December 30, 2007
Philippine Stock Market: How To
Each time I log on to my YM, I always get a couple of invitations from random people. Most of them ask about the stock market. It's a bit strange since I haven't actively been updating my site. It turns out I still get top billing when searching Google for "investing in the Philippine stock market". Fair enough. I'll be the nice guy and I'll put this information out. I'm fairly sure some other site has this, but hey.
I will start with the assumption that you've all seen some stock market movie or television show. If this piqued your interest, then you probably want to get rich quick. That won't happen unless you're Erap and you were offered BW shares when it was still called GRC resources. Nonetheless, prudent investing can provide you with good returns over a long period of time.
If you're checking this out, I'm assuming you're fairly young and that this will be your first investing venture. Let me give you an unsolicited tip. If you buy something, be prepared to hold it for years and years. You'll probably say yes, but you won't follow me. Why? There is something very addictive about checking stock prices, reading the stock market news and frantically calling your broker to buy or sell. It is. I promise. It's fun and it's cool to tell your friends that you're buying and selling, but it's probably not a very profitable way to go about this. Trust me on that.
Honestly, I don't think it's the best time to buy. Let me warn you that I haven't been reading the news all that much, but I do know the economy's still riding on some pretty good times. And if you're excited to invest, then it's really not the time. When you're scared about tomorrow and you see bankruptcy news and some really enticing interest rates, that's the best time. If there seems to be a mass exodus of folks to the US or Canada, that's the time. It sounds simple enough, but it's harder to execute than you think. When we were right smack in the middle of the Asian financial crisis in 1998, it didn't seem clear when the economy was going to bottom. So please give that some thought.
With the proper mindset in place, the rest is mostly administrative. Go to a broker. Most of them are just in Ayala Tower. You may also check the PSE website and find the list of member brokers. Go call them up and tell them you want to open an account. It's just like opening a savings account in the bank. Bring IDs and probably the money you want to invest. It's not hard at all. The difficult part is finding the right broker for you. I'd say go the referral route. Find a friend who has a broker. Is broker selection important? Of course it is. You'll have a fiduciary relationship with this person. Trust is important. I wish I could recommend one but I've been out of the market for a while now.
With the account in place, all you have to do is call your broker if you want to buy or sell something. If you need more details than that (like how to pick stocks) or how to ignore the bullshit stock market reports you read on the papers, let me know.
BTW, it's usually faster if you contact me through my blog.
August 13, 2007
Who loves us?
It was about time that I read a Warren Buffet book. And I have to admit, it aroused some of the old feelings. So here I am, writing an update after all these years. He's a fairly simple guy. He likes predictable businesses are within his realm of competence. He likes companies with track records and is not very impressed with restructuring stories. After all, if you've been on the ball all this time, you wouldn't need a major overhaul at some defined period. You'd be making small changes all the time. He also favors annual reports that are understandable. He's of the opinion that if something can't be understood, it's intentional.
Anyway, I checked out the PSE site and tried to see exactly what companies are investor focused. Who proactively tries to inform us? I've loved JFC all my life and I still think that it will provide value. In fact, I will buy it during the next downturn. But it's a bit disappointing when I tried downloading the 2006 annual report from the site. It was the 2005 report that was downloaded. No, it wasn't a user error. So apparently, providing this information is not a priority. Tsk...tsk...I then checked one of the old reliables: ALI. I remembered ALI as a low returns kinda company. Apparently this has not changed. It's ROE over the past five years has been below 10%. How dismal is that? And considering that foreign ownership is at ceiling, a downturn will probably kill its stock price. I then checked one of my old speculative favorites: MEG. The link in the PSE website is wrong! You'd think someone would've moved to correct this, right? And when I found the actual site via Google, it turns out the financial highlights presented are for 2005. So no, I don't think this company focuses on providing its investors information. I'll go sell one of these days. Until next time.
June 15, 2004
Tax on Text
I am against the proposed tax on texting. My reasons are simple really. The proposal was made on the premise of remedying the P200B+ annual budget deficit. This begs the question: why is there a deficit in the first place. In first place is the public debt. Servicing of principal and interest payments take up over 1/3 of the country's budget already. It has become both the cause and the effect in the deficit situation. In this regard, Camacho and company have done their jobs already, stretching the maturities and preventing any further comparisons between the country and Argentina. FPJ also said it best when he suggested suspending payments, and sent financial markets tumbling afterwards. On that I note, I argue that not much can be done about debt servicing at this point.
What else has caused the deficit? Tax effort, which is defined as total revenues as a percentage of GDP has plummeted from 17% in 1997 to 12.3% in 2003 according to Ben Diokno, a former budget secretary. There lies the problem. As my MBA teachers would insist, the solution must answer the stated problem. More bluntly, if tax effort is the problem, new tax legislation cannot be the answer.
But what has the government done in this regard? How much has it collected from Lucio Tan? Why are tax delinquents being given leeway? How many erring tax collectors have been jailed? These things, if not answered, will adversely affect future tax effort. As I will disagree with GMA's policy everytime, the answer is justice, not reconciliation. I think the diminishing tax returns are a function of trust. Collect taxes from evaders. Jail corrupt officials. These are the things that will raise revenues.
My third target would be government bureaucracy. The government is not behaving like a profit seeking private corporation. What happens when companies are cash strapped? They eliminate redundancies, reorganize structures, and remove non-performing individuals. There is an estimated 1.5M employees in the government. There is an estimate that more than 80% of the national budget is allocated for debt service, allotment of local government units, and the salaries of government employees. Surely some savings can be had by streamlining the government fat.
My fourth is a question: why text? Beer and cigarettes are taxed because they are 'sin' products? But why text? Because people are addicted to texting? Because Smart and Globe are raking billions of pesos in profits? These are arbitrary decisions and are unjust. Prepaid cards are already imposed VAT, so excise taxing would constitute double taxation. Profitability level should not be a basis for taxation. That would be tantamount to discouraging efficiency and business sense. On the other hand, Meralco, which I perceive as inefficient is getting away with abuses such as overcharging. And the nature of text messaging? It's a form of communication. It's a medium of commerce. These are in fact things to encourage.
My fifth point is another question: why not some other products? Granted that income taxes are hard to collect. Fine, let's shift to consumption taxes. Tax the Pajeros, the yachts and all those other luxury items. Tax has to be progressive after all, so it must be the rich that is most taxed. It's not hard to figure out that texting is not an elite preoccupation. There are about 22M texters out of the 70M+ population. I'd say that cuts across all sectors.
Lastly, do we even want the government to have more money? I once read that what auditors did not find, a recession will reveal. I believe there are too many leaks in the governments coffers. Put it through enough hardships and all those leaks will be exposed (hopefully). I certaintly am not willing to fund pork barrels, bribes to government employees and expense accounts of mistresses.
No to tax on text.
June 11, 2004
CFA Level 1 Materials for Sale (Manila, Philippines)
I'm selling my Level 1 CFA 2003 Materials. These would include two books and several videos. If you're interested, YM me.
June 5, 2004
A New Face / Phase
I must be on a redesign spree. I've decided to go for an even cleaner look than before. That seems to be my motivation each time I re-do. I'm still at a loss if I should do a retroactive redesign. I seem to think that this site's evolution, as shown by its past issues, is part of the charm. What to do...what to do...I guess I'll just eliminate all the deadlinks in the past issues and adopt a common form of link resources.
June 1, 2004
A Keynesian Moment
Here's a thought. What if the difference between the country's GNP and GDP growth rates becomes consistently notable, such as around 2%-3% because of our expertise in exporting people as against products and services. Given that the Philippines has one of the lowest savings rate in Asia, it should also have one of the highest marginal propensity to consume, and therefore one of the highest expenditure multiplier. Perhaps that could guarantee that the country will never slip into a recession. That's because the money infused has diverse sources and will go right into the heart of the economy. Let's contrast this with the entry of hot money. Portfolio investments come from a couple of foreign fund managers. Their entry could propel the stock market into unseen heights, but we've also seen what their exit can do. This is why the Philippines survived the Asian Financial Crisis and the Tech Bubble: there wasn't much hot money to talk about in the first place. I reckon that the quality of foreign currency seeping into the economy via foreign-based nationals is of higher quality because of the arguments above. Remittances sent here can't be pulled out because there are better investment avenues abroad unless our own people decide to invest abroad. Even if that theoritically happens, it can't happen overnight, unlike the pullout of a major multinational company or a selloff by a foreign fund manager. Hmmm, textbooks define interest rate risk, currency risk, political risk and the like. But what do you call that risk when you have an economy that has too much money concentrated in the financial system or in one sector leaving it vulnerable to shocks? Economic structure risk? hmmm...
If I've been long and laboring, it's because I just woke up. To state again, my thesis here is that if the consistent difference between the GNP and the GDP growth is significant enough, the country will never fall into a recession. Of course, like all rules there could be exceptions. I mean, if we have another actor as president, that could throw off all the economic theories I've ever heard of. But enough of that. Do not feed negative thoughts with more energy.
It's funny but I was napping a while ago. I had a dream that an analyst on TV declared that "the market died yesterday." He went on to point out several stocks that have already begun their descent. With that thought in mind, I forced (yes forced) myself awake thinking that I have to sell my PLDT. Considering that I was in deep sleep, I found that to be a remarkable resolve on the part of my subconscious. The first thing I checked was the time: 12:30 PM. Dang. I just missed the market. Just now I checked what happened to the index. It rose seven points. Whew. PLDT closed at P1075. Whew again. What would the act be called if I managed to sell? Sell on Dream (as against sell on news)? hehehe. That's enough for today.
May 29, 2004
Stock Market Essentials
Admittedly, one page can't have all the stock market and business information that you would need in making informed investment decisions. Given that, what I'm doing now is putting all these sources together in one page. This stock market page is what I envision to be a start page for people who regularly research. It's not half done yet, but the idea's brewing and the page is developing. I'll finish it someday.