How to Invest in the Stock Market?

I am an accountant by profession and if you had ask me two years ago how the stock market works, I will tell you "I don't know". Yes, my profession obviously is all about numbers and most of the data coming out from the stock market are all related in my profession. But still the mystery of how those data are being played out in the stock market is unknown to me. Since I was in college, I am always fascinated with the stock market. I like reading broadsheets everyday, flip the pages, and go directly to the sports section. Eventually, I will stumble upon the business section. "BSP to ease branching rules for thrift banks", the business headlines would say. Then I would think, what is this all about? May epekto ba'to sa buhay ko? Nevertheless, I will still go on the next page and the long list of companies would show off. Some of them are quite familiar to me like Metrobank, BPI, San Miguel, PLDT and Meralco. Others I simply don't know them and I don't even know their line of business. If the title of the article is interesting like " San Miguel buys another company", I will continue reading the story, but it has to be in layman's terms otherwise, I would just skip on it. Little did I know that one day, the curiosity I had on the business section of the broadsheet will have an impact on my investment knowledge. Now, I read business news with an anticipation on the influence it will bring in the stock prices.  


My beautiful wife introduced me to Bo Sanchez with her reading paraphernalia about spirituality.  I read them, swallowed them, searched about Bo's in the internet and found his website. I was a little bit surprised because Bo is a lay preacher but instead of teaching pure spiritual wisdom, he expounds a lot about wealth issues. It was from him that I really started to have a great interest in the stock market. I study the pros and cons of the stock market for sometime and finally decided that I will give it a go. 


The first thing I did was to ask Citiseconline through e-mail on how I can invest in the stock market. On the next day itself, I got a reply from their customer service (helpdesk@citiseconline.com) complete with the requirements in opening an account, forms and a guide in investing.

After that, I just fill up the form, sent it through e-mail to one of their customer service and send the original documents via courier. After three weeks, it was approved. The customer service sent me an e-mail that I can now deposit money in their account. Since then, I have been depositing money in their account. Instead of the bank, Citiseconline became my savings account. As a beginner,I picked one of the blue chip companies. Their growth are slow but steady. Their business fundamentals are strong. Along the way, I researched the companies I am interested to buy, how the ups and downs of the share price happen, and the factors contributing to its price swing. Doing all of these is actually fun for me. I feel like I am just playing and in complete control of what I want to do with my resources.

MWIDE: BUY RECOMMENDATION

PSE finally broke the 4250 resistance. It's good news for all of us. Foreign investors has been buying our stocks pouring their dollars into our economy. No doubt, the peso is getting stronger nowadays. Just today alone, foreign investors bought 470 million pesos worth of shares. Now, imagine that with the 1st week of April when the bull market started, billions of pesos worth of shares were bought by foreigners already. That has a big impact on our economy and peso-dollar exchange. Most of the shares are going up.

Today, I checked Megawide Construction (MWIDE) shares and was astonished at the number of shares bought. The volume suddenly increased exactly at 11 am today with more than 5 million shares being bought. Since the average shares being bought everyday is 200k shares, todays transaction is unusual. BUYERS are flocking! 80% of those shares were bought by Citiseconline and UBS. 

MWIDE was incorporated in the Year 2004 with Mr. Micheal Cosiquien and Mr. Edgar Saavedra as the major stockholders.  (These names aren't familiar to me, perhaps I will start recognizing them).73% of the revenues of MWIDE came from SM MALLS, SM housing projects and other SM projects. Since most of SM Malls were being constructed by MWIDE, Henry Sy bought 20% of MWIDE stocks when it went public last February 2011 . MWIDE has already become a byword in the real property sector since its inception in the stock market.

The outlook for the property sector is bright because of the strong economy, growing OFW remittances and skyrocketing tourism. The ties of MWIDE with Henry Sy will ensure billions worth of revenues in the coming years because SM Malls are sprouting like mushrooms everywhere. Also since MWIDE uses high technology in construction (it is the first company actually to extensively use advance technology), it has a big advantage right now compared to Ayala Land and Megaworld. It is also setting up a billion pesos precast manufacturing complex that will increase its production and lead time.

Unless SM runs out of space to build SM malls which may happen after a decade or so, the company's earnings will compete with that of ALI and Megaworld. By the time SM Malls become saturated in the market, you already have a great return on your investment with MWIDE. MWIDE is also planning to remove their dependency on SM and will go with other construction projects like hotels, housing and high-rise buildings. Given with their competitive advantage in utilization of modern technology in constructing buildings coupled with their pre-cast manufacturing complex, it will not be long before it will be held at the level of Ayala Land and Megaworld.

The prospects are good in the coming years but we need to see how it will play out once SM projects are all completed. That will be the time whether MWIDE can stand on its own.

There are no Evidence of Ownership in the Stock Market, so it must be Risky!

Have you ever went to sabong (cockfighting) where the kristos are shouting "Lo Diyes""Pay,pay,pay"Sa Wala""Sa Meron" and then after the fight, they began collecting the money from the loser and give it to the winner? The stock market a few decades ago, is a very animated place like sabong. Brokers are shouting with one another like "San Miguel sell for 50!""Buy Purefoods for 90!", etc. Some are even holding placards with their stocks. The stockbrokers are like kristos. Tell them that you need Metrobank stock and they will shout it for you in the market. Likewise, when you sell a stock, they will shout, and yell in the market in order to sell your stock. Then they collect the money from the buyer of stocks and gives the money to the seller of stocks. That was the old days!

Today, you can buy or sell a stock all on your own, albeit with the help of the computer. Gone are the days when stockbrokers are shouting. Now, everything can be done while you are on vacation, while working, eating at Jollibee, going to the metro, etc. as long as you bring with you an electronic gadget with an internet.


Yesterday, I woke up at 6 am, took a cup of coffee and opened the Citiseconline website (Best Online Broker in 2007, given by the Agora Excellence Award; Outstanding Trading Participant for Active Investor Education, both given by the Philippine Stock Exchange, in its 1st PSE Awards Night.) . I just click the buy button, encoded a few details and my transaction went to the main server of Philippine Stock Exchange where the seller awaits. In just a few seconds, the stock I purchased was instantly credited in my account because there are sellers in the PSE servers waiting for their stocks to be matched. Since they want to sell 300 for 60/share and I want to buy 300 shares for 60/share, the transaction was instantly consummated. This means that I now own shares of stock of the company I bought. But where is the certificate to prove that I own them?


Once the purchase I had made yesterday  morning was consummated, it automatically went to the servers of PCD (an institution owned by PSE where all transactions are recorded.) to record my purchase of stocks as the rightful owner. PCD records the owners of the shares of stock. Since I own 300 shares of stock, I can demand the PCD via Citiseconline to issue stock certificates in my name but I did not do that. The reasons are: 


1. If I will ask Citiseconline to open a subaccount in my name at the PCD records, I need to pay additional 100 pesos every month to PCD.


2. If I insisted for a stock certificate and then after a few months I wanted to sell it, I need to go to through PCD within settlement date otherwise I will pay penalties or cancellation fee if the stock certificates could not be delivered on time. 


3. If I insisted for a stock certificate, PCD will remove my shares in their records system until I decided to sell them.  I need to approach PCD again to reenter my shares in their records so that I can sell them again in the stock market.

4. If I insisted for a stock certificate, I need to pay 100 pesos to my stockbroker plus 20 pesos plus 12% VAT.


5. If I insisted for a stock certificate, I may need to go to my stockbroker personally to deliver the stock certificates when I am about to sell them which is not possible because I live abroad.


These are just five of the many cons of owning a  stock certificate. Yes, I can request for a stock certificate from my stockbroker but the cost and processes I had to go through is not beneficial for me. Philippine Stock Exchange works electronically through heavy servers. 

Below is an excerpt from the Philippine Stock Exchange (PSE) website.

"The PSE through its central depository (PCD) uses the computerized book-entry system (BES) to transfer ownership of securities from one account to another, thus eliminating the need for physical exchange of scrip between buyer and seller. The trading system where settlement is carried out via book-entries, rather than by the movement of physical certificates. This system is called scripless trading. However, you may still request for an upliftment of your shareholdings to get a physical certificate".

Welcome to the world of electronic trading! 


"There are risks you cannot afford to take; but there are also risks that you cannot afford not to take."

Philippine Stock Market is Going Up! So What?

For the past few months, the stock market is down and is always trading below the 4000 benchmark. The investors are reluctant to put money in the stock market. The sentiment is negative. Investors confidence is down and the stocks are low and cheap.



This week, stock prices began to rise. The stock market was triggered by the acquisition of PLDT to Digitel. PLDT stocks have risen up from around 2000 last month to 2400 today. The telecom giant stock rises because its market share of telecommunications industry has increased. Digitel is the operator of Sun Cellular brand. Revenues of Digitel will now be part of PLDT. The subscribers of Sun Cellular become part of PLDT's customer base. PLDT's network also expanded. The competition on the cellular industry is now between Globe and PLDT. Sun Cellular is out because it is now part of PLDT already. SunCellular has a different pricing scheme against Smart and Talk and Text, it actually competes with the subsrcibers of Globe. Little by little Sun Cellular is creeping into the market share of Globe. These are few of the assumptions the investors used when they bought PLDT this week. A lot of them bought PLDT and just like in any market, when the demand is high, the prices go up.

Aside from that, foreigners began buying stocks worth billions of pesos. This means that aside from the Filipinos buying the stocks, these foreigners adds up to the investors, so the stocks becomes a hot commodity being grabbed by everyone, that's why their prices go up. The US unemployment also goes down from 8.9% to 8.8%  last March. US Companies are now beginning to hire people. Business is picking up in the US and when the business goes up, consumers began buying basic necessities or luxury items. When more people are hired, more people can have the ability to dispose their income to buy material things.

I have a friend whose name is John and works in the US. He is an immigrant and last 2008, he was part of the workers laid off by their Company. He was devastated because he needs to pay his house rent, utility bills and food. In order to save on food, he became one of the unemployed persons lining up for food stubs. He rely on those stubs to get by the day. Normally, when he was working, he is buying his food in Jollibee,yes there is a Jollibee in the US. Imagine if John is eating in Jollibee 4 times a month. He spends $5 every meal. In one month, he spends $20 to Jollibee. but because he is unemployed, Jollibee is losing $20 from its revenues every month. Now, multiply that with hundreds of thousands of people terminated and with cases like John, Jollibee may lose in millions of revenue in one month alone. And when Jollibee revenues goes down, its stock price will also go down. That's why unemployment is one of the indicators whether a stock market will go up or down.

This week, the stocks of almost all blue chip companies in the Philippines have risen up and I think it will go up for the next six months. On a longer perspective, I think the Philippine Stock Market will go up. We are an emerging market and we are only in Phase 1, "The Spark" a stage where political, economic and social conditions of the country is beginning to improve. The government gives preferential treatment to foreign investors, and the stock market is going  up. Tourism is improving and large scale infrastracture is picking up. This phase may take years or even decades depending on the performance of our country. It's a long way to go and our country according to analysts is one of the rapidly growing economy.


So what, if stock market goes up, the rich are just getting richer and the poor getting poorer. I will just miss the opportunity to put a tiny amount of money in the foundation I just so care about.

So what, if stock market goes up I don't care anyway. I will just miss the opportunity to profit when it goes up.

So what, if stock market goes up it doesn't affect me. I will just miss the opportunity of parking my money into an investment vehicle I love.

So what, if stock market goes up I do not feel the effect of it. I will just miss the opportunity of helping our country grow no matter how little it is.

So what, if stock market goes up I will ignore it. I will just miss the opportunity to save for my retirement.

On a side note, I would like to share whether I make money in the stocks or not. Below are actual purchase price I bought, its price today and the returns I have.

Purchase Date	Stock Symbol	Purchase Price	Price Today	Returns (Profit)
12-Jul-10	TEL	2,440.00	2,400.00	-2%
16-Sep-10	FGEN	13.42	13.04	-3%
23-Nov-10	SMPH	11.58	11.70	1%
19-Jan-11	LC	0.4850	0.4950	2%
26-Jan-11	MBT	62.00	68.45	10%
16-Feb-11	ALI	14.70	16.44	12%
15-Mar-11	NIKL	19.94	20.50	3%

Disclaimer:

Investing involves substantial risk. I do not make any guarantee or other promise as to any results that may be obtained from using this blog. No reader should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing the prospectus and other public filings of the issuer. To the maximum extent permitted by law, I disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations in this blog prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

The Books I Read...

I love books. When I read, I'm in my zone. I feel relaxed, rejuvenated, and happy. It's my therapy. Show the gates of the mall for some people and they get excited, relaxed, and feel that they are alive. Others are contented with Mara Clara, Eat Bulaga and other showbiz gossips. My friend showed me his collection of robots and he feels fantastic just looking at them. The other friend has a sound system that almost ripped my ear glass. He likes music. Everyone of us has it's own interests and likes that makes us feel happy...Relaxation is relative. I knew of someone who relax while dancing. Others feel good when they stand in front of an audience while delivering a speech.




Robin Sharma said something about books,  "All of the problems we are going to face have been experienced by a lot of people who walked before us and all of the answers are there in print."  When I read Jack  Welch story, it's as if I am having a conversation with him. His insights, his life, and how he managed one of the most successful company ever in the US of A, the GE. Obviously, it is not what I will get out of the books that is so enriching for me, it is what the books will get out of me that will ultimately changed my life. Not all books are good after all, some needs to be tasted, others to chewed and few books needs to be swallowed as  a whole. Books do not teach me anything new, they simply see what is already within me. Thus, I am taking little steps everyday to apply the knowledge I have learned so far. One of the bosses I know said this " When I am up at that balcony, I get one of my books and read it to get an inspiration."

Below are some of the few books I have read so far...

The Bible
     The holy book that has always been a constant source of inspiration, strength, courage and humility for me. When I feel low, I read it. It's as if God is talking to me personally, guiding me in every bit of my way. I feel secured, loved and remembered by the Infinite. It is one of the books that accompanied me in every place I go.







Accounts Receivable Management by John Salek
    Obviously, I need this one because my current job is all about Accounts Receivable. It provides me the technical aspect I need in my work and helps me improve the accounting aspects of the Company. The lessons I learned in the school, coupled with my experience in the Philippines makes me equipped with the knowledge I needed in my chosen field. I felt though that I still need a lot of things to learn in this area and will most probably buy another book in Accounts Receivable. Perhaps, a book about Contracts will immensely help also to further my knowledge in this field.

Think and Grow Rich by Napoleon Hill
    This book is not all about making money. Its also about making a lot of life. It is considered as one of the most influential books of all time, and I could not agree less because the subsequents books I read almost rely entirely on the philosophy of Napoleon book. The contents are profound  and mostly talk about abundance, including   spiritual abundance and the secret on being a successful human being.

The Monk Who Sold His Ferrari by Robin Sharma
    A captivating story about a superstar lawyer that collapse in an almost packed courtroom because of a heart attack. His transformation began after that incident. The tale has blended the cutting edge principles of the West and the timeless spiritual wisdom of the East. It's like a parable that offers a lot of wonderful insights applicable to every aspects of our life. It is one of my favorite books actually.

My audiotapes from Bo Sanchez

     Wherever I go, I bring my Kindle with me where a lot of audiotapes are stored. It's like reading a book with a different twist. Instead of using your eyes, you use your ear instead. Going from and to the office, I read books through this.