Prerequisites in Stocks Investing

Some people think that investing in stocks is as easy as going to a 7-eleven convenience store and buying what you want. However, in my opinion, to be able to become successful in investing in stocks you need to have a proper knowledge and proper discipline. Based on my own experience, below are the 7 prerequisites that you need to do before venturing in stocks investing:

1. Put your finances in order
I remember one of my friend ask me, "How can I invest in that "stock" thing that you've mentioned? I'm really interested in trading stocks  to earn money. But first, can you lend me some money because I used up my salary in buying a new netbook and I need to pay my electricity bill..."

Know the Language of Investment in PSE Part 2

The first part of this series is available in this link: "Know the Language of Investment in PSE Part 1"

13. Blue Chip - is a stock of a mature and well-established company with remarkable earnings. Example of the Philippine Blue Chips are SM, AC and JFC. Majority of the stocks in the PSE index are considered blue chips though there are some blue chips that is not included like LPZ and SMC.

14. Overbought - it means a stock(s) price is pushes up at level above its fundamental or intrinsic value due to irrational exuberance or too much optimism of the market participants.

2010 Philex Mining Corporation Review

Philex Mining Corporation or PX, which was incorporated in 1955, are organized into two main business groupings: the mining business under Philex Mining Corporation, and the oil and gas business under Philex Petroleum Corporation.

Business Details:

1. Ore Mining
Philex Mining Corporation - Padcal mine, the company's current bread and butter, produces copper concentrates, containing copper, gold and silver with declared life up to 2017 or more. Exploration and development of new mine sites are on-going   . The Silangan Project is the project with the highest potential has initial findings of estimated 191M tons of resources.

BPI Launches Online Method of Investing In Mutual Fund and UITF

Great news to all BPI account holder! BPI finally launches its online service for investing in UITF (Trust Fund) and Mutual Fund.

It's more than how your assets perform at maximum.

The said services can be accessed by logging in to their website so one must have a BPI Saving Account and online access.  From there on, one can choose in various fund offered by the BPI Asset Management Group.

Mutual Fund Basics

A mutual fund is a collective investment managed by a professional fund manager which are invested in stocks, bonds, money market and other financial instruments.

For example,  there are 12 person who invested P1,000 each to start a mutual fund. The fund is named InvestPhil Fund. The total initial fund, which amounts to P12,000.00, are divided into 120 shares. Each investor will have 10 shares each at P100 initial worth or initial Net Asset Value Per Share (NAVPS). The fund manager of InvestPhil invested it in various securities like stocks, bonds and etc. In return, the fund manager will deduct 1% of the total value annually before calculating NAVPS for his effort. This is the same in real case wherein the daily NAVPS are net already or calculated after fund manager's fee was deducted.

2010 First Philippine Holdings Corporation Review

First Philippine Holdings Corporation
First Philippine Holdings Corporation (FPH) was formed 50 years ago with the primary purpose of acquiring Meralco shares(stocks, notes, securities, and entities). Currently, the company diversified into businesses with interest in power generation, real estate development, roads and tollways operations, manufacturing and construction, financing and other service industries. Lopez Holdings Corporation (LPZ), the parent company, owned 44.26% of FPH.

Know the Language of Investment in PSE Part 1

The Philippine Stock Exchange or PSE is the private organization that operates the stock market wherein people can invest (buy and sell) in the publicly listed companies in the Philippines. The website of the Philippine Stock Exchange contains a lot of information that is valuable for every investor. Examples are company reports (e.g. financial statements), stock market update, company disclosure or announcements and etc.  Below is a screen capture of the said website:

BPInoy Seafarer's Home Loan Program

If you're a Pinoy Seaman and are planning of building your own dream house, then this is what you are looking for. The BPInoy Seafarer's Home Loan Program was especially packaged by BPI Direct in partnership with its accredited Manning Agency clients for qualified seafarers and employees.

Ways to Make Money in Philippine Stocks

Profiting in stock market investing are possible through the following:

1. Stock Price Increase or Capital Appreciation
This is the main reason and the major profit driver in stock investments. Stocks that are bought are expected to increase in price as a result of the success of the underlying business of the company it represent. Theoretically, the more profitable a company becomes, the higher the stock price will appreciate. For example if you bought shares from EDC, DMC or FGEN mid of february this year, chances are you have already gained 20-35% based on the latest closing of the PSE.

Are Stocks A Good Investment?

There are 2 main reasons why stocks are good investments.

1. Stocks gives you the opportunity to own a successful companies.
Although, small business is also a way to earn wealth but it will take more than effort and time before it becomes successful and there's the risk of failure specially if your competitor is a big company. Buying the stocks of these big players like Jollibee, Alaska Milk or GMA7 will give you the rights to become a part owner of the company or shareholder as I have mentioned in my post "What are stocks?". Buying stocks is like the saying "if you can't beat them, join them".

2. Stocks have been the best investments over time.
As per the Philippine Stock Exhange, from January 1989 to August 2009, the Average Annual Total Returns is 14.1%. This outperformed the 91-TD Bills and of course the earnings from Savings. Take note that the key here is investing in long term.

Now, the downside of Stocks investing is:

1. You can lose money if the company lose money and declare bankrupt. 
Owning stocks is owning business, if the company is profitable then the stock price will follow (though not always immediately).  The same holds true if it loses money and worst if the company dissolves.

2. The stock market  movement is not linear and unpredictable in the short term. 
Stock market are subjected to the psychological status of the all the investors. This is the reason why stock market crashes during economic crisis and exuberance during bull days(bulls means stock market is going up).  Panic and selling during the bear days (bear means stock market is going down) can make you lose your money and shirt. However, if you use rational investment strategy, these roller coaster of the market can work at your advantage.

What are Stocks?

Stocks are  pieces of business own by the shareholders. To understand it, let us take SMPH as an example.
SMPH or SM Prime Holdings is the company that own and operates the SM Malls in the Philippines and China.  This company is divided into 13,898,943,067 outstanding shares or stocks. Owning one of these stocks will make you a part owner of those does it mean I can go to any SM mall and do a shopping spree for free? Or can I demand from the sales lady to prioritize my purchases during the midnight sale since I'm a part owner of SMPH?  No, you can't do that unless you want to be mistaken as insane...

So what if I own a stock(s)?

First, owning a stock entitles you to be a business owner but not necessarily the controlling owner (Management) unless you own majority of the stocks. The following are your rights as a stockholder:
1. Voting Rights
2. Dividend of Net Income
3. To Sell the Stocks you Own at Your Price
4. The Right to Avail of Stock Rights/Warrants and offerings.

The abovementioned are the basic and important rights of a stockholder.For small investors like me, I think the most important is number 2 and specially number 3. I say it again..."The Privilege to Sell the Stocks you Own at Your Dictated Price". Likewise, for those who want to purchase stocks, they also have the option to buy the price at the price they want. Of course, if someone agreed to your Price, whether Buy or Sell, then we have a Matched and only then the transaction will be finalized.

Note that whenever I mention stocks, I am referring to common stocks only. I will not be touching about the preferred stocks since I'm not investing on it and I think it is not useful for individual investor (usually companies or institutional investor holds the preferred shares). 

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