investing in the stock market today(2010)

8/7/2019 Investing in the Stock Market today(2010)

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Presents“Investing in the Stock Market Today”

Presented by: Juan G. BarredoVice PresidentCitisecOnline.com Inc.



Introduction

•Wealth Building through

Stock Market Investment

•How to Pick Good StocksFundamental Analysis

•Methods of InvestingPeso Cost Averaging

Technical 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 ITindustries

• Driven by our core competency in

research, investor education and

technology

• Capitalized at over half a Billion Pesosand 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

DreamHouse

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 andsafekeeping of wealth

• Rewards: Low

• Risk: Very Low (only Inflation)

Savings

• Provides the avenue for

wealth to grow moremeaningfully

• 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 listed

companies.

• 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 whenthe 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 iscommonly 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 acompany’s actual business and its future prospects.”

•

• We buy quality stocks today for what we believe it willbe 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 itsbusiness, earnings and prospects

Is the Economy growing?

• Are there enough investments and potential moving inon 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


Invest Here



0

5

10

15

20

Banks Non-Performing Loans % (NPL)

Industry : Banks


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

ABC

XYZ

5.25

1.16

6.23(19%)

1.27(9.0%)

8.54(37%)

1.53(20%)

SUMMARY

Positive impact to price:

1. Growth in Income/Value

2. Prospective Story for business

expansion

3. Potential Buyout

4. Worthy Dividends

Negative impact to price:

1. Slowing Growth or a loss

2. No Story, no dividends, nonothing…

3. Too much debt

4. Inefficiency / poor relative

performance



Part Three

Methods of Investing



How to Invest in Stocks

Popular Techniques

• A Gradual Buy and HoldStrategy

• Make steady and fixed

Peso investments throughtime on good companies

Peso Cost

Averaging

• Trading through Technical

Analysis• Time market swings to

provide short term entry

and exit strategies

MarketTiming



Method #1: Cost Averaging

What is Peso Cost Averaging?

•Peso Cost Averaging is a personal

wealth-building strategy that

involves investing a fixed amountof 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




How it works…

Month 1

Buy P5,000 worth of

stock ABC at market

price

Month 2

Buy 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

6

5

4

3

P5,000 will buy

less shares here

P5,000 will buy

more shares here

Ave Cost




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

PriceAction

StudyCharts

SpotTrends



Ayala Land Inc (1990-2008)


How to Read Graphs and Trends?

Stock: “A” “B”

3 Trends:

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

Down Trends – lower highs and lower

lows tracked by a down trendline

Consolidations – sideways shifts




Markets swing in Cycles: BULL and BEAR



Part Four

Getting Started withOnline 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:

http://www.dreamstime.com/globalreachbyworldwideweb-image325963

http://www.dreamstime.com/computer-image183529



In the Palm of your Hands

• Investing made easy

• For the Busybody, No

need to time markets

• Allow us to help pickgood stocks

• Take advantage of

technology

• ALI, TEL, SMPH, BPI, JFC, MWC

Research COL EIP

Open 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 Option

3. Understanding Price4. 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

investing in the stock market today(2010)

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