My Portfolio (Nov 22, 2008)

Ayala Corporation (AC)
P/E Ratio: 4.60
My Buy Price: 200
Current Price: 174
% Profit: -14.65%



Digitel Communications Philippines, Inc. (DGTL)
P/E Ratio: 5.05
My Buy Price: 1.61
Current Price: 0.93
% Profit: -42.66%



Filinvest Land, Inc. (FLI)
P/E Ratio: 5.20
My Buy Price: 0.62
Current Price: 0.37
% Profit: -41.01%



Megaworld Corporation (MEG)
P/E Ratio: 3.61
My Buy Price: 1.37
Current Price: 0.55
% Profit: -60.09%



San Miguel Brewery, Inc. (SMB)
P/E Ratio: 17.5
My Buy Price: 11.30
Current Price: 9.10
% Profit: -20.16%



SM Development Corporation (SMDC)
P/E Ratio: 5.75
My Buy Price: 2.14
Current Price: 1.90
% Profit: -12.03%




Recommendations:

My Philippine Stock Exchange portfolio as of October 22, 2008.

It's too late to cut losses now. Just wait it out, and save some cash for investments. I'll start buying a little bit of stock every month to average down the price starting next year.

Here's some videos about the stock market crash history. This tells us that the market always crashes and it always recovers.

My Portfolio (Oct 22, 2008)

Digitel Communications Philippines, Inc. (DGTL)
P/E Ratio: 6.19
My Buy Price: 1.6
Current Price: 1.14
% Profit: -29%

Filinvest Land, Inc. (FLI)
P/E Ratio: 6.33
My Buy Price: 0.62
Current Price: 0.45
% Profit: -28%

Megaworld Corporation (MEG)
P/E Ratio: 5.85
My Buy Price: 1.38
Current Price: 0.89
% Profit: -35.42%

San Miguel Brewery, Inc. (SMB)
P/E Ratio: 17.88
My Buy Price: 11.3
Current Price: 9.3
% Profit: -18.40%

SM Development Corporation (SMDC)
P/E Ratio: 6.06
My Buy Price: 2.14
Current Price: 2
% Profit: -7.40%

Recommendations:
Save up cash, and try to buy existing stocks (to average down) at the same time buy bargain Blue Chip stocks. Remember to spread it out over a few weeks. So for example you have 100,000, don't spend it all at once. Split your money by 20% and spread the buying per week , once every two weeks or monthly.

DON'T PANIC

Broker's must BUY tips (Oct 20, 2008)

Megaworld Corporation (MEG)
Last Sale : 0.92
Buy Price : 0.8
P/E: 6.05

Philippine Long Distance Telephone Company (TEL)
Last Sale : 2,226
Buy Price : 2,100-2,200
P/E: 11.99

Philippine National Bank (PNB)
Last Sale: 23
Buy Price: 20-25
P/E: 9.46

Ayala Corporation (AC)
Last Sale: 242
Buy Price: 200-210
P/E: 6.40

San Miguel Brewery (SMB)
Last Sale: 9.40
Buy Price: 8
P/E: 18.07

Blue Chip Stock Picks

Blue chip stock picks.
Holding Time : 1 - 2 years

As of October 15, 2008

Ayala Corporation (AC)
Price : 262.50
P/E : 6.94
52 Week High : 645.00
Minimum Order: 2,620
MAX Gain : 145% (96% with stock dividends adjustment)
Notes: Gave 20% Stock Dividends.

Metropolitan Bank & Trust Company (MBT)
Price : 27.50
P/E : 7.63
52 Week High : 68.50
Minimum Order: 2,750
MAX Gain : 149%

First Gen Corporation (FGEN)
Price : 16.75
P/E : 2.79
52 Week High : 69.00
Minimum Order: 1,675
MAX Gain : 311%

SM Investments Corporation (SM)
Price : 239.00
P/E : 12.15
52 Week High : 407.50
Minimum Order: 2,390.00
MAX Gain : 70.50%

Globe Telecom, Inc. (GLO)
Price : 1,000.00
P/E : 9.99
52 Week High : 1,750
Minimum Order: 10,000
MAX Gain : 75%

Bank of the Philippine Islands (BPI)
Price : 40.50
P/E : 10.71
52 Week High : 71.50
Minimum Order: 4,050
MAX Gain : 76% (41.23 % with stock dividends adjustment)
Notes: Gave 20% Stock Dividends

* My MAX Gain Computation is = ( ( 52Week - Current Price) / Current Price) * 100
This is an optimistic projection, the realistic projection would be half of the Max Gain figure.

CRISIS = OPPORTUNITY

All right, I'll give my portfolio details when the market opens again. But this week just crippled my stock position. I'm down by 20%!

I'm tempted to cut my losses and sell, but I'm sticking to my plan of buying and holding. $700B did not work?

Ok, I agree with Bush, the cure was injected to the system, the body just need a couple of weeks, months or even quarters to heal.

My Plan:
1. DO NOT PANIC SELL
2. Cut back on luxury expenses to save cash
3. Hold that cash until the first ray of light show up.
4. PANIC BUY!

Last February 2008, MEG currently is swinging at 2.10 - 2.45, I tried to buy at 2.08, unfortunately I was not able to. The next day MEG rallied at an average of 0.1 per trading day.

Come April 2008, MEG price went back to 2.08, that looked like a bargain to me, and I started buying in 2000 share increments per week. MEG price, declined consistently to 1.80, 1.60, 1.50, 1.40 ... until 1.14.

I steadily bought MEG at 2000 share increments as it went down, since

-MEG paid dividends,
-MEG was a bargain at P/E 8 to10, and I thought that
-MEG will dominate the Mid Level market in the condo business.

But, I was also saving a lot of cash thinking that when it hit 1.00 per share, I'll go ALL-IN on that stock. Thus, when the price hit 1.14, I bought a lot of it and made the average buying price per share @ 1.30. Meg rallied again on the next month and made me a whopping 30% gain.

That's why investors should not PANIC SELL. Just like in Poker, you'll never know until you see the cards.

If you bought 10 shares of ABC stock at PRICE = 10 per share (should be 52 week average of 10)

Thus, 10 shares @ Php 10 = Php 100.

In the next month, the price dropped from 10 per share to 1 per share.

Buy 1000 shares @ Php 1 = 1000

Your average stock price is Php (1000 + 100) / 1010 shares = 1.089 per share.

Now wait till the next BULL comes, price goes back to the average price and there's your X-folds of gain. But the key here, is that to have buffer cash to dig yourself out when you made a wrong stock pick. Just don't put in your kids college fund or rental money.

One more thing. You never really lost money in stocks until you sell at a loss.

DO NOT PANIC SELL: Investor panic despite Central Banks' Intervention

My Portfolio :
(6.41% of portfolio) DGTL - 24.21%
(9.53% of portfolio) FLI -16.44%
(50.46% of portfolio) MEG -15.16%
(6.31% of portfolio) SMB -18.64%
(27.29% of portfolio) SMDC +4.54%

So you've seen/heard the news, almost all central bank of almost all countries had tried to bailout the financial sector. However, instead of helping the economy it increased investor panic.

I'm tempted a couple of times to cut my losses and sell of my remaining equity at a loss of more than 15%, but I won't. Instead I'll make sure that I have enough capital, that when the worst is over, I'll have enough to buy back my losses.

My opinion is that a companies stock price does not reflect its performance. (The stock market is just a means for a company to easily raise capital). Thus, as long as you're not betting on the financial sector, and the company you are betting has a healthy financial statement, then there should not be anything to worry about.

DO NOT PANIC SELL!

Price to Earnings P/E Ratio

Price to Earnings or P/E Ratio maybe the simplest way to know the value of the Stock.

Here's how the P/E is computed.

Company ABC has a
- total shares of 1000 shares.
- Income of Php 100 annual

Earnings Per Share (EPS) may now be computed by dividing the Income / No. of Shares
In this case 100 / 1000 = 0.1 Earnings per Share.

This means that a share of a company makes PhP 0.1 per year.
EPS - shows the true value of the company.

Now P/E ratio on the other hand show how much a share of stock is valued by the investor.
If ABC company was selling for Php 1 per share
That gives it 1/0.1 = 10 P/E.

In the simplest terms, EPS may be compared to the COST-OF-PRODUCTION of a product. A cake may cost Php 100 in ingredients and labor. (Cost = EPS). The cake can now be sold for Php 200 (Price), which gives it a "sort-of" P/E ratio of (2). However, due to the demand of the cake people are willing to buy it for Php 1000 a piece, that gives it a P/E of 10.

Now since you know the value of EPS, you'll know that a particular stock is over priced. So always keep the look out for bargain stocks P/E of less than 15. But, make sure that the financial statement of the company is healthy.

Effects of the $700B not going as planned

My Portfolio :

(50.46% of portfolio) MEG -6.38%
(27.29% of portfolio) SMDC +9.21%
(6.41% of portfolio) DGTL -19.21%
(9.53% of portfolio) FLI -6.804%
(6.31% of portfolio) SMB -15.10%

I thought that I would make a killing this week. But the opposite happened, my stock position is down by -5%. I'm not panicking though. It's just that investors has not grasp the effects of the $700B in the market. With fractional reserve banking, the $700B impact in the economy would approximately $7 Trillion.

So just be patient wait a couple of weeks or months and prepare to invest more in your current portfolio if the stocks continues to dive to average out the losses.

My Stock Picks:
FLI 0.58 (P/E 8.16)
MEG 1.28 (P/E 8.42)
SMB 9.6 (P/E 18.46)

FLI and MEG has a P/E ratio less than 10, which makes it a bargain. SMB on the other hand, requires some speculative analysis, I choose SMB even with a P/E of 18.46, is that even though that figure seems so high and may make SMB overpriced, but based from my research, SMB is still paying SMC for the company split. Thus, this affects the net income of SMB which then affects the Earnings per Share (EPS). But after the debt is paid, the EPS may rise significantly.

My Opinion on the 700B Bailout Package

I just recently increased my portfolio by 20%, due to the bailout issue.
Just 2 days ago, the bailout bill was approved in the U.S. congress after it was rejected last week.
The reason the bailout package is important to my stock position is that it will make the money supply increase.

From my observation, when the money supply increases, loan approvals becomes easy, and there will be another boom in the business. Jobs will be created, people will have more purchasing power. And since, there are a lot of US companies with offices/plants in the Philippines, my speculation is that the Philippine economy will also feel the effect of the 700B bill.

So get the 25% of your saving and start investing. Check the financial statements of the company you wish to invest in and make sure that the company's P/E ratio is less than 15. That will tell you that the stock is not overpriced and is really making money.

And when the bull market comes, wait a couple of months, then be ready to sell all your stocks.

Current Portfolio:

(53.34% of portfolio) MEG +5.32%
(24% of portfolio) SMDC +2.67%
(6.4% of portfolio) DGTL -13%
(9.7% of portfolio) FLI +1.24%
(6.3% of portfolio) SMB -9.35%

Total Gain = 1.05%

PSE Stocks tumble

700B Bailout Plan Collapse, what do you think it does to my portfolio??

My Current Portfolio:
(64% of portfolio) MEG -2.76%
(28% of portfolio) SMDC +1.86%
(08% of portfolio) DGTL -19.85%


Check yesterday's stock position and you'll now. Asian and the Philippines stock market just tumbled.

All my watched stocks are in RED. Now what do I do?

I'm trying to buy more stock. Currently I have a bid on FLI and DGTL. Call me crazy, but I really believe that now is the best time to buy. It is like a mall midnight madness sale. Buy if you have money to burn!

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
-Warren Buffet

Now maybe you are curious on what is my fixation on property stocks. Hmm... let us see. Aside from property stocks, there's Financial, Holdings, Industrial, Mining and Oil and Services.

Let me discuss what I think of these types of stocks.

Banking Stocks - If you have not watched the Money Masters DVD yet, banks has the so called fractional reserved banking. What does this mean? For every bank, it only keeps a fraction of the depositor's cash liquid. This means if there are 10 depositors with 1,000 pesos each, only approx. 1,000 pesos is kept in the bank vault. This is done due to the so called GOS (Grade of Service). The probability of the 10 depositor's withdrawing all their money on the same day is only 10%. Now why would a bank keep 100% of the money, when they can keep 10% and load 90% for a 10% profit per annum. That is how banks actually make money. That's how Lehman Brothers Investment Bank, AIG and WAMU went belly up. The money they lend for a 10% interest, did not get paid. Thus, the bank's cash flow was trapped. They may have a lot of Accounts Receivables and other assets, but their Cash is tied to bad loans. Further, banks are in danger of bank runs (mass withdrawals). Notice metrobank is advertising in their ATM machines that they are not affected by the downfall of Lehman Brother's. A bank run is a bank's death.

Holdings - I don't really know how holding firms work in detail. But from my understanding, these are investment firms that buy shares of a company, real estate and other investments. Thus, holding firms are just investors. Correct me if I'm wrong, but basically buying in an investment firms just seems like getting a financial consultant that does the buying decisions for you. So the bottomline is that I don't put my money on stuff I don't fully understand.

Mining and Oil - Betting on mining companies is like betting on a toss coin. Mining companies (not all), tend to do a press release telling that they have a prospected drilling on some mountain that has reserves of some precious metal. Thus, mining and oil tend's to fluctuate violently and could make you tons of gains or losses.
Oil on the other hand is dificult to predict. Notice recently that when the prices of crude reaches $120+ per barrel, the prices of gasoline and diesel rose 3-5 pesos in a day. And when, the crude prices went down to less than $105 per barrel, the price of gasoline was the same or went down by just 1-2 pesos. So, it is hard to analyze!

Services - I don't know other stocks in these category aside from Globe, PLDT and Digitel. A telco is always a good buy. PLDT only reached its peak after 10-20 years. Globe on the other hand is on it's way. Digitel, is relatively a very new company. Sun Cellular just started operation on the year 2000 (approx.). Thus, since PLDT is expensive currently at 2,640. You need 26,400 just to buy 10 shares. GLO is at 1,005. So you'll need 10,005 to get in the game. Now why DGTL? Well DGTL is a long shot currently trading at 1.32. So this is my low risk high gain speculation pick. I'm planning to buy just 10,000 shares of this company hoping that someday in the near DECADE, it will rise to at least 500 per share. Now imagine buying 13,200 will make you 5,000,000. So this is a BUY and HOLD stock.

Property Stocks - Ahh my favorite. Why property stock and why MEG, SMDC and FLI. Ok property companies are those companies that you do not need to see their Financial Statements to know that they are doing well. How much does it cost to build a Condo, or a subdivision? Maybe they loaned from a bank, but you all know that banks does not easily loan you money if they know you are unable to pay. So the more building's I see developed by a certian company, the more I am confident that they are making money. Ok now why MEG, SMDC, FLI?

MEG - MEG is the next ALI. Ali is too expensive and they are only catering to the top 5% of the population. Only rich idiots buy Condo's in Serendra for 4M for a 2 bedroom unit. Well, only stupid people or people working in office in the FORT buy's condo there. ALI is way overpriced and MEG is targeting the upper middle class. Although there are some complaints about the finishing of MEG units (i.e. leaks etc), but majority are happy with what they have. Thus, MEG since it's the next ALI. ALI actually sold some of their Condo Buildings to MEG. Just to liquidate some of their assets. Further, like their condo units or their housing, ALI is actually overpriced too, currently selling 9.20 at 14 P/E ratio. Compared to MEG's 1.36 at 8.94 P/E ratio. So buy MEG its a frickin bargain! One more thing. Currently BDO just bought majority of MEG's receivables making MEG liquid. So watch out for that.

FLI - From my perspective, most of Condo buyer's are either yuppies with money, Filipino-Americans, Rich people from the province or DOM's love nest. That's the trend now, but sooner or sooner, most of these type of people want to settle down and buy a house with a backyard. Where their kids can run around chased by their dog. Or in the case of DOMs when their wife die, that's where his mistress' kids run around chasing their dog, turtle or cat. So again, FLI is a mid-priced real estated (mostly town homes and house and lots), and I am speculating that after people get tired of their condo, they are going to buy a house from FLI. ALI is still way overpriced. FLI currently at 0.62

SMDC - Well SMDC is like MEG. Except its run by Henry Sy (that everything he touches turns to gold), this maybe even better managed than MEG. SMDC, is also targeted for Lower-Middle market. A friend of mine who is a broker for SMDC told me that there's a plan to build a condo at the back of SM North Edsa that would just cost 7,000 pesos a month for a studio type. However, it will be constructed on 2014. So you see that its targeted to the Lower-Middle class.


So that's it! Maybe I'll talk about Financial Statements, Balance Sheet and the most important item Price / Earnings ratio on my next journal entry.

I just got FLI at 0.62.
I cancelled my DGTL order, instead placed a bid on SMB for 10.75.

First Pick

I just started trading stocks on PSE a couple of months ago. A lot of my friends discouraged me from investing (betting) in the stock market as I will have more chances of winning if I play poker or play black jack.

Well from my point of view, it is actually like poker, it is still gambling but you have a chance of winning once you get to know the game and the players.

Like poker, betting in the stock market requires risk taking, reading the players (other traders), some basic analysis and luck.

Here are the stuff I read and watched to give me at least a background on how to play.

A Random Walk down Wallstreet

Investing for Dummies

The Money Masters

Boiler Room

I know, I know you might say, "what? but those are references that are based in the US Market. And a Movie?!?!"

Well, the movie Boiler Room is about what not to do in the stock market. And the others are not about the Philippines Market, but I think that the game remains the same only different players. (Although in PSE, there's no way to short a stock or buy options. Not that I know of)

Also, whatever happens in the US Market has a direct impact in our market. Just like what happens to AIG, a lot of traders in PSE sold their shares at a loss on that single day. Of course I did not sell, I just wondered what's with those people selling stocks at a loss.

Anyways, I'll continue to share my experiences with trading in PSE, and maybe improve my writing skills on the process too.

My Current Portfolio:
(64% of portfolio) MEG +5.94%
(28% of portfolio) SMDC +1.86%
(08% of portfolio) DGTL -17.38%

My Buy List:
MEG
SMDC
SMB
FLI