Wednesday, July 29, 2009

Who got a shock from Meralco (MER)?

Not me.

I bought Meralco (MER) stock at 125 and sold it at 175 and 225. The reason I bought the stock even if at 125 the P/E is already more than 50x, is because of the battle for the Lopez' 13~% share. When the Lopez' announced that they would sell their 13% at the right price. I quickly bought a sizable amount of MER and SMC, thinking that SMC is bidding for a controlling position of MER and the Lopez' are waiting for the right price for MER. I was expecting at least 175.

When it reached 175, I quickly sold 75% of my shares thinking that, it was the peak, and I was expecting to move a bit higher around 180-190 due to momentum. Then, rumors circulate that the 13% of the Lopez' was already sold. Thus, I quickly sold the rest at 225.

I must admit that I'm glad I made those moves now, but before today, I was regretting it. I could have doubled up my stock if I sold all of it at 250, instead of 175 and 225, and that would still be a bargain given that it reached a high of 300+.

But still, I'm happy I played it safe, always watching the P/E, and I did not let greed get in the way.

Also, I'm pleased with myself for pulling out majority of my stocks out to the sidelines, except of course for SMC and SMB, because I believe MER will be the catalyst for the probable August to September PSEi correction.

However, I'll still keep an eye on MER, if it passes the 350 mark, I'll probably put some money on it, expecting it to go past 400.

As for now, I'm still holding on my SMC and SMB stock. Even if SMC might not have won the battle for control of MERALCO, they might made a huge profit, if ever they already dumped the stock. SMC's resistance at 63, I'm putting a stop loss for SMC at 58.

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