presents “investing in the stock market today”
TRANSCRIPT
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!
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
22.00
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
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.”
•
• 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
0
5
10
15
20
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
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
X
Y
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
6
5
4
3
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 [email protected]