Day 4: Going ColdTurkey on stock market speculating.

I mentioned on my previous blog that stock speculating gives me money (i.e. MERALCO), but quickly takes it away.

This is the first week where I reverted to my tried and tested buying and holding until I reach my TP, ignoring trends and just concentrating on financial statements, volume, low P/E and projected future earnings based from the news.

I disregarded the thought that a major correction is coming and that I might lose the opportunity to get in at a lower price. But experience taught me, that even if I make the mistake I made last
October 22, 2008 stock portfolio, I'll just be patient and wait, and continue to buy stocks based on the criteria I mentioned above, and everything will be all right.

Thus, I bought the following stocks last Wednesday August 19, 2009, and most of it did well.


My current portfolio.

PROPERTY
1. Megaworld Corporation (MEG)
Price: 1.5
P/E Ratio: 8.02

2. SM Development Corporation (SMDC)
Price: 4
P/E Ratio: 285.71

HOLDINGS
3. SM Investments Corporation (SM)
Price: 325
P/E Ratio: 14.17

BEVERAGE
4. San Miguel Brewery, Inc. (SMB)
Price: 9.1
P/E Ratio: 14

FINANCIAL
5. China Banking Corporation (CHIB)
Price: 385
P/E Ratio: 11.69

6. Metrobank Corporation (MBT)
Price: 38.5
P/E Ratio: 17.74

Greed always gets in the way of my logic

I lost my gains on my PX positions today; thus I sold everything.

A lot of people always thought that a huge correction is coming, I've studied the market and I always thought the valuations are way to high given that there is no concrete basis for the recent rally, so there should be a market correction.

However, when I read the news that SMC is interested in getting PX, I quickly got in to it, thinking that I can make the huge MER gains I got before with PX.

Also, when I read that SMDC has a huge Q2 earnings, I also bought a lot of stock. Thinking that I can make the 30+% gains I did when I bought it at 2.

However, when I bought my MER and SMDC before, I really studied those stocks. When I bought SMDC at 2, the P/E was below 10. SMDC is now at 275+ P/E on 4/share.

I got greedy! I should have stuck to my plan, which is the sure and steady way to make money in the stock market; find stable companies, low P/E, high volume and high growth potential then buy small portions ( and on dips) and hold for at least a month.

I guess Jesse Livermore has a bad influence on me.

What now?

I'm expecting that those investment banks in the US, will have a good double digit Q3 earnings, all made possible by short selling.

I wonder when can citiseconline or firstmetrosec be able to have the short selling feature implemented?

I'll wait for the selling to subside, and start buying my tried and tested long term stocks.

From now on, I'll stick with what works, and speculating is not working for me. Speculating gave me a lot quickly and it quickly took it away. :)

A Place where a man eats his own words everday.

I've read from Reminiscences of a stock operator, that the stock market is a place where people eat their words all the time.

Enough said.

I sold all my other stock, put my bets on the following, PX and SMDC. PX gave me a handsome paper profit so far, I hope this will continue. I'll sell it when it reaches P/E of greater than 20.

SMDC, my long term stock pick, I'm expecting a another increase in EPS. My friend used to work for Megaworld (MEG), selling condo units, he quit his job and is now with SMDC. His reason is that, it is easier to sell SMDC units and few customers comes back to him and complain about the sub standard quality of the condos they bought. So that's my only reason. I'm a bit worried about the astronomical P/E of SMDC though.