investing in the stock market new

8/8/2019 Investing in the Stock Market new

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www.citiseconline.com

Presented by:

Juan G. Barredo

Vice President

CitisecOnline.com Inc.

Investing in the Stock Market Today

CitisecOnlinePresents


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CitisecOnline: Who we are?

Building of Wealth

How to Pick Stocks

Timing your Investments

Powering up with Online Trading

Outline


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Who We Are

CitisecOnline is the leading innovator inonline stock trading in the Philippines

Established in 1999, actively trading onlinesince 2001

Managed by professionals in the financialand information technology industries

Capitalized at over Php400 Million:

-Listed in the PSE in July 2006

Also a member of the HK Exchanges (HKEx)


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PART ONE

Building of Wealth
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How to double your money?

To figure out how much you need to earneach year compounded annually to makeyour money double, divide 72 by thenumber of years you plan to double it at:

3 years = 24.0%

4 years = 18.0%

5 years = 14.4%

6 years = 12.0%

The Rule of 72!


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Interest Rates

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

22.00

1993199419951996199719981999200020012002200320042005200620072008

Interest Rates (91-day T-Bill)

Rates have come from 20 Year Lows!

%


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Capital Market

Investment

Jobs =

Income

Savings

Natural Resources

Processing

Manufacturing

Economic Expansion

Pension

Funds

Real

Estate

Insurance

Policies

Savings

Accounts

Bonds

Stocks

Capital

Market

Various Instruments


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Like any market, it is a place where peopleconverge to buy and sell.

Instead of actual goods, shares of public

corporations (or Stocks) are what you buy andsell.

A company lists (or sells) its shares in the

PSE to raise money to fund its growth.

An Initial Public Offering (or IPO) is the firsttime a company sells its shares to the public toraise cash

High demand for shares is what makes pricesmove up; low or no demand makes it subside.

The Stock MarketMarket Dynamics


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What is a Share of Stock?

Part ownership of a company

Shareholders make money through:

*Capital AppreciationThe increase in market price of

a stock driven by investordemand for a companys

shares

*Dividends(Cash & Stock)

A distribution of a portion of acompanys earnings handed

in cash or shares

The Stock Market


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Earning Dividends

Profit sharing with shareholders made either in Cash,Stock or a combination of both.

Cash DividendMoney givenback to theinvestor as hisshare of distributedprofits.

Ex. Cash div of20/share: if I had1000 shares, Iwould get P200.

Stock DividendAdditional sharesgiven to theshareholder.

Ex. Stock div of

20%: if I had 1000shares, I would get200 additional shares;share price will adjustdown by: price / 1.2

The Stock Market

Dividend DatesEx-Date the cut off pointfor dividend entitlement is aday before this date (youmust be a shareholder as of

the day previous to this date) Date Payable the daywhen the dividend is given toshareholder (usually amonth after the Ex-date)


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Investing your money into solid growing companies potentiallyoffer better returns over savings instruments and inflation

The Stock Market

History has proventhat investing instocks, provides

greater returns thanmost investors can

earn through

guaranteed savings;plus gives a good

run over inflation


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PART TWO

How to Pick Stocks
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What is Price?

PRICE

That determined by Actual Value or the real value towhich a stock can be said to be worth.

That determined by Market Value or that valuedetermined by market forces (demand and supply),also known as the market price.

The study of these two prices craft the two major sciencesin market analysis:

Fundamental Analysis (studies Actual Value) Technical Analysis (studies Market Value or Price)


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Fundamental Analysis Study of Actual (Fair) Value:

Fundamental Analysisis a technique thatattempts to determine a companys value by

focusing on underlying factors that affect itsbusiness, earnings and prospects.

Look for companies that show:

1)Value = Look for cheaply priced stocks

2)Earnings Growth = Look for companies whoseprofitability is increasing or accelerating if not adequatelymaintained

Remember: What you dont know you dont touch!


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Economic Analysis Look into the Macro View; examine

your economic surroundings. Industry Analysis

Break it up into industry sectors,then look for the norm and evaluateoutperformers.

Company Analysis Filter out the Best options by

comparing company performances.

Top-Down ApproachFundamental Analysis

Quality is neveran accident; it isalways the resultof high intention,

genuine effort,intelligent

direction, andskillful

execution.

William A. Foster


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The EconomyFundamental Analysis

2004 2005 2006 2007

GDP Growth (%) 6.00 5.10 5.50 7.10

Ave 91-day T-Bill Rate (%) 7.30 6.40 4.89 3.4

Inflation (%) 6.0 6.9% 5.0% 2.8

Real interest Rate (%) 1.30 (0.50) (0.11) 0.60

EOY Forex (Php/$) 56.26 53.06 49.13 41.401

Budget Deficit (US$ Bil) (187.10) (146.50) (62.2) (9.4)

Source: NSO, BSP

2008

5.56.3

12.2

(5.90)

44(51.6)


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Fundamental Analysis

Growth Stage of Philippine Industries

Industry View

Consumer

Media

Mining

Power

Utilities

BPOs

Banks

Telcos

Manufacturing

Property

Infrastructure


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Industrial ViewMakati (Manila) CBD Commercial Lot Prices

Pesos / Square Meter (2007 projection)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

85 87 89 91 93 95 97 99

2001

2003

2005

2007

Fundamental Analysis


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Banks Non Performing Loans (%)

0

2

4

6

8

10

12

14

16

18

91 92 93 94 95 96 97 98 99 '01 '02 '03 '04 '05 '06 '07 '08

Industrial ViewFundamental Analysis

*as of mid 2008


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Look at a companys ability to GROW!Monitor Earnings Growth (Increase in Net Incomeor its Earningsper Share(EPS) = Net Income / total number of shares)

Look out for Cheap Stocks (actual or fair value targets)

Look for a New Story, Product or Emerging Trends

Fundamental Analysis A Companys Tale

Energy

Water

Construction


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Fundamental Analysis The Tale of the Tape

Stock ABC P6.10 Stock XYZ P0.86

2005 2006 2007 2005 2006 2007

RecurringEarnings (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%

Which would you invest in?

Fair Market Value P16.50 (170.5%) P2.10 (144.2%)

* Sold new shares (dilution)


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Fundamental Analysis ALI vs MEG: Winner is?

A

BC

XYZ

9.90(+62.3%)

1.20

(+39.5%)

13.75(+38.8%)

1.56(+30%)


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Looking for Value What creates / destroys value

Positive impact to price:

1. Growth in Income/Value

2. Prospective Story forbusiness expansion

3. Buyouts

4. Worthy Dividends

Negative impact to price:

1. Deterioration in Growth ofIncome/Value or a loss

2. No Story, no dividends, nonothing

3. Uncontrollable debts

4. Inefficiency / poorperformance


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PART THREE

Timing your Investments


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Two Investor Styles Choose your fancy

Cost Averaging Make steady

investments throughtimePassive

Technical Analysis Time market swingsto provide entry andexit strategies

Active


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Passive Investor Passive: The easy way through

Utilizes the methodologyof cost averaging

Keeps investors gearedfor the long haul

No need to worry abouttiming the market

We help in choosinggreat stock picks


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Cost Averaging Passive: The easy way through

Cost averagingis a technique designed to reducemarket risk through the systematic purchase ofsecurities at predetermined intervals and set amounts

Month 1

Buy P5,000 worthof stock ABC atmarket price

Month 2

Buy P5,000 worth

of stock ABC atmarket price

Month 3

Buy P5,000 worthof stock ABC atmarket price

Buy fewer shares when prices are higher

Buy more shares when prices are lower

6

5

4

3

P5,000 willonly buy lessshares here

P5,000 canbuy more

shares here


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Cost Averaging Does it work? Well let history tell

Top of aBull Market

of Bull

Basket:

AC,BPI,

MBT,

SMC

TEL


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Cost Averaging Does it work? Well let history tell

Beginningof a BullMarket Basket:

AC,BPI,

MBT,

SMC

TEL


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Cost Averaging Passive: The easy way through

Our Premium Growth Stock GEMSS:G- Growing industryE - Earnings visibilityM - Management credibilityS - Superior productsS - Strong balance sheet

0.0%

200.0%

400.0%

600.0%

800.0%

1000.0%

1200.0%

1400.0%

1600.0%

1800.0%

2000.0%

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Inflation JFC TEL ALI BPI MWC

Selected Premium Growth Stocks versusInflation 1990-2008

TOP 5

1) Jollibee -JFC

2) PLT - TEL

3) Ayala Land - ALI

4) Bank of Phil Islands - BPI

5) Manila Water - MWC


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Active Investor

Technical Analysisis the study of market action(market price), primarily through the use of chartsfor the purpose of forecasting future price trends

-- John J. Murphy Technical Analysis of Financial Markets

Active: Lets do some work

PriceAction

StudyCharts

SpotTrends


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The Graphic AdvantageTechnical Analysis

Stock: A B

The Firsttraded pricefor the day

The Lowestprice of theday

The Highestprice of the

day

The Final orLast traded

price for theday


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0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

91 92 93 94 95 96 97 98 99

2000

2001

2002

2003

2004

2005

Land prices andAyala Land

Technical Analysis TOP

BOTTOM

Who toppedout first?

Why?

Market moves aheadas people act inanticipation of change.


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TRENDS

UP TREND

Higher Highs andHigher Lows

Trendlines drawn byconnecting lows.

DOWN TREND

Lower Highs andLower Lows

Trendlines drawn byconnecting highs.

NO TREND

Sideways shift/Consolidation

Prices mustbreakout to re-trend

Trends & ConsolidationsTechnical Analysis


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Our Roadmap


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The Market TodayOur Map

PSEi


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PART FOUR

Powering up withOnline Trading
http://www.inmagine.com/view_image.php?filename=bxp54071


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Online Needs

CitisecOnline Provides:

Direct execution and Off Hours OrderPlacement

Live quotes and market statistics Live portfolio monitoring

Research studies and Seminars

Charting tools

24/7 online service

Customer Service

Best commission rates

All at the Palm of your hands

Get started?
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Stock Browsing Do your Homework

*Target Price = Estimated Fair Market Value BUY (Upside) SELL (Downside)

1 >16% 1 >16%

2 9%-16% 2 9%-16%

3 < 9% 3 < 9%

COL Rating:

BUY Good and solid fundamentals

SELL Unexciting or poor fundamentals


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Stock Browsing Get a Quote!


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Stock Browsing Examine its Trend!

Try our JAVA CHARTS!

What is the current trend?

Bullish or Bearish?
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Stock Browsing Assess your Risk vs Reward

RISK: Support of P 2.22

REWARD: P2.90

Risk/Reward:0.12 / 0.56 = 1 : 4.6

(1 pt risk for every 4.6 pts gain)

GOOD TRADE!

(Try to maintain a 1:3+ ratio)

Risk

Reward


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Buy / Sell How to Execute an Order

Term:

ATO at the opening

GTC- good till cancelled

ATC- at the close

EIP Easy Investment ProgMEG

10,000

2.34

Note: Market trades between 9:00 AM to 12:10 PM

After 1:00 PM, you can use Off-Hours Orders


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Buy / Sell Monitor your Portfolio


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Stock Browsing Reassess your Risk vs Reward

RISK: Support of P 2.32

REWARD: P2.90

Risk/Reward:0.28 / 0.30 = 1 : 1.07

(1.00 pt risk for every 1.07 pts gain)

High Risk TRADE!

BUY-2MEG

2.90

2.60

11.53%

Risk

Reward


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Tips of the Trade Key Points!

Cut your losses short and let your profits run The trend is your friend Try not to add to losing position When you are not sure, stand aside Always look for good odds 1:3 Risk vs RewardTrade active stocks; avoid thinly traded issuesDo not overdiversify, concentrate on a few well

selected stocks (3-5 issues) Remember: Plan your trade and trade the plan(discipline = success)


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1. The building of Wealth

2. The Stock Market Option

3. Understanding Price

4. Choosing Fundamentally GoodStocks

5. Passive or Active Investor

6. Plan your trade trade the plan(discipline = success)

Summary

Knowledge born from actual

experience is the answer to whyone profits; lack of it is the reason

one loses

- Gerald M. Loeb


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www.citiseconline.com

Thank you and havegreat day!

To learn more about COLs Easy InvestmentProgram or know more about our services and

seminars please visit our website atwww.citiseconline.com or call our customer hotline

at 6-333-777
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