No Philippine Stock Exchange Sellers Remorse Yet

I've been away from the stock market since September 6, 2011. I thanked myself for making that decision since things were getting really confusing with all the bad news and good news, then bad news again.

However, I'm getting real fears with the job situation in the U.S., since I'm working for an American company.

So, mind your cash folks until the weather improves, but it's not near the 2008 problem though, IMHO.

Note:

Still kept MPI, no other choice. :(

http://www.psetips.com/2011/09/running-scared-keeping-metro-pacific.html

Running Scared - Keeping METRO PACIFIC INVESTMENTS CORPORATION (MPI) though

I'm eating my words again.

I reduced my exposure in stocks, due to volatile conditions. I've been seeing the same news way back when I first started.

http://www.psetips.com/2008/09/pse-stocks-tumble.html

However, the difference is that in 2008, there was a bubble (CDOs, Real Estate), at the present I do not see anything similar. However, I had a chat with a friend in the US, not the US we usually see on TV (LA or NYC), but the real united states (states between LA and NYC), my friend confirmed that he's taking up a masters degree because his college degree does not suffice, in order to get a job. So the news about unemployment in the US is a real and present danger in my opinion.

I pulled out because I no longer understand what is really happening. Better safe than sorry as they all say. But then again, I made a profit and not a killing.

Looking back on my psetips.com journal, I never made a killing, so probably I'm not really the person you like to listen to, I'm not a Jesse Livermore, who's will win big and lose big. But then again, Jesse Livermore has an advantage because his market allows short selling.

Disclosure :

I sold all except MPI, not because I truly believe in this stock, it's just that I lost 2 digit percentage and I'm contented with the paper loss for now.

Good Luck. I hope I'm wrong.

Ghost Month, Ramadan and US Credit Rating Downgrade

I took a beating on my portfolio today, which made me feel scared and a strong urge to sell.

But before I do, I need to think why I need to sell.

As we all know, August is a Ghost Month and based from my past journal entries, this is the season that that stock market takes a beating or is expected to do so.

I also learned, that sometimes financial journalist, tend to find the causes of dips with data that does not really makes sense. In the past, Dow shed off 1-3% due to unemployment data, and in a span of a few days recovers and gained 1-2% based on nothing significant.

In my opinion the Credit Rating downgrade should not cause any panic to investors like us, since this downgrade will not cause unemployment or cause companies to go bankrupt.

This credit downgrade, just means that the US bonds is not a 10/10 but rather 9.5/10. But still, the US has obligation to pay its debt.

However, this might be an issue with countries like China who owns most of the US debt, and it may be harder for the Chinese to sell their US debts at a good price if they choose to get liquid (For expansion needs either economic or military). I have not dug into the Chinese economy, but just a bird’s eye view it looks like the country is liquid and will not be in trouble any time soon.

My theory is that the recent dips is just caused by the Ghost Month (Chinese Tradition) and the Ramadan (time for Moslems countries to reflect), the media might just be hyping it up.

Note, in the US, a positive swing or negative swing is always good as long as the market does not stagnate.

But I have to be honest, I am just rationalizing my decision because it's too late for me to get out. I just hope my past decision is correct again. I'll continue to hold, if not buy more.

Worst case, I’ve experienced the DJIA at 6000, with -70% in paper loss. By just being patient, I recovered and even made a profit.

Good Luck!

Philippine Stock Megawide (MWIDE) - Do I need to say more?

Last June 6, 2011, I recommended the MWIDE stock. See my previous post below.

PSE MegaWide (MWIDE) - SM's Construction Company

Now, MWIDE's current price is @ 11.06.
Average Buy price @ 8.98.

Also the stock dividends is still TBA, so MWIDE still has time to go up.

The Economy : BSP Lifts Ban on Bank Branching

BSP Lifts Ban on Bank Branching

From my research, the root cause of every recession is money supply contraction.

This means, the Money Reserve (BSP), limits the amount of loans and thus the money supply decreases.

A factor of the increase of money supply, is the number of banks or branches due to the fractional reserve banking.

For examples BSP loans 100 Pesos to bank A.

Bank A then is only required to hold a minimum reserve of 10% which is 10 Pesos, and can loan out 90 Pesos to a person or corporation.

When that person/corporation gets the 90 Pesos, the usual practice is that, the 90 pesos is deposited to another bank (Bank B).

Bank B then is only required to hold a minimum reserve of 10% which is 9 Pesos, and can loan out the rest of the 81 pesos.

In short, if there are 10 banks the initial 100 money supplied by the BSP will become 1302.64312 Pesos due to Fractional Reserve Banking.

BSP 100

BANK A 90

BANK B 81

BANK C 72.9

BANK D 65.61

BANK E 59.049

BANK F 53.1441

BANK G 47.82969

BANK H 43.046721

BANK I 38.7420489

BANK J 651.3215599

TOTAL = 1302.64312

Thus, this is a good sign that the economy is ready for recovery.

PSE MegaWide (MWIDE) - SM's Construction Company

My new stock pick Megawide Construction Corporation MWIDE on the Philippines Stock Exchange (PSE).

I recently bought a couple of Megawide shares, hoping it will follow SMDC's performance.

SMDC started at around 3 and now is at 9. I believe this is solely due to SM's good business sense.

Given that MWIDE is a construction division of SM, it already bags SM construction projects by default, in my opinion. So they have a solid project base from day-0.

I will continue to monitor and study this stock, but same as SMDC, I see a lot of potential.

Bought @ ~8.9.

P/E @ ~ 11.16

I'll be gradually accumulating this stock, while I get more information about this company.

Tune in. :)

Buy and Hold Strategy

I've mentioned on my previous post that I should have made more money when I should had bought and hold my stocks for a year or two.

Two Years in the Stock Market and What Did I Learn

After 5 months of not trading, the results is not too impressive, I made 10% gain mostly on SMDC due to the 1/3 stock rights. But, I should have had made that gain since October 2010 if I sold the stock when it skyrocketed to 10 per share.

But, no worries, I'm still optimistic with SMDC. Based from the charts below, SMDC never failed in it's usually behavior. It stagnates for the very longest time, and the moment you get impatient, it steeply pops up. Based from experience, this is due to the dividends either stock or cash.

Further, I think that SMDC is still a rookie compared to FLI, MEG, RLC and ALI, but given the track record of the companies under the SM umbrella, I really think this stock is safe and will go places. I just hope I won't get too impatient and get off this slow-but-steady ship.




Now that SMDC is moving as I expected (sort-of), I'm now waiting for MPI to move. However, I am not too sure that it will in the near future. Since, based from what I know whenever MPI (MVP) makes an acquisition (DGTL) the stock price drops.

But, I really think that MPI is another must have stock on the portfolio right now, so I just buy when I can, and hope the Buy and Hold Strategy works.

Note To Self:
Sell all when DJIA@16000+