one stock that traded well was NRCP, for what reason I don't know. I was able to trade the stock but made only a few bucks because I exited at the wrong price. My tools were just the crude PSE chart and calling up the broker every so often.
Recently I attended "Money Talks", an open forum and seminar from First Metro Asset Management. They had a very interesting discussion about the effects of the European debt crisis, the Philippine outlook, and of course, the local stock market.
I'll post more about it in my next post as I have to run. This post was written to tell you dear readers that I'm still here. :D
It's been a long month for the local stock market since I last posted. As far as I could recall, the only exciting trade between the time I last posted and today was ORE. Some blue chips also traded higher as the index is already at 3335 today's close, a few points off from the June 4 high of 3,355.
This week, one stock that traded well was NRCP, for what reason I don't know. I was able to trade the stock but made only a few bucks because I exited at the wrong price. My tools were just the crude PSE chart and calling up the broker every so often.
Recently I attended "Money Talks", an open forum and seminar from First Metro Asset Management. They had a very interesting discussion about the effects of the European debt crisis, the Philippine outlook, and of course, the local stock market.
I'll post more about it in my next post as I have to run. This post was written to tell you dear readers that I'm still here. :D
Wednesday, May 19, 2010
Directionless Market
Thanks for dropping by reader. I wasn't able to post anything last week, not that it mattered since there wasn't anything exciting to see in the market. There was a brief rally after Europe announced its rescue package but markets the world over has been on the way down since.
I expect the market to head with no direction. And lesson and experience tells me that when the market has no direction, it's better to stay out. Somehow, the saying that "sell in May and go away" is holding true thus far.
Putting the perspective of the US' bailout of its failing financial system in 2008, markets rallied for a while then just went south. It took quite a while before stock markets - and economies - rose again. Given the US bailout the time frame was close to 6 months, if memory serves me right.
But now, we're not talking about bailing out banks. We're talking about bailing out countries! So.... I shudder at the thought.
I got to wonder really. Banks mismanage money. Governments mismanage it too. So if that's the case, will it be better to just put your money in a stash? You can trade the stock market on your own, cash in the gains and always hold on to cash.
While this may sound enticing at some points, it somehow borders on paranoia. Time and time again, investing for the long term has been a boon for investors. I can't say yet if that's applicable in the Philippine setting as I haven't done that. Perhaps if I'm able to have enough to invest for the long haul, I can tell you in about 5-10 years hahaha. Right now, I'd rather be a trader than an investor.
The Philippines though, could be a bit insulated, sans foreign brokers dumping our stocks, given our relatively clean and peaceful national elections. I checked today's PSEi close, and we're now at 3,222. We're 100 points shy from the low last last week of 3,142. More pain to come.
It's inevitable, stock prices may have risen ahead of themselves (i.e. ahead of their projected earnings). While there is a crisis on going, this can serve as an opportunity for stock market newbies to enter at "cheaper" prices. Of course, this is a double edged sword. The path downwards could be continuous.
But, there's really a dearth of possible investment opportunities for the Filipino investor. Time deposit? Interest rate is too low. You're better off spending your money and enjoying your life. Mutual funds and UITF's? If you pick the equity fund they're investing in the same place - the local stock market. Except of course if you choose bond funds. Historically, when the stock markets are crashing, bond markets are cashing gains for investors. This is referred to as "flight to quality". Of course, this is just a simplistic definition.
Making money today is more difficult than it was a 20 years ago. Most industries have heavily entrenched players already. Margins are smaller given the stiff competition. So if you are afraid of shelling out money to be an entrepreneur, then there's a slower way to growth - investing for the long term.
The bloodbath in the markets can spell good opportunities for you. This is a pure speculation play but I would advise going to quality real estate stocks like SMPH, RLC, and ALI. The REIT is supposed to be passed into law sometime this year. With this, there'd be gains for these three big real estate companies. I suppose SMPH and RLC are the ones who stand to gain the most due to their massive square meters (or hectares? hehe) of leasing space.
Of course, if you will invest just for the speculation, then expect that the price can go both ways - up ... or down. Don't say I didn't warn you. Currently, I don't hold any of these stocks but I'm actively looking at them as opportunities.
Until my next post, stay safe with your cash :D (as of this writing the DOW JONES is down 70 points, and more bad news - mortgage delinquencies and new foreclosures increase)
I expect the market to head with no direction. And lesson and experience tells me that when the market has no direction, it's better to stay out. Somehow, the saying that "sell in May and go away" is holding true thus far.
Putting the perspective of the US' bailout of its failing financial system in 2008, markets rallied for a while then just went south. It took quite a while before stock markets - and economies - rose again. Given the US bailout the time frame was close to 6 months, if memory serves me right.
But now, we're not talking about bailing out banks. We're talking about bailing out countries! So.... I shudder at the thought.
I got to wonder really. Banks mismanage money. Governments mismanage it too. So if that's the case, will it be better to just put your money in a stash? You can trade the stock market on your own, cash in the gains and always hold on to cash.
While this may sound enticing at some points, it somehow borders on paranoia. Time and time again, investing for the long term has been a boon for investors. I can't say yet if that's applicable in the Philippine setting as I haven't done that. Perhaps if I'm able to have enough to invest for the long haul, I can tell you in about 5-10 years hahaha. Right now, I'd rather be a trader than an investor.
The Philippines though, could be a bit insulated, sans foreign brokers dumping our stocks, given our relatively clean and peaceful national elections. I checked today's PSEi close, and we're now at 3,222. We're 100 points shy from the low last last week of 3,142. More pain to come.
It's inevitable, stock prices may have risen ahead of themselves (i.e. ahead of their projected earnings). While there is a crisis on going, this can serve as an opportunity for stock market newbies to enter at "cheaper" prices. Of course, this is a double edged sword. The path downwards could be continuous.
But, there's really a dearth of possible investment opportunities for the Filipino investor. Time deposit? Interest rate is too low. You're better off spending your money and enjoying your life. Mutual funds and UITF's? If you pick the equity fund they're investing in the same place - the local stock market. Except of course if you choose bond funds. Historically, when the stock markets are crashing, bond markets are cashing gains for investors. This is referred to as "flight to quality". Of course, this is just a simplistic definition.
Making money today is more difficult than it was a 20 years ago. Most industries have heavily entrenched players already. Margins are smaller given the stiff competition. So if you are afraid of shelling out money to be an entrepreneur, then there's a slower way to growth - investing for the long term.
The bloodbath in the markets can spell good opportunities for you. This is a pure speculation play but I would advise going to quality real estate stocks like SMPH, RLC, and ALI. The REIT is supposed to be passed into law sometime this year. With this, there'd be gains for these three big real estate companies. I suppose SMPH and RLC are the ones who stand to gain the most due to their massive square meters (or hectares? hehe) of leasing space.
Of course, if you will invest just for the speculation, then expect that the price can go both ways - up ... or down. Don't say I didn't warn you. Currently, I don't hold any of these stocks but I'm actively looking at them as opportunities.
Until my next post, stay safe with your cash :D (as of this writing the DOW JONES is down 70 points, and more bad news - mortgage delinquencies and new foreclosures increase)
Saturday, May 8, 2010
Greece is the Word
Last week, we mentioned that there may be a possible downside risk to the market, who would've known that it would be this bad? We projected a support of somewhere at 3,200, unfortunately, the market settled at 3,142 last Friday. When I was talking to my broker, he told me that the index support was actually at 3,150 and not 3,200. Maybe it's due to the chart I'm using that's why I can't see clearly, or, it's just that my TA is rusty already.
Whatever the support is, Friday's close broke through 3,200 and 3,150.
While Friday was another depressing day, there were many trading opportunities - RLC, SMPH, AP and EDC - to name a few. Yes, while the market was dreary, these stocks offered (brave) traders opportunities to make money. In fact, AP closed higher than Thursday's closing price. EDC and AP's performance just shows that this year, power generation companies have much upside. Last year, the darling stock (which I missed #@$#) was Philex mining as it generated about 50-100% in return based on stock price. AP is this year's stock, which I also missed.
Perhaps I was too much concentrated on looking for stocks to trade that I forgot about investing for the long term, i.e. investing in quality stocks even if their price actions are not exciting. That's assuming I had the money to invest hehe. Sometimes it gets frustrating so just putting money in a mutual fund would be a better option. You don't have to spot the stocks and just rely on your investment fund manager. Anyway...
What caused the wild volatility this week? One word: Greece. There is a risk of a crisis contagion in the European Union.
Personally, I don't understand what's going on/wrong in Greece, just that I know they have a problem with their economy. I scoured the net for some information and stumbled upon BBC. They have a very lucid explanation. I think this part of their explanation sums it all up -
"For years, Greece has been spending money it doesn't have.
How can one country hold debt of another country? It's quite similar to the Philippines selling bonds (bonds are a debt issuance) offshore. Did you know that the Philippines is Asia's biggest offshore bond issuer? Same article from ABSCBN states - "The debt-laden economy, which relies heavily on foreign and local borrowings to fund its budget shortfall, faces a budget deficit of P293 billion, or 3.5% of GDP, this year after a record shortfall of P298.5 billion, or 3.9% of GDP, in 2009."
Since the market has been sold down to 3,142, I'm sure we're almost nearing a selling climax. Unfortunately, since I don't have any data, we don't know if foreign brokers are dumping our stocks. For me, it's not about the charts anymore, but about market sentiment. The DOW fell by almost 1000 points supposedly due to a trader error and so that was a major major drag for this week. The good news? Our market was down by as much as 90 points but closed just down by 25. So perhaps, the market has support in 3,142, thereabouts.
I'm not a fan of economics and I don't think I ever will. Few really do since this isn't the most interesting of topics.
I hope that whoever becomes the next Philippine president has a well equipped brain that understands economics. Everybody is promising us the moon and the stars with no clear platform or agenda. Choose wisely. The country, and the stock market (as it is considered the barometer of the economy), depends on it.
Whatever the support is, Friday's close broke through 3,200 and 3,150.
While Friday was another depressing day, there were many trading opportunities - RLC, SMPH, AP and EDC - to name a few. Yes, while the market was dreary, these stocks offered (brave) traders opportunities to make money. In fact, AP closed higher than Thursday's closing price. EDC and AP's performance just shows that this year, power generation companies have much upside. Last year, the darling stock (which I missed #@$#) was Philex mining as it generated about 50-100% in return based on stock price. AP is this year's stock, which I also missed.
Perhaps I was too much concentrated on looking for stocks to trade that I forgot about investing for the long term, i.e. investing in quality stocks even if their price actions are not exciting. That's assuming I had the money to invest hehe. Sometimes it gets frustrating so just putting money in a mutual fund would be a better option. You don't have to spot the stocks and just rely on your investment fund manager. Anyway...
What caused the wild volatility this week? One word: Greece. There is a risk of a crisis contagion in the European Union.
Personally, I don't understand what's going on/wrong in Greece, just that I know they have a problem with their economy. I scoured the net for some information and stumbled upon BBC. They have a very lucid explanation. I think this part of their explanation sums it all up -
"For years, Greece has been spending money it doesn't have.
The government there took advantage of the economic good-times to borrow money and spend it on pay-rises for public workers and projects such as the 2004 Olympics.
It began to run-up a bigger and bigger deficit (the gap between how much a country brings-in from tax, and what it spends).
After the world economy went bad, Greece suffererd.
Banks started to view it as a country that might not be able to manage its money.
They worried Greece might eventually fail to pay its loans, and even go bankrupt.
To cover the risk, banks started charging Greece more to borrow cash - making the problem even worse.
Eventually the government there went looking for help."
But if this is a Greek problem, why are other countries affected? In the same BBC link, this explanation should tell you why -
"As well as Greece, banks and credit rating agencies are going through their books looking for other bad risks.
That means countries that have a big budget deficit, compared with how much money their economy generates.
Portugal and Spain are reckoned to be two that could face problems next.
The EU hopes that its bailout will reassure the money markets that their cash is safe.
However, that depends on Greece getting control of the situation and proving it can make the cuts needed.
The UK does not use the Euro currency, but could still be affected.
Its budget deficit is also large, and we could start to appear unattractive to lenders.
UK banks also hold some of the debt of countries such as Greece, Spain, and Portugal.
If they were to go bankrupt, it would mean more problems for Britain's banks."
How can one country hold debt of another country? It's quite similar to the Philippines selling bonds (bonds are a debt issuance) offshore. Did you know that the Philippines is Asia's biggest offshore bond issuer? Same article from ABSCBN states - "The debt-laden economy, which relies heavily on foreign and local borrowings to fund its budget shortfall, faces a budget deficit of P293 billion, or 3.5% of GDP, this year after a record shortfall of P298.5 billion, or 3.9% of GDP, in 2009."
Debt laden huh? I wonder if the Philippines will one day go down the Greek road to economic oblivion. Due to some minor research online, I found out that other European countries with big deficits are - France, Spain, Ireland, and the UK.
This entire drama is quite amusing when you look at it from the point of view of Personal Finance. Why? In personal finance, you are always advised that you should spend within your means. If some governments in the world cannot even practice this basic tenet, then it's no wonder their citizens also run up debt like there's no tomorrow. A lot of countries in the West have this affliction - using credit cards, mortgaging their houses, borrowing money to fund their yearning for affluence.
Since the market has been sold down to 3,142, I'm sure we're almost nearing a selling climax. Unfortunately, since I don't have any data, we don't know if foreign brokers are dumping our stocks. For me, it's not about the charts anymore, but about market sentiment. The DOW fell by almost 1000 points supposedly due to a trader error and so that was a major major drag for this week. The good news? Our market was down by as much as 90 points but closed just down by 25. So perhaps, the market has support in 3,142, thereabouts.
I'm not a fan of economics and I don't think I ever will. Few really do since this isn't the most interesting of topics.
I hope that whoever becomes the next Philippine president has a well equipped brain that understands economics. Everybody is promising us the moon and the stars with no clear platform or agenda. Choose wisely. The country, and the stock market (as it is considered the barometer of the economy), depends on it.
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