Posts Tagged ‘investors’

Stock Market Investing Tips and Seminars

Have you already heard people say that you can make a lot of money in stocks ? Well such rumors are not false at all. If you know how to invest in stocks, you can make lots of money.

For 2009 the Philippine stock market exchange index was up by more than 60 %. If you had invested in the stock market January of 2009 until December of 2009, your 1 million peso investment would have gained you more than P 600,000.00 !

Warren Buffett, is undoubtedly the world’s best stock market investor and perhaps the only Read more…

How To Invest Stock Market?

To invest stock market one is not qualify when he can have faint of heart.

Read more...

13 Advantages of actively managing your money yourself

A friend of mine forwarded the article below to my email. It’s about managing your money on your own while not getting any help from financial managers or experts. I would like to share this to you as it may give you an idea on making decisions on how will you want your hard earned money be managed.

In my opinion, I will agree to some points of the author but it’s also good that we also have those fund managers or financial experts do the job in growing our money. I also have “some” of my money or investments handled or coursed through brokers or fund managers as I find their capabilities significant in my investing strategies. So far, I’m satisfied with the service, it’s just how you look for a good broker with less or minimal fees and of course, TRUST is important. These people already got the experience and  they know that their primary concern is giving you the best they could do. To make their client happy! If you think, they are helpful enough, I think, you might stick to them for “some” not all of your investments.

I’m definitely a NEWBIE! To start in this money endeavor, seeking help from those knowledgeable folks is a good option. If I find myself capable of doing it on my own, having mastered the strategy, then, I will be better to manage my own money already.  For now, learning from others and getting the best option from those financial experts is still my recommendation. Well, you may want to read the article. Read it below:

Most investors do not realise, but as a private investor managing his own money, he has got an immense advantage over a fund manager due to factors he may not even be aware of.

Sure it will take up some of your free time but it will probably be one of the most awarding activities you can invest your time in. We have all worked hard for the money we have saved and it would only be prudent to invest in the best way possible. With public pension systems crumbling around the world because of ageing populations, making the most of your savings had gotten much more important.

1. You can wait

As a private investor you can wait for attractive investment opportunities to present themselves. If you cannot find anything attractive you can stay in cash. Fund managers do not have this luxury.

They have to invest in whatever their investment area is irrespective of valuation. Holding cash in the fund management world is known as career risk as the fund manager runs the risk of falling behind his peers or his benchmark. The larger the cash position the higher the career risk.

The best example of career risk I have read is value fund managers losing their jobs because they refused to buy internet shares during the internet bubble.

2. You can invest anywhere and everywhere

As a private investor you can invest in any type of asset in any country that offers an attractive risk return trade-off, be it corporate bonds, equities, options, real estate etc.

Fund managers have to stay within the fund’s investment area. Additionally complying with regulations, even further limits their investment choices. You can argue that you can change to a fund in another investment area but that is also actively managing your money.

3. You can invest in any size

This is similar to the investing anywhere and everywhere as you have the freedom of investing in small or large companies whatever is most attractively priced.

I was recently astounded when I heard of a value fund manager that had to invest in companies that have a high weighting in a particular share index because he had institutional investors (read large investors) that would withdraw their funds should his performance deviate too much from the market.

This is ludicrous, why invest with a value manager if you really want market index performance? You want a value manager to do what he does best, search for undervalued companies.

4. You have no benchmark

As a private investor I only have one goal in mind, to grow my investment portfolio each year irrespective of what the market does.

I do not consider it a good year if I have lost 25% while the market has lost 40%.

I am sure your goal is the same.

Fund managers only have one goal, beating his benchmark irrespective of absolute return. I cannot remember how many times I have heard a fund manager say that he has to remain fully invested in his investment area as that is what his investors expect of him.

Just think of what happened to investors in technology funds as the internet bubble deflated.

5. You can focus and ignore

Studying, understanding and applying what has worked in investing is all you need to do to be wildly successful as a private investor. You can only focus on a few things and ignore the market noise, you only have to spend relatively little time to be successful.

Fund managers have to have an opinion on a lot of different investment areas because they have to appear competent in company and client meetings. It is tough for them to have to say I do not know.

I do not watch financial television, its complete rubbish and a waste of time.

Mainly yo-yo news i.e. what went up and down.

I have my investment criteria, I look for companies that falls within it and I study only that. The rest does not interest me and that saves a lot of time.

6. No conflict of interest

This is a big one. You only have your best interests at heart. In other words all your decisions are in your best interest.

Fund managers have to think of keeping their jobs, increasing their assets under management and keeping clients happy. All this means is that their investment performance is not the most important thing on their minds.

Also fund managers in companies what also offer investment banking services may be pressurised to buy securities of investment banking clients irrespective of investment attractiveness.

7. You can have a long view

According to a study by the New York Stock Exchange the average holding period of shares held by investors have declined from five to six years in the 1950’s to 11 months. That means that the average investor has an investment horizon shorter than one financial year.

It is unlikely that a company with problems, as undervalued investment inevitably have, can sort them out in such a short period of time.

As a private investor you can follow the company over many years and realise the gains when the company gets revalued by the market. This may be the largest competitive advantage you have.

The ability to look at a company solely on valuation and keep it as long as it is undervalued.

8. No peer pressure

Accept if you discuss your investment with friends or family you will have no peer pressure to buy or sell any investments. I have gotten to the point that I am reluctant to discuss my investments because the response I get is either, “never heard of it” or “what, you must be mad, don’t you read the newspaper?”

Fund managers have a different problem. The funds they manage get compared to benchmark indices and other funds, including the individual fund holdings.

Should you stand out in any way invites questions. Should the performance be worse than the peer group or benchmark career risk increases.

If you manage your own money you have none of these problems.

9. You decide

You make the final decision after you have done the analysis. You may be wrong but at least you make the calls either way. A lot of funds are managed where committees decide what is bought and sold.

Apart from the problems of group-think investment committees are staffed with people throughout the organisation with different investment approaches, not all of which has shown good historical results.

Furthermore it may be difficult to tell your boss that his investment idea stinks if you have your bonus evaluation later that day. This leads to suboptimal and sometimes completely dysfunctional decision making.

10. You can concentrate

If you find a really compelling idea you can choose to invest as large a part of your capital as you feel comfortable with.

With 80% of non-market risk diversified away with as few as 15 positions you can determine what your optimal number of investments are.

Mine is 30 as I feel comfortable with the weighting of each position in my portfolio and I can easily keep track of the investments.

When I see funds with 100 or more investments my first thoughts are that they must not have much conviction in any of their ideas. Also with so many positions you may as well buy the market itself through an inexpensive exchange traded fund.

11. You control the costs

Controlling costs and fees, or the friction of investing, is a very important part of part of realising superior long term results.

Using a discount broker I can buy and sell most shares for around 1% brokerage.

If I hold a position for three years that equates to 0.33% per year plus a 0.25% custody fee. That is a lot lower than funds that charge 1% to 1.5% per year on top of a 5% initial fee and other expenses.

Calculated over a period of 20 to 30 years keeping costs low makes a huge difference.

12. Down years are more bearable

This goes along with the point on making your own decisions. Should you have a bad year at least you know you made the decisions, can learn from your mistakes and make adjustments to your investment strategy.

13. You can be fully invested

Should you find a large number of attractive investments you can be fully invested and remain so even if the markets declined and you are still convinced of the investment case of each investment.

With a fund manager this is unfortunately not the case. When markets fall they are bound to get redemptions. In order meet the redemptions they must either have cash available or sell investments. But when markets are falling liquidity drops as well. That means that because investments have to be sold liquid investments are sold first.

This selling pressure puts pressure on share prices leading the markets to fall further thus triggering more redemptions. You get the picture.

Some fund managers plan for such eventualities be keeping a certain amount of liquid investments or by keeping at least a small amount of cash on hand. This as mentioned in one of the points above leads to suboptimal investments not necessarily the managers best ideas.

Luckily as a private investor you do not have this problem. I always keep a cash reserve of one years living expenses aside to ensure that I do not have any pressure to sell investments should the market decline unexpectedly. Also a large cash reserve gives me the peace of mind and opportunity to focus on investing for the long term.

There are of course a few funds where the drawbacks mentioned below do not apply but they are in the minority. The large bulk of fund management companies are focused on growing the amount of money they manage, where maximizing the returns to investors come a distant last.

Entry Credits: www.eurosharelab.com

You have read the article already. In the end, it’s your decision whether you manage you money or get a fund manager for you. As what I’ve said, I’m a NEWBIE, I need help from the experts. I invested in mutual funds which are managed by fund managers. I see my money is growing and so far, satisfied with the service. I’m happy. That’s important. Now, what’s your take? wbpitfe5qk

Ten Principles of Investing

I got this Ten (10) Principles of Investing from Freeinvestmentreport.com. I would like to share it. This is one way to condition our minds in terms of stock investing. Hope this helps!

1. 1. Start investing now. You could be getting better returns on your money today to prepare yourself financially for your future.
2. 2. Make a financial plan. You must know what your goals are to be a successful investor.
3. 3. Do not follow the crowd. When investing, do what the wealthy do and look for opportunities to get in before the masses.
4. 4. Don’t overpay for stocks simply because the companies behind them are large and well known. Too many large companies are overvalued, and their prices will eventually fall back to earth.
5. 5. Have patience when investing. Wait for the right time to enter and exit your trades.
6. 6. Research, research, research. And if you can’t do your own research, seek advice from experienced professionals who specialize in the markets.
7. 7.Remember that all big companies were once small companies. Look for high-potential opportunities in the micro cap and small cap sectors.
8. 8. Be cautious when investing borrowed money. Your investments can fluctuate in value, whereas the money you borrow must be paid back in full.
9. 9. Don’t put all your money in one place. To protect yourself, make certain your portfolio is diversified across a number of unrelated financial instruments.
10. 10. If necessary, close out losings investments to cut your losses. Stocks do not always bounce back.

Entry Credit: http://www.freeinvestmentreport.com

Mutual Fund

We collated and researched online on the different definitions of Mutual Fund. Here:

What is a Mutual Fund?

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.^[1] The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the investors annually

- Wikipedia

***

A mutual fund collectively pools money from individual and corporate investors. These funds are managed by a professional fund manager who invests the money in stocks, bonds, money market instruments, and/or other securities. The mutual fund earns in two ways: from the capital gain (increase in value) of the security and dividend or interest income. These proceeds, net of whatever charges and expenses, are passed along to the shareholders. The value of a share of the mutual fund, called the Net Asset Value (NAV), is calculated daily based on the fund’s total value divided by the total number of outstanding shares.

There are mainly four types of mutual funds in the Philippines: stock (or equity), bond, balanced, and money market.

-Pinoymonetalk.com

***

Mutual funds are similar to UITFs or Unit Investment Trust Funds, to make investment much simpler, more accessible, and more cost effective for small investors.

The sale and trading of mutual funds, stocks, and bonds is regulated by the Securities and Exchange Commission (SEC), a government agency that protects investors from fraud and theft. However, the value of your investment in a mutual fund (or an individual stock or bond) is not guaranteed by the SEC or by any other government institution.You can lose money on a mutual fund investment — in an extreme case, even all your money. However, the safety track record of most mutual funds is quite good.

-Investingpinoy.com

Advantages in Investing in a Mutual Fund

Mutual funds provide a combination of benefits to investors which cannot be matched by other investment instruments. These advantages are as follows:

Professional Management

Full-time professional managers are the ones who manage the mutual funds. Their job is to analyze the various investment products available in the market and select those that would give the best possible returns to the fund and its shareholders.

Low Capital Requirement

A minimum investment of Php1,000 to Php5,000 is enough to start with. Most mutual funds in the Philippines require a minimum initial investment amount of only Php5,000.00 and minimum additional investments of Php1,000.00.

Diversification

There is a saying that goes, “Do not put all your eggs in one basket.” This adage is especially true in the world of investments which is full of uncertainties. There is no such thing as a “sure” thing. Diversification is the key to manage risk. When people invest in a mutual fund, they achieve instant diversification because the fund is usually invested in a wide array of securities.

Liquidity

Liquidity is the ability to readily convert investments into cash. While the law provides that redemption proceeds must be given within seven (7) banking days from the date of the redemption request, most funds are able to pay the redemption proceeds within a day. Mutual funds are, therefore, considered very liquid investments.

Safety

Mutual funds are highly regulated by the Securities and Exchange Commission under the Investment Company Act and its implementing rules. They are prohibited from investing in particular investment products and engaging in certain transactions (this is discussed in greater detail in a latter section). All of the fund’s assets must be held by a custodian bank for a safekeeping.

Potential Higher Returns

Because a mutual fund is managed as a single portfolio, it is able to take advantage of certain economies of scale. For instance, with its millions under management, it can negotiate for lower stockbrokerage fees or command higher interest rates on fixed-income investments. In the end, however, it is still the investment adviser who really makes the big difference between making direct investments and investing in mutual funds because very few individual investors can match the experience and skill of full-time professional fund managers.

Convenience

In other countries, mutual funds can be purchased directly from a funds or through a broker, financial planner, bank or insurance agent, by mail, over the phone and increasingly over the internet. The popularity of mutual funds in the Philippines is fast catching up. It may be a matter of time for this level of convenience to be a reality in the country. Funds also offer a variety of other services, including monthly or quarterly account statements, tax information, and 24-hour phone and computer access to fund and account information.

-Pinoysmartsavers.com

Our Mutual Fund

Our current mutual fund is Philequity. Why? We made researches and it’s so far one of the best mutual fund to invest in the Philippines. It got lots of awards and recognitions in the financial field and as an investor of Philequity, I’m in deed very satisfied with it.

You may visit PSE for the list of mutual funds you might want. As an advice, know the company first, before putting your money in it.

-thegetwealthy.com

LINKS:

Wikipedia

Pinoymoneytalk.com

Investingpinoy.com

Pinoysmartsavers.com

GetWealthyIn

PhilEquity

Secrets of Millionaire Traders

My own take on the ebook as described by Netfutures.com and the-way-to-trade.com

Would really like to thank, Intelinvest Co. for sharing the ebook on Secrets of Millionaire Traders. For those who have no access to the ebook file, let me share to you what I’ve read and hope it will help those newbie traders! This source is a big help to me. I will be summarizing it into vital keypoints.

Introduction:

Only a few traders are successful yet some are earning a million of profits from stock trading!

There are rules that are already familiar to several millionaire traders and these are generated from interviews from them.

Let’s uncover these.

Rule 1 Use Money You Can Afford To Lose

- It must be the money we are willing to lose.
- We can’t use the money reserve for our family’s budget.
- Mental freedom or independence is important.

Rule 2 Know Yourself

- You must have the attitude of being unemotional or able to control emotions
- Must have an objective temperament as the market keeps on changing.
- Successful traders suggest that people who can’t control emotions look elsewhere for profits.

Rule 3 Start Small

- Begin to trade at a small amount
- Learn the mechanics of trading before going in for volatile contracts
- Note, big things start from small things

Rule 4 Don’t Over Commit

- Keep three times the money in your margin account than what is needed in your particular position
- It means if you trade P30, you must have P90 savings as your margin account.
- Don’t go beyond that rule.

Rule 5 Isolate Your Trading From Your Desire For Profit

- A successful trader is able to isolate his trading from his emotion.
- Hope is a great virtue in other areas of life but it can be a hindrance for traders.

Rule 6 Don’t Form New Opinions During Trading Hours

- Decisions during the trading day based on price change and news is disastrous for many
- Formulating your own opinion before trading opens is advised by successful traders.
- Sometimes, the ups and downs of the trading game might upset traders.

Rule 7 Take A Trading Break

- It’s good to take a break sometimes to give yourself a fresh look at the market when you get back.
- To see a better perspective in your trading lifestyle may be achieve after taking a break
- Everyday trading  makes you dull in judgment

Rule 8 Don’t Follow The Crowd

- Don’t go with what everyone is up to. You need a breathing room.
- If 85% of the analysts are bullish, this indicates an overbought situation. If less than 25% are bullish, this indicates an oversold condition
- Periodic government reports on the position of traders of various sizes provide “overcrowding” clues. Another clue is “contrary opinion”

Rule 9 Block Out Other Opinions

- Don’t get easily influenced by what someone says, it may change what’s on your mind
- Find someone who could give you logical reasons for a change in view
- Form your own basic opinion of the market

Rule 10 When You’re Not Sure, Stand Aside

- Don’t feel to trade everyday, it might be costly
- Develop discipline and patience to wait for an opportunity

Rule 11 Try To Avoid Market Orders

- Put specific price limit when buying or selling.
- Minimize the use of market orders

Rule 12 Trade The Most Active Month

- If you’re trading emini contracts, trade it on the nearest months. Like some are expiring on March, June, September, November, December. Most active a few days before expiry.
- For trading commodities like soybeans, trade at the highest volume and open interest. March, July and November are active months.
- Trade on high volume commodities so you could easily liquidate your position.

Rule 13 Trade Divergence With Related Commodities

- Watch the families of the commodities. Ex: soybeans, related to it might be grains, meat and metals,
- If all grains except soybeans were moving higher, the millionaire traders would look for an opportunity to sell soybeans as soon as the grains in general appeared to be weakening. The reverse of this is true also. The traders would buy the strongest commodity in the group during periods of weakness.
- Be detailed on the related products you are trading.

Rule 14 Don’t Trade Many Markets At Once

- Know your limitations and trade within your limits
- Listen to yourself and your capability

Rule 15 Trade The Opening Range Breakout

- If there’s a major break out with the price in a day, it will signal you the next price-decision making the next day or days to come

Rule 16 Trade The Breakout Of The Previous Day’s Range

- Buy if the price is below the previous day’s closing price
- Sell if the price is above the previous day’s closing price
- Just wait for a breakout of the market.

Rule 17 Trade A Weekly Breakout

- It’s similar to the daily rule but this one in on weekly basis
- Basing on the week’s high and low closing.

Rule 18 Take A Breakout On A Monthly Range

- Monthly basis in making decision gives you’re a broader view of the market
- Same rule applies to days and weeks

Rule 19 Build A Trading Pyramid

- Don’t add more stocks beyond your money capacity
- If you’re trading on 3 Bank Securities, you may add 2 then 1 after the other.
- Avoid “inverted pyramiding”, it will make you vulnerable!

Rule 20 Never Enter Your Position At One Price

- The important key is Market Action
- Never put your entire investment in only 1 stocks position not unless you’re sure with it
- Wait for the market to be in favor with you.

Rule 21 Never Add To A Losing Position

- Some traders don’t agree on this rule as they believe in “Price Averaging”
- It will Lead you to Rule No. 5 “Hoping”
- Don’t add or buy if it continues to give you losses.

Rule 22 Cut Your Losses Short

- Liquidate your position when the market is against you.
- Don’t hope for the market to turn in the favor to you

Rule 23 Let Profits Run

- Never take a profit just for a profit. It should be reasonable profit-taking.
- Some technical rules on reversals and formats may help
- Don’t cut profits short

Rule 24 Be Impatient With Losing Positions

- Never carry a losing position more than 2 or more days or over a week
- Force discipline on yourself

Rule 25 Learn To Like Losses

- Be a good trader, never fear losses
- Losses are part of the business
- Having the right attitude in accepting losses helps you gain emotional stability

These 25 Rules of Secrets Of The Millionaires may be a big help to you. You might agree or disagree on some keypoints, but here’s what I learn the most, DISCIPLINE.

Happy Trading!
-Bullish Trader

Links

netfutures.com
the-way-to-trade.com

Today’s Stock Buzz- August 21, 2009

Investors secure gains ahead of weekend

SHARE PRICES closed lower on Thursday after investors booked profits ahead of the long weekend, analysts said.

The benchmark Philippine Stock Exchange index (PSEi) slipped by 1.47% or 40.71 points to 2,720.18, while the all shares index shed 1.2% or 21.34 points to 1,744.29.

A total of 3.58 billion shares worth P4.25 billion were traded. Net foreign buying totaled P332 million.

Decliners led advancers 71 to 32, while 55 shares did not move.

“The trading week is shorter so it was already expected that investors [would not be] as aggressive,” 2TradeAsia.com said.

“Investors were also checking for ’momentum progression’ that was absent during the past trading days.”

The online brokerage noted there wasn’t enough buying momentum that would have encouraged investors to enter the market. In the past five trading sessions, for instance, the market rose only once and the gain was not even significant.

The composite index managed to gain 29 points on Wednesday on bargain hunting but this failed to prevent the PSEi from sliding. The index lost 4.77% week-on-week.

Jun B. Calaycay of Accord Capital Equities Corp. said investors also remain “sensitive” to market declines after experiencing a “big scare” last year when the market shed almost half of its value.

“[Yesterday] was also the first day of the ghost month. So traditional thinkers tried to avoid the market ahead of the long holiday, especially since Wall Street continues to be volatile,” he said.

Investors, Mr. Calaycay said, will monitor how the US market will do during the break before charting their next moves.

Wall Street closed higher on Wednesday after crude prices for September delivery jumped by 4.7% or $3.23 to close at $72.42 a barrel on the New York Mercantile Exchange. This was after the US government’s weekly inventory showed that crude oil supplies fell last week.

The Dow Jones industrial average rose by 0.66% or 61.22 points to 9,279.16 after investors scooped up oil-related firms on anticipation that demand for crude would rise.

The Standard & Poor’s 500 index added 0.69% or 6.79 points to 996.46, while the Nasdaq composite index rallied by 0.68% or 13.32 points to 1,969.24.

At home, however, mining and oil stocks led the losers, retreating by 2.33% or 190.54 points to 7,985.75.

Industrial stocks fell by 2.26% or 91.30 points to 3,944.18, while the service sector slid by 1.25% or 17.76 points to 1,397.08.

The property sector tumbled by 1.23% or 12.03 points to 964.72, while holding companies shed 0.87% or 13.33 points to 1,518.44.

Financial firms lost 0.1% or 0.64 point to 592.84.

Manila Electric Co. shed 5.31% or P11 to P196, while Lopez-led holding company Benpres Holdings Corp. dropped 5.26% or 20 centavos to settle at P3.60.

Benpres unit First Philippine Holdings Corp. slipped by 3.52% or P1.50 to P41, while Andrew Tan-led property company Megaworld Corp. was down by 3.12% or four centavos to P1.24.

Philex Mining Corp. declined by 2.43% or 25 centavos to P10, while index heavyweight Philippine Long Distance Telephone Co. dipped by 1.63% or P40 to P2,405.

Ty-led Metropolitan Bank & Trust Co. shed 1.33% or 50 centavos to P37, while Lopez-led Energy Development Corp. lost 1.14% or five centavos to P4.30.

Ayala Land, Inc. did not move at P9.70, while the Bank of the Philippine Islands stayed at P43.50.

Entry Credit: http://www.bworldonline.com

Today’s Stock Buzz- August 20, 2009

Bargain hunting ensues after downturn

SHARE PRICES closed 1.07% higher yesterday due to bargain hunting following a three-day downturn, dealers said.

The Philippine Stock Exchange index closed 29.34 points higher at 2,760.89. The all shares index rose by 1.07% or 18.79 points to 1,765.63.

A total of 2.89 billion shares worth P3 billion changed hands.

Advancers led losers 89 to 22, while 47 issues closed unchanged.

“Tomorrow, we expect the market to continue its reversal,” Ron Rodrigo of DBP-Daiwa Securities told Dow Jones Newswires.

Analysts also pointed out that the market’s rebound yesterday resulted from the US market’s recovery on Tuesday night.

“As expected, the market turned green due to the Dow’s recovery due to better-than-expected results of some retail companies and positive news about Germany’s economy,” said Daniel C. Picache of Papa Securities.

“This was inspired by recovery of the Dow in the US. It was just a relief rally from the profit taking in the past two days,” said Astro C. del Castillo of First Grade Holdings, Inc.

He added that speculation on some stocks because of rumored interest by specific parties also pushed the rebound.

The Dow Jones industrial average finished 82.60 points or 0.90% higher at 9,217.94 after a sell-off on Monday night.

The Standard & Poor’s 500 and the Nasdaq composite index similarly rose, each moving up a percent to 989.67 and 1,955.92, respectively.

Mr. Picache said late trading on Tuesday already gave signs of a rebound since there were already signs of bargain hunting especially on Lopez-led companies.

“But with a long holiday coming, it may lead investors to trim their positions. They may adopt a sell-on rally stance today, which may result in consolidation,” he said.

Mr. Picache placed the support level at 2,693 and the resistance at 2,984.

“The two-day correction already gave investors enough room to reenter the market… Buyers won’t be as aggressive as before though],” he said.

Mr. Picache noted there is still money on the sidelines since some investors were not able to get in when the market staged its run-up from the 1,800 level.

Mr. del Castillo said the market would probably hover at the 2,700 level as investors continue to digest numbers and look overseas for direction.

Mining and oil companies climbed the sharpest, going up by 3.47% or 274.52 points to 8,176.29, followed by property shares that rose by 2.39% or 22.79 points to 976.75.

Shares of service firms finished 20.15 points higher at 1,414.84, while holding companies inched up by 1.08% or 16.31 points to 1,531,77.

Industrial companies improved by 0.59% or 23.98 points to 4,035.48, while financial firms closed at 593.48, up 0.29% or 1.75 points.

Lopez holding firm Benpres Holdings Corp. climbed by 7.04% or 25 centavos to P3.80, while the Manila Electric Co. was flat at P207.

Market heavyweight Philippine Long Distance Co. closed 1.24% higher or P30 up to P2,445.

Banco de Oro Unibank, Inc., the country’s largest bank, went up 1.47% or 50 centavos to P34.50, while Ayala Corp. was steady at P297.50.

Harry G. Liu of Summit Securities, Inc. said that with the market having reached its targets, its direction would be dictated by market movements abroad.

“[What’s happening is] base building for the medium term so that the long term would catch up in anticipation that the global slide is improving,” he said. — AFP and Don Gil K. Carreon
Entry Credit: http://www.bworldonline.com

Today’s Stock Buzz- August 15, 2009

Stocks down on profit-taking

Philippine stocks fell on Friday as investors cashed in on gains made a day earlier when shares soared following the US Federal Reserve’s upbeat assessment of the US economy.

Concerns over a bigger budget deficit in 2010 also triggered a selloff, analysts said.

The benchmark Philippine Stock Exchange index or PSEi lost 0.21%, or 6.05 points, to 2,850.01, while the all-shares index slipped 0.27% to 1,806.98. A total of 3.4 billion shares worth P2.69 billion changed hands. Decliners led advancers 55 to 46, while 57 shares did not move.

“The slight slide in the share prices today was brought about by profit-taking by investors following the recent market advance, [especially after Fed announced that the US, the world’s biggest economy, is stabilizing],” Grace C. Cerdenia, chief operating officer of online brokerage firm 2TradeAsia.com, said.

The Fed said Thursday that US economic activity was leveling out, allowing rates to remain at near zero for an “extended period.” That drove a rally in Asian markets that day, including the Philippines.

Ms. Cerdenia said investors unloaded their portfolios after economic managers raised the target budget shortfall to P233.4 billion for next year from P208.4 billion, as part of the government’s economic pump-priming efforts.

Justino B. Calaycay, Jr., analyst at Accord Capital Equities Corp., said investors bracing themselves for a slump in share prices during the traditional “ghost” month of August contributed to the price pullback.

Since investors normally stay on the sidelines in August, news pointing to a global economic recovery won’t help, he said.

“There is already a general consensus that we are not going into a recession, and this was already factored in by the investors,” Mr. Calaycay said.

Select industrial, as well as mining and oil issues, pulled down share prices, with the Manila Electric Co. weighing down on the market with an 8.61% loss.

Industrial stocks lost 2.59%, or 111.46 points, to 4,186.82, while mining and oil tumbled by 2.72% or 233.14 points.

GMA Network, Inc., Philex Mining Corp., First Gen Corp., class “A” shares of Lepanto Consolidated Mining Co., Vista Land and Lifescapes, Inc., Aboitiz Power Corp., and Globe Telecommunications Co. all pulled down the PSEi.

On the other hand, International Terminal Container Services Inc., which advanced by 6.49%, led upward movers among index stocks.

Other PSEi stocks that gained on Friday were Ayala Corp, Ayala Land, Inc., SM Prime Holdings, Manila Water Co., Rizal Commercial Banking Corp., Banco de Oro Unibank, Inc., Robinsons Land Corp., Jollibee Foods Corp., and SM Investments Corp.

Entry Credit: http://www.bworldonline.com

What is Ghost Month?

If you’re new to the world of Stock Market, you might be hearing the term “ghost month” by the investors/traders circle. Well, we visited some sites on how they view the Ghost Month as it influences business market for many. Read below:

* This years Ghost month starts on August and ends September.

The Ghost Festival is a traditional Chinese festival and holiday, which is celebrated by Chinese in many countries. In the Chinese calendar (a lunar calendar), the Ghost Festival is on the 14th night of the seventh lunar month.

In Chinese tradition, the seventh month in the Chinese calendar is called the Ghost Month, in which ghosts and spirits, including those of the deceased ancestors, come out from the lower world to visit earth. The Ghost Festival is the climax of a series of the Ghost Month celebrations. Traditionally, ancestor worshiping was an important part of the festivals, with activities including preparing ritualistic offering food, and burning hell money and bags containing cloth to please the visiting ghosts and spirits of the ancestors, as well as other deities. A very solemn festival of ancestor worshiping, the festival nevertheless represents a connection between the ancestors and the descendants, the living and the dead, earth and heaven, as well as body and soul.

So why does this matter to you? Well ghost month is embedded in the chinese tradition where you’re not supposed to spend unnecessarily during the ghost month. this really does happen every lunar ghost month of the year, as some foreign (Asian) funds do not like to make investments at this time. Stock trading is considered an unnecessary expense what this means for traders is less liquidity. If there’s nobody there to really buy up a stock then there’s really no way for stocks to go but sideways or even…. DOWN

Credit to: http://financemanila.net

*Bearish mood to persist as ‘ghost month’ rolls in

TRADING AT the stock market this week would still be influenced by crude prices and the performance of US stocks, analysts said, but consolidation is also expected during this “ghost month.”

“The outlook for the market remains bearish for the long and medium term,” said Jose L. Vistan of AB Capital Securities, Inc. “Short-term view looks cautiously positive as the near-term rally seems to be on shaky legs.”

He added that although last week’s rally might continue this week, the market still lacks the solid fundamentals to make it snap out of its downtrend.

The composite index last week made a surprising gain of 2.8% or 71.49 points to 2,584.21 as local investors focused on crude prices on Friday, ignoring the drop in US stocks.

Credit to: http://www.bworldonline.com

* Ask advice with any old timer in stock market and he’ll tell you to stay away from stocks during the Chinese ghost month. Indeed, the table below shows that stocks tended to perform poorly during this period (12 out of the last 19 years), registering an average loss of 4.1 percent.

PHISIX Performance during the Hungry Ghost Months (1987 – 2005)

*Source: Technistock, Philequity Research

Double whammy

This year is a double whammy of sorts because of the occurrence of a double ghost month. The Chinese lunar calendar (as the name implies) follows the cyclical movement of the moon. Therefore, in the Chinese calendar, a year has a total of 354 days or 11 to 12 days shorter than the solar year. To balance the lunar and solar calendars, a leap lunar month is added every three years. And this year, the leap month occurs in the seventh month with the regular seventh month from July 25 to August 23 and a leap seventh month from August 24 to September 21.

So far, the Philippine Stock Exchange Index (PSEi) is up 3.9 percent since the ghost month started last July 25. Will it stay up or will the jinx of the ghost month finally haunt it in the end? Only time will tell.

Trading simulation

Heeding the old advice of staying out of the stock market during the ghost months should have earned investors more money in their pockets. A simulation below shows that if one peso was invested in the PSEi in 1987 and a strategy of selling before the ghost month and buying it back afterwards was employed, the investment would now be worth P15.10 (or an annual compounded rate of 14.8 percent). Meanwhile, a simple buy-and-hold strategy would have resulted to only P5.01 (or an annual compounded rate of 8.6 percent).

Credit to: http://www.yehey.com/finance

*August is known to be the Chinese ghost month where the perception is that liquidity and the index takes a breather due to the Chinese tradition. However, it has been proven that this phenomenon does not have its usual hold on the market anymore. How will it be this year?

Credit to: http://www.absolutetraders.com

Today’s Stock Buzz- August 12, 2009

Profit taking caps gains by mining stocks

SELECT MINING issues managed to push up share prices yesterday despite investors pocketing gains due to lack of positive leads, analysts said.

The benchmark Philippine Stock Exchange index (PSEi) gained 0.34% or 9.96 points to 2,860.54, while the all shares index added 0.32% or 5.82 points to 1,813.28.

A total of 7.93 billion shares worth P5.45 billion were traded. Net foreign selling widened to P323 million.

Advancers led decliners 57 to 43, while 66 shares did not move.

“The upside came from mining-related stocks, led mostly by Philex Mining Corp.,” Eunika B. Maloles of 2TradeAsia.com said.

“The rally, however, was tempered by [profit takers] who took their cue from the [drop in Wall Street stocks on Monday night].”

Doreen Mijares of IGC Securities, Inc. said the PSEi’s gain was minimal since most mining stocks are not part of the index.

The mining and oil sector climbed the most yesterday, surging by 5.8% or 475.89 points to 8,670.36, buoyed mainly by Philex and Lepanto Consolidated Mining Co.

Philex jumped by 8.58% or 85 centavos to P10.75. Lepanto “B” shares, open to all investors, climbed by 6.45% or two centavos to 33 centavos, while “A” shares, exclusive to locals, also added 3.22% or a centavo to 32 centavos.

Both companies recently figured in newspaper headlines. San Miguel Corp. President Ramon S. Ang said he was interested in acquiring a stake in Philex. Lepanto, meanwhile, confirmed rumors that Hong Kong-based First Pacific Ltd. Co. is interested in making an investment in the mining firm.

Other mining-related issues that rallied yesterday included Nihao Mineral Resources International, Inc. that jumped by 16.66% or P1.75 to P12.25 and Abra Mining and Industrial Corp. that rose by 10% or P0.0005 to P0.0055.

But with the market having already reached an overbought level, Ms. Mijares said it is bound to correct, which explains the PSEi did not close higher despite reaching an intraday high of 2,873.53.

“Right now, our outlook for the market is it will continue to correct but it will not fall steeply since those investors who were left behind when the market was rallying will view whatever correction as an opportunity to enter,” Ms. Mijares said.

Profit taking also pulled down Wall Street stocks on Monday. The Dow Jones industrial average lost 0.34% or 32.12 points to 9,337.95.

At home, holding firms climbed by 0.41% or 6.25 points to 1,527.84.

The service sector added 0.35% or 5.10 points to 1,424.11, while industrial shares rose by 0.005% or 0.23 point to 4,419.53.

Financial stocks, on the other hand, dipped by 0.24% or 1.47 points to 603.02, while property shares slipped by 0.13% or 1.37 points to 987.33.

Blue chips closed mixed, with index heavyweight Philippine Long Distance Telephone Co. rising by 0.2% or P5 to P2,485.

Manila Electric Co. did not move at P262.50.

Ayala Land, Inc. was flat at P9.50, along with sister firm the Bank of the Philippine Islands, which stayed at P45.50.

Rival bank Ty-led Metropolitan Bank & Trust Co. remained at P38.50 apiece.

Andrew Tan-led Megaworld, on the other hand, lost 1.44% or two centavos to P1.36, along with Sy-led Banco de Oro Unibank, Inc., which dipped by 1.42% or 50 centavos to P34.50.

Entry Credits: http://www.bworldonline.com

***

Online Stock Trading Steps

Are you interested in how to participate in the stock market in the Philippines but don’t know how to start? Do you have a hard time contacting brokers? Well, you could always do stock trading and investing online! Let me give you some baby steps to the local Stock Market i.e., the Philippine Stocks Exchange.

How to Start In Online Stock Trading:

1. 1. Open an online account thru CITISEC or BPI Trade. In my case, I have BPI Trade but it’s good to have both. Simply fill-up the online registration form (BPI Trade) and PRINT it after. Please double check your information that they are correct before printing.
   2. The instructions are stated in their site but for your convenience, you have to photocopy 2 Valid IDs (front and back). Example: GSIS, SSS, Passport, Voter’s ID, Driver’s License, Company ID, PRC ID, etc.
   3. You must have an existing BPI Account whether ATM/Savings. If you don’t have yet, open one at your nearest BPI bank in your area.
   4. Submit the photocopied IDs and the printed BPI TRADE registration form to the BPI branch where you opened your ATM/Savings account and tell the Customer Rep that you want to submit the requirements for BPI TRADE (online stock).
   5. You will have to wait for about 5 to 7 business days for your BPI Trade account processing. They will also send you an email on the progress of your account processing within the duration. So, please check you email regularly.

Voila! That’s how you get started in online stock trading thru BPI Trade.

Now, you have the account set-up already, what to do next?

1. Once you have the username and password initially given to you by BPI Trade, you will be given a simple instruction to change your password but not your username. So please do remember the username and password when you registered to avoid such mess.
2. First time to view the BPI Trade page? No worry, there’s an online tour HERE.
3. Let me elaborate the tabs:

• * Market Info- it displays the real-time market condition and that you could also refer it to PSE.
  * Stock Info- it is where you check the current real-time information of the stock of your choice. Just fill-in the stock symbol in the tab. It will display the current price and all necessary information.
  * Quote Page- it displays your ten favorite stocks with their real-time information.
  * Time & Sales- it displays the real time buying and selling transactions of your stock choice.
  * Most Active- it displays the most active stocks in the Philippine Stock Exchange.
  * Top Gain/Lose- it displays the top gainer/loser stocks real-time.

4. At the side tab:

* Stocks (under trading)- this is where you buy and sell a particular stock of your choice. Just fill in the stock symbol, the number of shares you want to buy or sell (if you have bought some shares already) and of course the price you are willing to buy or sell.

Note: You have to make sure to put funds to your BPI trade account before you could make any transaction.

* You could deposit your money for your BPI Trade account thru over-the-counter to any BPI Branch or you may do an online transfer from your online BPI ATM/Savings account direct to your BPI Trade account for convenience.
* In case you sold your stocks, proceeds/sales will be credited to your BPI Trade account but you have to transfer it to your BPI ATM/Savings account thru online transfer only so you could withdraw it. You can’t withdraw the funds in your BPI Trade account. It has to be transferred.

Hope this helps!!! Good Luck to your online stock trading experience!

GMA is a Stock Investor

I have never profited from my office – GMA

Philstar.com – Tuesday, August 11Send IM Story Print
MANILA, Philippines – President Arroyo maintained yesterday that she has never and will never use her position for personal profit even as she strongly denied manipulating her statements of assets, liabilities and net worth (SALN) that showed her net worth doubling in the last eight years.

Her lawyer, Romulo Macalintal, said the President vehemently denied “any report or speculation alleging defect or her non-compliance with the law in filing her SALN.”

A report from the Philippine Center for Investigative Journalism (PCIJ) said that based on her SALNs, Mrs. Arroyo’s declared net worth more than doubled from P66.8 million in 2001 to P143.54 million in 2008, or bigger than the combined growth in declared wealth of her three immediate predecessors, including former President Joseph Estrada, who was convicted for plunder.

“The President reiterates that she has never used and will never use or take advantage of her position for personal profit as she had declared in her State of the Nation Address and as expected of her by the people,” Macalintal told a news conference at the Palace that was also attended by First Gentleman Jose Miguel Arroyo’s lawyer, Ruy Rondain.

He said he spoke over the phone with the President who was in Ilocos Norte yesterday and received instruction that he speak for her on the matter. She did not sound upset, he said.

He said Mrs. Arroyo prepared and signed her SALN under oath to the best of her knowledge and in full compliance with the Constitution.

“She honestly believes that she has been very transparent on her assets and liabilities and she has nothing to hide,” Macalintal said.

He said the report insinuating irregularities in the preparation of her SALN “is most unfair and uncalled for.”

He said the report “would accuse the President’s SALN as somewhat irregular just because she reported an amount bigger or higher than her predecessors.”

“We do not know what standard used by the reporter in coming up with her analysis. It is as if that if you reported a big asset, this must be investigated; if small, it’s okay and there should be no more investigation,” Macalintal said.

He said Mrs. Arroyo is inviting anyone to question before the Office of the Ombudsman, where the SALNs are filed, “if he or she has any evidence that the President violated or did not comply with the constitutional requirements in the filing of such disclosure documents.”

He said the President filed her SALNs in good faith and without any intention to deceive anyone.

“Those who alleged otherwise should come up with evidence to prove their uncalled for or self-serving accusations instead of being speculative or judgmental on the matter,” he said.

Macalintal and Rondain said if there were any vagueness in the SALNs, the Office of the Ombudsman should have already pointed out the matter to the First Couple.

Rondain also criticized the article’s use of the term “token compliance” to describe the First Couple’s handling of the requirements of the law.

“Under the law, there’s no such thing as token compliance. Either you comply with the law, with the requirements or you don’t comply. Either you’re alive or dead,” Rondain said.

On the issue of the alleged non-disclosure of the First Couple’s business in the stock market, he said the data is open and available in the records of the Philippine Stock Exchange.

“My feeling is that if the PCIJ has any evidence, it would be better if they bring it out. Because the report is just full of insinuations,” Rondain said.

“It’s a clear indication that democracy is in action in the Philippines and nobody is prevented from making this report but of course the President expects the report to have evidence and not based on speculations,” Macalintal said.

A lot of explaining to do

Senators said the president has a lot of explaining to do regarding the allegations in the PCIJ report.

Senate Minority Leader Aquilino Pimentel Jr. said every public official should account for the wealth he has acquired as stated in the Constitution and the Anti-Graft and Corrupt Practices Act.

Sen. Manuel Roxas II said the Office of the Ombudsman should be the one to look into accountability of a public officials but it was unfortunate that the anti-graft body was sitting on many scandals involving the Arroyo government.

“Of course it will raise eyebrows and the people will wait for an explanation on how it happened because she has no other businesses that can be the source of (her additional wealth),” Roxas said.

Senate President Juan Ponce Enrile said it would be wise to check the income taxes filed by Mrs. Arroyo.

Enrile said the figures must be justified. “I’m a lawyer, I know how to handle that,” he said.

Roxas said if the President and her financial advisers would say she earned from her shares of stocks, it would be good to check the rates at the time she said she made money out of them.

Sen. Francis Escudero said he had not seen the SALNs of the President but that her salary was considerably low.

Moreover, he said, there is always conflict of interest when a president ventures into a business.

“There is also a worldwide crisis not only in the Philippines, so you wonder why her wealth grew much bigger considering ordinary interest rates, ordinary return on investments on any business that one gets into,” Escudero said.

“I hope she will put that in her SALNs, the explanations of where her wealth came from and that she must be transparent along with the public officials,” Escudero said.

Escudero said it’s doubtful that the wealth had been acquired legally by the President and that her lawyers’ defense should be examined in detail.

Confirmation

The United Opposition (UNO) said it is seriously concerned over reports of “exponential growth” in the wealth of President Arroyo and her family during her term, which exceeded the growth in the wealth of all the three presidents before her, spokesman Ernesto Maceda said yesterday.

“The PCIJ report confirms what people have long known. Arroyo has flouted the rules on accountability and transparency in government and has made a bad example for the million and a half other civil servants running the government,” Maceda said.

“Now we know why she has made token compliance to the requirement of regularly stating a public official’s assets. It’s because she has much to hide. In her eight years in office, Arroyo’s declared net worth more than doubled, from P66.8 million in 2001 to P143.54 million in 2008. The increase of P76.74 million represents a growth rate of 114 percent.” Maceda said quoting the PCIJ report.

Maceda said the PCIJ report showed that the late President Corazon C. Aquino’s declared net worth grew by only 4.8 percent from 1989 to 1992.

He said, by comparison, Fidel V. Ramos’ rose by 34.2 percent from 1992 to 1998, and Joseph ‘Erap’ Ejercito Estrada’s, by 7.2 percent from 1998 to 1999.

If various allowances are thrown in, Mrs. Arroyo’s monthly pay would total P100,000 at most or P1.2 million a year before tax. Yet even then, this represents only 10 percent of the P10.97-million average annual increase in Mrs. Arroyo’s net worth since 2001.

The president’s SALNs, however, offer few clues to explain the big difference, or whether she has other lawful sources of income.

PCIJ said that since 2001, the president has apparently taken the path of “token compliance” instead of going for full disclosure in form and substance of her assets and liabilities, in accordance with the Constitution. As a result, her SALNs in the last eight years have been remarkably full of gaps in data.

Allies come to GMA’s defense

Mrs. Arroyo’s allies at the House of Representatives defended her from insinuations that she had enriched herself during her eight years in office.

Isabela Rep. Rodolfo Albano III saw nothing wrong in Mrs. Arroyo’s net worth since her wealth came from legitimate sources.

“Baka nga interes lang ng pera iyan sa bangko o kaya sa stocks, shares and other investments,” he said.

“Critics are trying to throw everything because they have no more legitimate issues to raise. It is very clear that politics is behind everything.”

Camiguin Rep. Pedro Romualdo said the report on Mrs. Arroyo’s wealth is incomplete.

“It should have included details about the increase on President Arroyo’s net worth,” he said.

Romualdo said being an economist, Mrs. Arroyo had made some good significant investments that earned dividends.

“It seems that the battle among newspapers to boost its circulations is to report negative stories,” he said.

“How about good news? What happened to the positive gains of this administration? Do these good stories and positive achievements of the administration have been given enough space and prominence?” — with Aurea Calica , Jose Rodel Clapano, Delon Porcalla, Jess Diaz – By Paolo Romero (Philstar News Service, www.philstar.com)

Entry Credit: http://ph.news.yahoo.com

Meralco’s Rise and fall

Rise and fall of Meralco: Your questions answered
PHILEQUITY CORNER By Valentino Sy (The Philippine Star) Updated August 03, 2009 12:00 AM

We have received many queries on the recent price action of Meralco. Many are still befuddled on the steep rise and the equally sharp fall of its stock price. Last week, market watchers have been asking why Meralco shares have gone up to a closing price of P205 per share. They commented that at P205 per share it was already overpriced.

However, after Meralco reached P302.50 per share this week, the same people are questioning why it dropped when in fact it closed at P229 per share, which is 12 percent higher than the previous week’s close.

Because of the many queries of our readers and investors, we are changing the format of our column today to a question and answer (Q&A) type.

1) Why did Meralco’s share price zoom to astronomical levels these past few weeks?

In our article Turf Wars (see July 13, 2009 issue of The Philippine Star), we said that Meralco’s price action continues to defy gravity because the battle for control, given the limited free float circulating, is exerting upward pressure on the share price.

We mentioned the possible scenarios:

a) That the PLDT Group or the SMC group may be buying in the market to get a majority stake,

b) That fund managers sympathetic to either side may be accumulating

c) That a risk arbitrageur may be gobbling up the free float with the intention of selling the shares to the highest bidder

d) That maybe all of them are doing the buying at the same time.

Note that buying in the market is less costly than for one party to buy the other out which would trigger a tender offer for all the shares.

2) Why did it reach a staggering level of P302.50 per share?

It appeared that the race to own 50-percent stake + one share was decided by “photo finish”. Therefore that last one or two percent — which matter the most — commanded a huge premium. Buying two percent of the company at P300 per share to gain control is actually cheap.

Morover, many fail to realize that the bulk of the stakes of PLDT Group and SMC Group are priced at P90 per share (in SMC’s case it is even less because it is payable in three years).Thus, even if the winning bidder paid P300 per share for the last two percent, the average cost would just be a little over P90 per share.

3) Why did the Meralco drop sharply after reaching P300 per share?

To the experienced eye or seasoned investors, the block of shares that was crossed at P300 per share last Wednesday was a clear signal that the game was over. It was clear at that instance that one party sold and that the other party bought the deciding block.

It did not really matter which party won. It was apparent that when the fight for control was over, the demand for the shares and the buying frenzy would no longer continue.

4) Why is that block of shares traded on Wednesday a game-changer?

It was a game-changer because that block of shares represents nearly two percent of Meralco. Therefore it meant minus two percent for one side and plus two percent for the other side – a swing of around four percent.

5) So, who eventually got control of Meralco?

A quick look at the PSE quotation report last Wednesday showed a net foreign buying of P2.03 billion. A foreign broker known to be used by the PLDT Group and foreign funds sympathetic to PLDT crossed 6.7 million shares last Wednesday. Meanwhile, a local broker which represented one of the local funds sympathetic to the SMC Group crossed six million shares.

Apparently the funds that are allies to SMC Group flipped and sold to the highest bidder. Obviously, the PLDT Group now owns the majority of Meralco.

6) Why is getting control of Meralco important for PLDT?

The PLDT group sees real synergies between Meralco and PLDT. The company mentioned eight specific areas where they can work together, namely: powerline broadband, fiber optic backbone network, electric power poles, easements and rights of way, prepaid electricity service, business offices, ICT or data center, bill statement printing & enveloping and access to subscriber base.

Moreover, losing Meralco at this point, when it has already invested billions of pesos, would be disastrous for PLDT. In fact, PLDT’s share price has lagged the market during the battle for control of Meralco but when it was clear that PLDT maintained control, the stock price went up.

7) What do we do now with Meralco?

For those who have a short-term perspective, especially the punters, the answer was clear. If the fight for control is over, they have no choice but to sell.

For those with a long-term view, PLDT Group’s entry in Meralco brings many opportunities. Manny Pangilinan’s track record of turning companies around, cost-cutting and creating synergies to optimise profits and enhance shareholder value is definitely a positive for the stock. MVP has proven this in PLDT with its shareholder value and stock price steadily increasing since he has taken over.

While Meralco’s stock price has gone up too fast too soon, the company has a strong franchise, a good business model and sound fundamentals.

Is the turf war over?

As far as the fight for control of Meralco is concerned, the game is over. But in other battle turfs, the war would probably continue as both parties are involved in telecommunications, infrastructure and other businesses in the Philippines.

Lessons learned

The meteoric rise in the share price of Meralco and the sharp drop afterwards provide valuable lessons for investors.

1) One important lesson is that you should do your own research rather than following without thought what your brokers are doing. In Meralco’s case, most brokerage houses had recommended a SELL on Meralco when it first reached P90 per share. Their recommendation may have been based on fundamentals, not considering the battle for control.

But if you did your homework and realized that there was a battle for control and limited free float circulating, you would have known that the rich valuations were justified.

In the same manner, when the race to get majority is over, you should recognize that valuations will revert back to fundamentals.

2) Another lesson is that you should follow strictly your investment profile. If you are a short-term trader, you should be alert and nimble because while profit potential is high, volatility at the turn will be wild.

If you are a retail punter, it is important to do your homework rather than following blindly what bigger brokers or investors are doing. In this case, the block sale of Meralco may have triggered an immediate change in view from these investors. Instead of being buyers, they may have become sellers.

Finally, if you are a long-term investor, you should buy when the price is being offered at a bargain or as Warren Buffet and Benjamin Graham put it “you should buy when the price of a stock offers a huge margin of safety.”