Time is Money!

When I started working for a job, I am afraid to plunge in the world of stock market. I do not know how the stock market works. Even though I am an accountant by profession, investing in the stock market during my early twenties did not cross my mind.

I remember when I used to read Manila Bulletin or Philippine Daily Inquirer, I will normally browse the sports section first. As I flipped through the pages and turn to the business section, I cringed. You know why? Because I do not understand what Phisix is all about. I do not understand what these tickers are all about. Most of all, I do not even know what are the implications of these information in my daily life. Do they really matter to me? The answer is no during those days. Perhaps during my college years, I was absent when those topics were discussed or maybe I just had a very short memory that does not last a month.

Stock market? Nah, let’s talk about savings instead. When I wore my first long sleeves and khaki pants towards my first job, I thought of savings a part of my salary. What I did on the ensuing months was to withdraw enough money to sustain me for the next 15 days and the rest will be left in my ATM. I then leave my ATM in our apartment. The reason why I am leaving my ATM in our apartment is to resist the temptation of overspending.

50% discount sales abound everywhere. From the malls, supermarkets and grocery chains, the endless promotions are there. The cool polo shirts are a catch, the Levi’s pants were cheap and the Nike shoes were all latest model. These and all sort of things that tempts me in pulling my wallet out of the blue is being nullified because I do not bring my ATM. While I do resist myself in buying unnecessary items, I sometimes indulge myself in the things I wanted like watching movies and PBA basketball, going for a few drinks in a bar, and buying books I wanted to read. These are the things that I get from my ATM from time to time for my own well-being.

Just like everyone else, I know that time deposit will be better than leaving my money in the bank or in my ATM. Interest rates are higher when you have a time deposit than a savings account. The longer the time period of the deposit, the higher the interest rates are. Normal interest rates for deposits are 3 to 5 percent. Not bad if you compare it against the savings interest of 1% or less.

The drawback of these time deposits is that it cannot cope up with the inflation. If you have 1,000 pesos today to buy 25 liters of gasoline, maybe next year you will need 1,050 to buy 25 liters of gasoline. Then next next year, you will need 1,100 to buy the same 25 liters of gasoline. The product stays the same but the value of your money is decreasing every year because of inflation. Time deposit cannot totally offset the loss of the value of your money every year.

So, how can we beat inflation then and preserve the value of our money? Well, you can try bonds, mutual funds and stock market as a beginner investor. Theoretically, bonds and mutual funds are safe for beginner investors. However, I never touched those two investment vehicle when I started investing. I went straight to the dreaded stock market. I do peso cost averaging in my early years in investing. I just buy blue chip companies every month and let them grow. That’s it. The average return of the stock market is 14% every year. Thus, even if the inflation grows to 5%, you can still preserve the value of your money because your return every year is 14% which is higher than the inflation.

Obviously investing in the stock market is out of our comfort zone. This is totally new to us. So many questions surround us in every opportunity that appears in front us and most of the time, those questions are left unanswered. Thus, we just ignore the opportunities that we have in our life. What I believe is that we need to be curious in this opportunity, research about it, ask questions to the professionals, buy a book, take a seminar and of course grab it and do not let it pass. An opportunity that passed already will never appear again. You’ll need to wait for another opportunity to come and you will never know if that another opportunity will come. In essence, time is money.

What Stocks Can You Buy for 5,000 Pesos at Philippine Stock Market?

There are two ways to buy stocks in the stock market. One is by buying through Oddlot and the other one is through Boardlot.

Boardlot – If you want to buy PLDT whose board lot is 5, the shares must be divisible by 5. Meaning, you can only buy PLDT shares at 5 shares or 10 shares or 15 shares or 20 shares or 25 shares and so on and so forth. You cannot buy PLDT at 4 shares or 6 shares or 9 shares or 12 shares because they are not divisible by 5.

Boardlot is also the minimum price you can buy for the stock. For example, the price of PLDT is 2,2994 pesos per stock as of today, since the boardlot is 5, the minimum price for PLDT is 11,470 pesos. In this case, if your money is 5,000 pesos only, you cannot but PLDT today.

Based on the 30 companies included in the Philippine Stock Index below, you cannot buy Globe, SM Investments and PLDT shares (yellow highlight) if your money is 5,000 pesos only. The good news is you can buy the rest of the companies with your 5,000 pesos.

SECURITY NAME	SYM	BOARD LOT	PRICES	Amount (Php)
AYALA CORPORATION	AC	10	300.8	3,008.00
ABOITIZ EQUITY VENTURES, INC.	AEV	100	39.30	3,930.00
ALLIANCE GLOBAL GROUP, INC.	AGI	100	10.14	1,014.00
AYALA LAND, INC.	ALI	100	15.30	1,530.00
ABOITIZ POWER CORPORATION	AP	100	30.00	3,000.00
BANCO DE ORO UNIBANK, INC.	BDO	10	56.00	560.00
BELLE CORPORATION	BEL	1000	4.02	4,020.00
BANK OF THE PHILIPPINE ISLANDS	BPI	10	56.70	567.00
CEBU AIR, INC.	CEB	10	79.90	799.00
DMCI HOLDINGS, INC.	DMC	100	36.50	3,650.00
ENERGY DEVELOPMENT CORPORATION	EDC	100	6.06	606.00
FIRST GEN CORPORATION	FGEN	100	14.20	1,420.00
GLOBE TELECOM, INC.	GLO	10	926.00	9,260.00
INTERNATIONAL CONTAINER TERMINAL SERVICES, INC.	ICT	10	50.65	506.50
JOLLIBEE FOODS CORPORATION	JFC	10	88.80	888.00
JG SUMMIT HOLDINGS, INC.	JGS	100	23.80	2,380.00
METROPOLITAN BANK & TRUST CO.	MBT	10	69.30	693.00
MEGAWORLD CORPORATION	MEG	1000	1.85	1,850.00
MANILA ELECTRIC COMPANY	MER	10	256.00	2,560.00
METRO PACIFIC INVESTMENTS CORPORATION	MPI	1000	3.16	3,160.00
MANILA WATER COMPANY, INC.	MWC	100	19.76	1,976.00
PHILE  MINING CORPORATION	PX	100	23.75	2,375.00
ROBINSONS LAND CORPORATION	RLC	100	12.16	1,216.00
SEMIRARA MINING CORPORATION	SCC	10	207.40	2,074.00
SM INVESTMENTS CORPORATION	SM	10	531.00	5,310.00
SAN MIGUEL CORPORATION	SMC	10	122.00	1,220.00
SM DEVELOPMENT CORPORATION	SMDC	100	8.44	844.00
SM PRIME HOLDINGS, INC.	SMPH	100	12.20	1,220.00
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY "Common"	TEL	5	2,294.00	11,470.00
UNIVERSAL ROBINA CORPORATION	URC	100	43.00	4,300.00

 Generally, investors and traders are buying stocks in boardlot tranches because they are easier to sell and trade.

Oddlot – if you want to buy 4 PLDT shares, you cannot do that because the price of PLDT which is 2,294 pessos is more than 1,000 pesos and it falls under the minimum board lot of 5 shares as you can see below. Boardlots are being determined by the current price of the stock. See below.  

Very few investors buy through oddlots. Stocks sold at boardlots are easier to sell than oddlot stocks.

My recommendation with your 5,000 pesos is you buy companies whose minimum board lot is less than 5,000 pesos. Based on the stocks listed above, you can choose 27 companies whose board lot amount is less than 5,000 pesos. Avoid oddlots purchases as much as possible because  they are a little bit hard to sell.

If stock price is 1000 pesos or more	Board lot is 5
If stock price is between 50 and 1000 pesos	Board lot is 10
If stock price is between 5 and 50 pesos	Board lot is 100
If stock price is between 50 centavos and 5 pesos	Board lot is 1000
If stock price is between 5 centavos and 50 centavos	Board lot is 10,000
If stock price is between 1 centavos and 5 centavos	Board lot is 1,000,000

Philippine Stock Market Summary Sep 19, 2011

 The PSEi rose on Monday, advancing 17.82 points or 0.42% to close at 4,307.99. The benchmark index managed to end in green despite most Asian indices falling.

Index gainers outnumbered decliners 18 to 9, while 3 issues closed flat. The industrial sector (+0.89%) recorded the biggest gain among all sub-indices, buoyed by MER (+2.75%), URC (+2.34%), FGEN (+2.26%), and AP (+2.00%). Other notable performers were ALI (+1.94%) and AEV (+1.91%). AEV advanced following reports that it has bought an additional 7.67Mil shares in Union Bank (UBP) last week. Meanwhile, BEL (-4.71%), SMDC (-2.58%), and PX (-2.81%) all fell sharply, dragging the property (-0.26%) and mining & oil sectors (-0.70%) down.

Value turnover dropped to Php2.99Bil from Php4.97Bil on Friday. Foreigners were net buyers during the session, accumulating Php226.37Mil worth of shares.


via www.citiseconline.com

What is Philippine Stock Exchange Index (PSEi)?

http://www.flickr.com/photos/57567419@N00/5961260280

We have a total of 238 companies listed in the Philippine Stock Exchange. Out of these 238 companies, we have small companies and large companies. The 30 largest companies in the Philippines listed in the stock market were grouped and called Philippine Stock Exchange Index (PSEi). Thus, if a company is listed in the PSEi, it is one of the largest companies in the Philippines. Most often, these companies are also referred to as the blue-chip companies. 


PSEi is the most watched index in the Philippine Stock Exchange (PSE).  It is also one of the indicators on the general state of the Philippine economy.


There are three criteria before a company will be included in the Philippine Stock Exchange Index (PSEi):


1. Free float level must be at least 12%. 


The free float level is the percentage of a company's outstanding shares that are not held by 'strategic shareholders. Regularly updating the exact level of a company's free-floating shares will give investors a clearer picture of whether a particular stock is widely held or closely controlled. This will also help investors discern whether a stock's price is moving sharply because of actions made by a broad investor base or simply by a few shareholders.

A strategic investor is someone who has a strategic reason for investing in your enterprise; that is, they have an over-arching interest in yoursuccess. You can find strategic investors by looking through your supply chain and your value chain. Even your competitors can be a source of strategic start-up capital if they are looking to you as a new co-opetitor.

http://www.flickr.com/photos/68767463@N00/3697227332

Say you are bootstrapping a new home builder. A trade creditor (supplier) might extend credit to you for building materials and supplies or a client might give you a sizable down payment on a home purchase; in essence, each of them become a strategic investor in your business. Or say you are starting an athletic wear clothing business, department stores might give you a cash advance in return for exclusivity or a sports drink company might sponsor your line of clothing in return for co-branding opportunities.

2. Trading liquidity must be among the top 25% by median daily value per month for at least nine out of twelve months. 


Median means "middle number" (in a sorted list of numbers). Example: the Median of 3, 5 and 12 is 5.  Trading means buying and selling of stocks. 


3. Top 30 based on full market capitalization


Full Market Capitalization refers to a method of equity index construction whereby the index components are weighted by the total shares outstanding. Under the 'full-market capitalization' methodology, the total market capitalization of a company, irrespective of who is holding the shares, is taken into consideration for computation of an index which includes promoters' holding, government holding, strategic holding and other locked-in shares.


Every March and September, the PSEi will change the list if some companies failed to meet the requirements and others which are not included have met the guidelines above.


The PSE noted that the ranking shall no longer consider the sector representation of companies and shall treat eligible companies equally. Before, final selection of companies is done in two stages with the two highest-ranked companies from each of the six sectors filling the first 12 slots to ensure sector representation. The remaining slots will then be occupied by the 18 highest-ranked companies from among the other qualifiers. 


A reserve list or companies which ranked 31st to 35th by full market capitalization will be used in the event that one or more members are deleted from PSEi on the next review.


Next blog will be list of companies in PSEi.


ref: PSE

Philippine Stock Market Summary - Sep 15, 2011

The PSEi rose for the first time this week as it climbed 32.54 points or 0.76% to 
4,291.40. 


Index gainers outnumbered losers 20 to 7, while 4 remained flat.  The Property 
Sector (+2.31%) was the strongest sub-index followed by the Mining & Oil Sector 
(+1.15%), and the Services Sector (+0.90%). The top gainers on Thursday were 
SMPH (+5.74%), AGI (+3.37%), LCB (+2.88%), and GLO (+2.54%). On the other hand, 
the biggest losers included MPI (-1.59%), and JFC (-1.50%). Losses incurred by MPI 
continue to mount as it dropped 5.5% in the past four trading sessions and 20% 
since the July-high of Php3.88/sh.


Value turnover increased to Php4.66Bil from Php4.25Bil on Thursday. Foreigners 
were net buyers as they purchased Php52Mil worth of shares.


via www.citiseconline.com

Philippine Stock Market Summary - Sep 14, 2011

The PSEi declined by 34.05 points or 0.79% to 4,258.86 as the market fell for the fourth consecutive day.  

Index losers outnumbered gainers 22 to 4, while 5 remained unchanged. The Mining & Oil sector (-3.46%) dropped sharply as LCB (-5.15%), LC (-4.14%), and PX (-3.85%) led all losers. The Mining sector was dragged by the drop in gold spot price to US$1,833/oz after reaching a record-high of US$1,921/oz last September 6. Other notable losers included the Tan-group as MEG (-3.23%), and AGI (-3.08%) rounded up the top 5 losers in the benchmark index. The only significant gainer was URC (1.65%).

Value turnover increased to Php4.25Bil from Php2.49Bil on Tuesday. Foreigners were net sellers for the fourth straight session as they liquidated Php284Mil worth of shares.

The Bureau of Treasury reported on Wednesday that the National Government debt reached Php4.81 trillion as of end June, up Php228Bil or 5% year-on-year and Php33Bil or 0.7% higher than the end May level. Of the total outstanding debt, domestic creditors account for 57% or Php2.76 Tril, while 43% or Php2.05 Tril is owed to foreign creditors. Foreign debt, which rose by Php11Bil from the previous month, was largely affected by the depreciation of the peso during the period. This accounted for Php9Bil of the increase. Meanwhile, domestic debt grew by Php22Bil month-on-month due to the net issuance of government securities.
 

via www.citiseconline.com

Philippine Stock Market Summary - Sep 13, 2011

Ø  The PSEi declined for the third consecutive day as it fell 4.94 points or 0.11% to 4,292.91.

Ø  Market gainers and losers were even at 13 a piece, while 5 issues remained unchanged. The benchmark index was dragged by the Mining & Oil sub-index (-1.27%) as PX (-4.24%) led all losers. Others losers were JGS (-1.88%), MEG (-1.59%), JFC (-1.30%), and DMC (-1.27%). On the other hand, notable gainers in the latest trading session included AP (1.84%), GLO (1.63%), ABS (1.59%), and URC (1.20%).

Ø  Value turnover dropped significantly to Php2.49Bil from Php3.2Bil on Monday. Foreigners were net sellers for the third straight session as they liquidated Php78Mil worth of shares.


via www.citiseconline.com

Philippine Stock Market Summary - Sep 12, 2011

v  The PSEi fell sharply by 50.02 points or 1.15% to 4,296.05 as Asian markets faced a heavy selloff on Monday amidst a continued EU debt crisis.

v  Index losers outnumbered gainers 26 to 4, while 1 issue remained unchanged. All market sectors declined in the latest trading session as the Mining & Oil sub-index (-2.03%) performed the weakest. LC (-4.93%), JFC (-4.18%), and LCB (-3.97%) led all decliners while the Sy Group’s SMPH (-2.50%), and BDO (-2.36%) followed closely. JFC and SMPH gave up most of its gains earned on last Friday’s surge. On the other hand, ABS (3.15%), PX (0.37%), MBT (0.35%), and MWC (0.10%) were the only gainers.

v  Value turnover dropped to Php3.2Bil from 3.98Bil on Friday. Foreigners were net sellers for the second straight session as they liquidated Php275Mil worth of shares.


via www.citiseconline.com

  

1 Year To Date Top Gainers in Philippine Stock Market

via www.pseticker.com

1 Year To Date Top Losers at Philippine Stock Market

via pseticker.com

Stock Market Strategy 1: Ignore the News!

Sounds crazy?

Read on...

http://www.flickr.com/photos/13203757@N00/380217997

News gives us the information we need to make a decision to buy or sell a stock. Without the information the investment media provides, how in the world can we make an educated stock pickings? I know it is an absurd idea to neglect news about the stock market but it is the right thing to do.

Investment media like internet, newspapers,tv, radio and magazines provides mind boggling information about the stock market. In the internet, you have thousands of sites that supply information about stock market (this site included) everyday. These sites provide the latest news about scandals, sleazy practices, and they even educate the investors how to beat the market. Investment media is good in exposing all of the malpractices in the stock market and they help the regulators improve the current system to avoid the same mistakes again. We are grateful to the media for exposing systems and programs that are ineffective and detrimental to the investors. Because of them, wrong practices are being noticed and rectified. There are also smart investors who supplies information that benefits the start-up investors. Without the media, we will not benefit from their insights. Also, perhaps we will not know the common mistakes that stock investors make without the media. For that, we are grateful.

The 2008 financial crisis and collapse of Lehman Brothers triggered an overwhelming amount of information that scatters everyday in all types of media. Even laymen who doesn't know stock market knows Lehman Brothers. It  is a contagious information that infects every person in the planet. Media provides the information we absolutely need to know in stock market. Well, not in my case. All of the captivating and outrageous stories coming from all media are just NOISE. No more, no less.

Investment media's interest is different from our own interest. My interest is to preserve my capital and benefit from the stock market while the investments media's interest is to persuade us to watch, listen and read their stories. They have their own agenda and we have our own agenda. They need to keep us reading, watching and listening or else they will go bankrupt. They sell stories and information to us and it is up to us if we will buy them. They offer advice on the future of the stock market and sometimes they get it correctly and sometimes they do not.

Investment media tells about the past stock market, current events and what might happen in the future. All of these are interesting but not relevant for me. They will tell you the ten hot stocks which are interesting but not relevant to me.They will debate whether the stock market will go on recession or not which is  interesting but not relevant to me.

If you have the habit of checking the business section everyday and feels like you need it for your own benefit, you might feel equipped and knowledgeable about the stock market. You will develop strong opinions about the future so much so that you feel belonged to the global community. Your hands are always itching to click the buy or sell button of your brokerage firm because of the news you received from the investment media, but little did you know that you are losing around 1.1% for every transaction that you make. Little did you know that these transaction costs when add up will cost painful percentage from your returns at the end of the year.

Turn off that tv, stop reading the business sections and start analyzing the financial statements of the listed companies you want to buy. Get the financial statements from the websites of the companies or get it from the Philippine Stock Exchange.

What are Hot Money in the Stock Market?

http://www.flickr.com/photos/36613169@N00/388322867

To put it simply, these are the foreign investments inflow in Philippine Stock Market. They are so called hot money because they can be pulled out easily from the stock market. The top five foreign investors came from the US, the United Kingdom, Singapore, Luxembourg and Hong Kong. Data from the Bangko Sentral ng Pilipinas (BSP) showed that as of August 19, 2011 FPI or hot money yielded a net inflow of $3.065 billion, up 99.6 percent from $756.58 million a year ago. 


The stock market recently experienced downturns in the month of August. It went down heavily and small investors like me sweated profusely waiting for the chaos to stop. Thankfully, this week we have seen some upswing in the market and I think the bullish market is about to unfold. 


The bloody August we have experienced is because of the hot money pulled out from the stock market. The foreign investors got scared because they fear that US might go in recession again. Coupled with the US Debt downgrade and European Debt Crisis, foreign investors pulled out their money from the stock market.


Foreign investors are unlike the average Filipino investors; they (foreign investors) are not that concerned about the losses recorded as long as they can still get some value out of the market.


There is nothing wrong with the fundamentals of our stock market. The problem is most of us Filipinos do not know how to invest in the stock market. There is no real or new money coming into the market, particularly for long term investment. 


What drives the stock market right now are the hot money from foreign investors that have the funds to move the market.We’re part of the global economy so we really cannot limit our exposure to foreign funds. There is a limit of liquidity we can get from Filipino investors. So it is best to open our market to foreigners. It will actually help the economy as a whole because it means that investors have confidence in our economy and we should encourage them to come in and leave when they want. I think the important thing is to manage the inflow and outflow of foreign funds so that it doesn’t come in as hot money which will give the market a boost at one point and also expose the market to global risk.


http://www.manilatimes.net/index.php/business/6227-hot-money-inflows-nearly-double-halfway-through-august
http://www.philstar.com/Article.aspx?articleId=715842&publicationSubCategoryId=63