Posts Tagged ‘PSEi’

Photo Courtesy: ANC on the Money, ABS-CBN News Channel

Photo Courtesy: ANC on the Money, ABS-CBN News Channel

Let’s say you now have the cash to finally start to buy shares of your chosen company listed in the Philippine Stock Market, the next big question that you need to ask is; how do you earn money in the stock market?

Before I get into that, I have to caution everyone that picking stocks in the stock market requires careful study in the company you are investing on. Here, you have to look into company’s earning and its stability and to at least figure out the direction where this company is headed to. This careful study includes either “fundamental analysis” or “technical analysis” (which I am going to discuss further in upcoming post) OR a combination of both. You must believe in the integrity of the company you are investing. For instance, if you believe that BPI (Bank of the Philippine Islands) under the conglomerate of the Ayala’s will still be there and continually grow in the next 10 years or more, then this may be a good pick for your long term investment plans. Again, choosing must not be based on gut feeling but with diligence and careful research.

Earning money in the Philippine Stock Market comes in two ways: a. Price of share appreciation/Capital Appreciation or b. through dividends.

Price appreciation or Capital Appreciation simply means an increase of the value of the stock price from the amount you bought it. As the price of stock appreciates, your profit also increases. However, you will only enjoy this gain if you sell your stock and someone is willing to buy it. If you do not sell it, the profit you make is called “unrealized gain” but when you decide to sell it, you turn your gain into cash or also called “realized gain”.

For example, if you bought 1,000 shares of Emperador (the popular liquor brand) at P9.40 and after a few hours it appreciates to P10.00 and you decide to sell it, you then earn P0.60/share x 1,000 shares = P600. I don’t know with you but for me earning P600 for a single transaction isn’t bad at all.

Notice that in the example given above, you only earned a few centavos per share or 60 cents to be exact. If you are a kind of person who has a long-term investment horizon then we are looking into a probability of an exponential increase of your investment. ANC on the Money has wonderful example for this. According to them, if you invested P100,000 in DMCI (real estate company based in Manila) and kept your money there for 10 years, your total investment could have then become P28,000,000 by 2013. This even after we experience 2007 Asian financial crises, Oakwood mutiny, stories of graft and corruption in the Arroyo Administration and many more economic debilitating news.

Nevertheless, this is not always the case. If you invested in Agrinurture INC whose share is valued at P30.00 in 2004, you will be dismayed to find out that as of June 05, 2015 it is only worth P1.378 after the company has been linked to Binay’s alleged corruption cases. Hence, Stock Market is not for gamblers. It is for people who are diligent with their research.

Another way of earning in the Philippine Stock Market is through Dividends. If a company earns profit, you get a cut from their earnings too as an investor. Normally, this cash is a profit that will not be used by the company for expansion. Dividends may be given either in a form of CASH or in the form of STOCK. Either way, this is still a passive income for you. PLDT (TEL) is a consistent-paying-dividend company. In 2014, it gave away a total of P156.00 dividend per share.

The number of shares you hold per company defines the impact of your profit to your investment. Of course, even if the stock price appreciates to 100% and yet you only hold 10 shares, your profit will still be less.

These are the ways your earn money in the Philippine Stock Market. Like the basic rule in economics, always remember to BUY LOW and SELL HIGH.

Please join our facebook group Pagadian City Stocks Network

Cost-vs-Value

I got a query on facebook recently from someone who is interested to learn about stock market investment but somehow apprehensive about it due to the cost of investment.

First I would like to apologize to most of my facebook friends. I have been advocating that you invest in the Philippine stock market and yet I failed to consider individual financial capabilities. It is a fact that for the many and uninformed, the word stock market is quite intimidating. People believe that you need to have millions and millions of pesos to invest, giving an erroneous idea that the stock market are only for the rich. In this post, I will clarify some of these myths and I will try my very best to make this as simple as possible.

I personally believe that the stock market in a great equalizer. This means that both the rich and the average income earners can do it. You can buy shares of companies and become partners of growth in big corporations in the Philippines. These include the likes of Jollibee, Ayala Land, BPI, BDO, SM, GMA or ABS-CBN. How awesome is that!

So how much does it really cost to invest in the stock market? My answer is it depends primarily in two things: a. company price per share and b. number of shares you are willing to buy. To avoid confusions, please remember that  by definition a “stock” is equivalent to “shares”. So If I mention about stock I also mean shares. For example, in the case of Jollibee Foods Corporation, their price per share is P201.00 (as of may 29, 2015). Is this something you can afford? It’s funny sometimes because every time I talk about this example, people will assume I meant 201,000. Just imagine, when JFC opens its door in your next visits you can say to yourself that you are part owner of it.

However, our stock market will not allow you to buy just 1 share. Every company sells their share at multiple called board lot. Investopedia defines board lot as a “standardized number of shares defined by a stock exchange as a trading unit. In most cases, this means 100 shares. The purpose of a board lot is to avoid “odd lots” and to facilitate easier trading.” In the case of Jollibee (JFC), the minimum share you can buy is 10. Hence, 201 x 10 = 2,100 as the amount of money you need in order to start investing in JFC. Now tell me, can you really not afford it?

Wait there’s more!

There are also good companies like SM Prime Holdings (SMPH) whose share is only P19.24 (as of May 29, 2015). This is not even close to a cellphone load you buy almost everyday. SMPH’s board lot is 100 so this means 19.24 x 100= 1,924. If you can spend 500 pesos in your facial treatment and splurge 1,000 in Mall’s midnight sales, why can’t you set aside the same amount of money for investment for you and your family’s future? If you truly believe that the company I mentioned here will still exist in the next 10 years, then they can be your best pick to start with.

Clear so far? Do you really need millions to invest? You can answer that question by now.

Now you have the money, what do you do next?

The next thing you need to do is to get a broker. A broker is a regulated professional individual, usually associated with a brokerage firm or broker-dealer, who buys and sells stocks and other securities for both retail and institutional clients, through a stock exchange or over the counter, in return for a fee or commission. In this information age, we are so lucky that we can now transact almost anything online. And with this we have online brokers. There are many brokers in the Philippine Stock Exchange that allows you to open an account with them for as low as P 5,000. You can use that amount to start your very first buying of shares in the stock market. Of course if you have much extra cash then you can buy more. But if you are just starting, then P 5,000 is already a great start for you.

Brokers charge you by commissions. By buying and selling shares you also pay taxes that help our country. These are common charges you will encounter and that is normal. It really isn’t much, the most important thing is that you will learn and build a sturdy investment for your future.

I hope this post helps you at least get a better picture of the “cost of investment” in the stock market. Please do not be intimidated about numbers and terms, the more you study this, the more empowered you become.

I will leave you with these information and hopes that you will also do your own research. In my next post, I will explain how you can earn in the Stock Market.

P.S. If you need a financial plan for your investment and/ or coaching, please send me an email at fjaymoli@gmail.com. I will be more than willing to be your mentor and partner in your journey towards financial freedom.

P.S. 2. Please join our facebook group Pagadian City Stocks Network

THERE are many reasons why for 100 years, the United States was the global center of economic power and innovation.

The US was isolated from military invasion. The land was rich with mineral wealth and, more important, vast farmlands capable of producing an abundance of food and agricultural raw materials. While the European nations all had colonies in every corner of the world providing both natural resources and markets for their goods, the US had to rely on creating its own wealth.

The Industrial Revolution began and was in full swing in Europe long before the US entered its darkest period, the civil war, which tore the country apart. But it was the US that took the advancements brought about by the Industrial Revolution and made the country the most prosperous in history.

The one defining characteristic of the US that separated it from every other nation on earth was economic mobility, the freedom and ability for virtually everyone to move up the economic ladder. The social and economic structure of every other country severely limited a person’s opportunity to become wealthier. The social and economic-class structure was fixed. A peasant would always be a peasant. One who was born into a family of shopkeepers would never become part of the ruling elite class. And by the same token, a member of the aristocracy could never understand what starting from the ground up would mean.

The Industrial Revolution slightly opened the door of economic mobility but it was the very rare exception of a man who started at the bottom and could work his way to the top of any private or public organization.

The US was the exact opposite. Each man had the chance to excel and achieve, based on merit and effort, not the status and station into which he was born. Of course, there were many rich families that savagely protected their own interests; oligarchs we call them today. But the system was designed to reward initiative and smart work.

Some of the most successful men in US history made the move up the economic food chain. John D. Rockefeller, in his time the wealthiest man in the world, was the son of a traveling salesman. Rockefeller’s first job at 16 was as an assistant bookkeeper. Railroad and shipping magnate Cornelius Vanderbilt quit school at 11 and at 16 ran a small sailboat ferry in New York City. The founder of US Steel Corp., Andrew Carnegie, came with his family as poor immigrants from Scotland, borrowing money to make the voyage. Henry Ford started as an apprentice machinist and owned a small sawmill to pay the bills while he studied engineering and bookkeeping. Wall Street icon Jesse Livermore ran away from home at 14 because he did not want to work on the family farm. Another stock-market name, James Fisk, ran away from home and worked at a circus. Fourteen years later he became a stockbroker.

The US was a nation where a person could start by cleaning tables at a fast-food restaurant with the idea that someday he/she could own their own restaurant. That is economic mobility.

But since the 1970s, economic mobility has disappeared in the US at an alarming rate. We know that small- and medium-size businesses are the economic drivers of an economy. The number of self-employed Americans at the end of World War II was roughly one-quarter of the country’s population. Now it is at a historic low of 7 percent.

US economic mobility has been destroyed to the point where one person may own 20 McDonald’s restaurants serving tens of thousands of customers who will never have a chance at business ownership. In 2013 more than 50 percent of all working American earn less than $30,000 a year, the minimum wage.

Economic mobility is not a government program. It is a mindset of the people. The “rags-to-riches” success stories of our now elderly taipans are still being repeated. The one-man food kiosk that 10 years later is 300 strong. The small factory that worked to develop an export market. The tricycle driver who believes one day he can own his own tricycle, his own business.

The West is dying. Countries like the Philippines will eventually be the economic drivers of global wealth creation. The reason is that these nations are embracing and using the same formulas for economic success that made the West strong.

 

Disclaimer: This is not my personal piece. This is written by Mr. John Mangun via http://businessmirror.com.ph of the same title. This piece carries a healthy opinion and perspective about a. what could have been the cause of America’s economic decline, b. what can individual do about it and c. why this (economic mobility) can help other nations as well. 

E-mail to mangun@gmail.com. My web site is http://www.mangunonmarkets.com and Twitter me @mangunonmarkets. PSE stock-market information and technical analysis tools provided by COL Financial Group Inc.