presents “investing in the stock market today”

Presents

“Investing in the Stock Market Today”

Presented by:

Juan G. Barredo

Vice President

CitisecOnline.com Inc.

Introduction

•Wealth Building through Stock Market Investment

•How to Pick Good StocksFundamental Analysis

•Methods of InvestingPeso Cost AveragingTechnical Analysis

•Getting Started with Online Trading

Outline

• Established in 1999, CitisecOnline (COL) is the leading innovator in online stock trading in the Philippines• Management team is composed of professionals in the financial and IT industries• Driven by our core competency in research, investor education and technology• Capitalized at over half a Billion Pesos and a Member of PSE & HKE• COL publicly listed in the PSE in ‘06

COL: About us

Wealth Building through Stock Market Investment

Part One

Retirement

Children/ Education

Dream House

I start working for money to build my nest egg…

However my goal is for money to one day work for me…

I need to secure my future!

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Interest Rates (91-day T-Bill)

Why Invest?

• Is the gradual acquisition and safekeeping of wealth

• Rewards: Low

• Risk: Very Low (only Inflation)

Savings

• Provides the avenue for wealth to grow more meaningfully

• Rewards: High

• Risks: Low to Very High

Investments

The Stock Market

• The stock market is the place where you can invest in other peoples’ publicly listedcompanies.

• A company sells shares of stock through an Initial Public Offering (IPO) to raise capital to grow their business

• You invest into a company to participate in its growth through: a) Price Appreciation

b)Dividends

What is it?

What Stock Markets Offer

• Capital Appreciation – the ability for a stocks’ price to increase in value as driven by business prospects

• Dividends – company returns wealth back to shareholders (distributes some profits either through cash or added shares)

Cash Dividend• Money given back to the investor as his share of distributed profits• Ex. A Cash div of 20¢/share: if I had 1000 shares, I would get P200.• Stock price will adjust by dividend value• This is taxed at 10%

Stock Dividend• Additional shares given to the shareholder• Ex. Stock div of 20%: if I had 1000 shares, I would get an 200 additional shares• Share price will adjust down by: price / 1.2• Choice to cash in is yours

Dividend Dates•Ex-Date – the cut off point for dividend entitlement is a day before this date (you must be a shareholder as of the day previous to this date)• Date Payable – the day when the dividend is given to shareholder (usually a month after the Ex-date)

History has proven that investing in quality stocks

can provide greater returns than most

instruments; giving a good run over inflation…

What Stock Markets Offer

Part Two

How to Pick Good Stocks

• the real value to which a stock can be said to be worth, it is commonly stated as Fair Value or Target Price

• studied through Fundamental Analysis

Actual Value

• that value determined by market forces (demand and supply), and is also commonly known as the Market Price

• reviewed through Technical Analysis

Market Value

Task # 1: Know Prices

Ticker Tape

Task # 2: Know some Fundamentals

• “Is a technique that attempts to determine a security’s value by focusing on underlying factors that affect a company’s actual business and its future prospects.”

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• We buy quality stocks today for what we believe it will be worth tomorrow!

Fundamental Analysis

Remember: ‘What you don’t know you don’t touch!

Task # 3: Do a Top Down Review

• A technique that attempts to determine a company’s value by focusing on underlying factors that affect its business, earnings and prospects

Is the Economy growing?

• Are there enough investments and potential moving in on these sectors? Money must be moving in, not out…

What Industry seems attractive?

• Pick out the top performing stocks in terms of valuation, earnings growth, prospects and market participation

What are the best Stocks in that industry ?

2005 2006 2007 2008 2009

GDP 5.10% 5.50% 7.10% 3.80% 0.9%

T-Bills (IRates) 6.4% 4.89% 3.4% 5.40% 4.2%

Inflation 6.9% 5.0% 2.8% 9.3% 3.4%

Forex (P-$) 53.06 49.13 41.40 47.50 46.40

Turnaround Growth Maturing Consolidating

Earnings and performance stabilizes

Profits and business opportunity rise attractively

Profits and business opportunity slow or are capped

Profits and business opportunity deteriorate or lose

Economic View

Industry View

Task # 3: Do a Top Down Review

Invest Here

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Banks Non-Performing Loans % (NPL)

Industry : Banks

Task # 3: Do a Top Down Review

Industry : Property

Task # 4: Know a Company’s Prospects

Look for companies that show:•The Ability to Grow Earnings = Look for strong or increasing profitability; watch earnings per share (EPS= income / # of shares)

•Good or Cheap Valuations = Look for good stocks whose Market Value is notably lower or discounted to its Actual (Fair) Value

•Good Story = Look for new buzz, solid products/services or catalysts for growth

Company Analysis

PROFITS

Task # 5: Choose the Best

Company Analysis

Stock “ABC” P5.25 Stock “XYZ” P1.16

2005 2006 2007 2005 2006 2007

Recurring Earnings (Bil) 3.00 3.45 4.24 1.15 1.60 1.84

(Growth) 7% 15% 23% 43% 39% 15%

EPS 0.28 0.32 0.39 0.11 0.124* 0.125*

(EPS Growth) 21% 14% 22% 22.2% 13% 0.5%

Proj. Fair Value ‘07 P16.50 (214%) P2.10 (81%)

* Sold new shares (dilution)

Task # 5: Choose the Best

Company Analysis

A

B

C

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Z

5.25

1.16

6.23

(19%)

1.27

(9.0%)

8.54

(37%)

1.53

(20%)

SUMMARYPositive impact to price:1. Growth in Income/Value2. Prospective Story for business

expansion3. Potential Buyout4. Worthy Dividends

Negative impact to price:1. Slowing Growth or a loss2. No Story, no dividends, no

nothing…3. Too much debt4. Inefficiency / poor relative

performance

Part Three

Methods of Investing

How to Invest in Stocks

Popular Techniques

• A Gradual Buy and Hold Strategy

• Make steady and fixed Peso investments through time on good companies

Peso Cost Averaging

• Trading through Technical Analysis

• Time market swings to provide short term entry and exit strategies

Market Timing

Method #1: Cost Averaging

What is Peso Cost Averaging?

•Peso Cost Averaging is a personal wealth-building strategy that involves investing a fixed amount of money at regular intervals over a long period

• Buying stocks over time reduces volatility risk in the market

• Invest what you can at your own pace

Method #1: Cost Averaging

How it works…

Month 1Buy P5,000 worth of stock ABC at market price

Month 2Buy P5,000 worth of stock ABC at market price

Month 3Buy P5,000 worth of stock ABC at market price

Buy fewer shares when prices are higher

Buy more shares when prices are lower

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P5,000 will buy less shares here

P5,000 will buy more shares here

Ave Cost

Method #1: Cost Averaging

Peso Cost Averaging… down the road…

Share price history from 1990 to 2007

Stock/ Indicator

Effective Annual Yield

Time Frame

TEL 18.88% 18 yrs

BPI 16.92% 18 yrs

AC 11.16% 18 yrs

JFC 10.7% 14 yrs

Inflation 5.7% 18 yrs

Retire with an Extra 10 Million!

Invest Monthly Php5,000

# Years 21

Return Rate 16.9%

Total Investment (P) 1,260,000

Will result in a…

Future Value (P) Php10M+

Investment Gain 740%

Method #2: Market Timing

Technical Analysis

•Technical Analysis is the study of market action (or market price) by reviewing price charts for the purpose of forecasting future price trends.

• Aim: Watch and Follow market direction

•Technique: Buy into Up Trends; Sell into Down Trends thereby limiting risk

Price Action

Study Charts

Spot Trends

Ayala Land Inc (1990-2008)

Method #2: Market Timing

How to Read Graphs and Trends?

Stock: “A” “B”

3 Trends:

Up Trends – higher lows and higher highs tracked by an up trendline

Down Trends – lower highs and lower lows tracked by a down trendline

Consolidations – sideways shifts

Method #2: Market Timing

Markets swing in Cycles: BULL and BEAR

Part Four

Getting Started with Online Trading

In the Palm of your Hands

• Direct execution and Off Hours Order Placement

• Live quotes and market statistics

• Live portfolio monitoring

• Research studies and Seminars

• Charting tools

• 24/7 online service

• Customer Service

• Best commission rates

Getting Started CitisecOnline provides:

In the Palm of your Hands

• Investing made easy

• For the Busybody, No need to time markets

• Allow us to help pick good stocks

• Take advantage of technology

• ALI, TEL, SMPH, BPI, JFC, MWC

Research COL EIPOpen an Account

• Fill up application form

• Provide 2 copies of valid ID

• Provide copy of billing statement

• Fund account:

• COL EIP - P5,000

• Trading - P25,000

Summary

What have we Learned?

1. The Building of Wealth 2. The Stock Market Option3. Understanding Price 4. Choose Fundamentally Good

Stocks 5. Cost Averaging or Time Markets

through Technical Analysis6. Power up with Online Trading “Knowledge born from actual experience

is the answer to why one profits; lack of it is the reason one loses…”

- Gerald M. Loeb

Thank you and have

great day!

To learn more about our COL Easy Investment Program or know more about our services and seminars please visit our website at

www.citiseconline.com or watch our EIP walkthrough video at www.citiseconline.com.ph/NewEIP/EIPVideo.asp

For inquiries: call our customer hotline at 6-333-777 or email us at helpdesk@citiseconline.com