Basic intro to stocks 2013 11 08
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Basic intro to stocks 2013 11 08

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    Basic intro to stocks 2013 11 08 Basic intro to stocks 2013 11 08 Presentation Transcript

    • You become partowner of Corporation Shares of Stock are “pieces” of the “corporate pie. “ When you buy a share of stock, you become: ONE OF THE OWNERS OF the COMPANY. So far: OWNERS BOARD MANAGEMENT WORKERS Customer
    • Mr. Prudent Investor
    • Lucky Guy
    • Mr. Media Man
    • You can be one of the owners… Ms. Long-Term Investor
    • You can be one of the owners… Ms. Long-Term Investor
    • You can be one of the owners… Ms. Long-Term Investor
    • Start a Company… ASSUME: Ten founders chip in: One million each. Ten million Pesos = Ten million Shares ONE million ONE million ONE million ONE million ONE million ONE million, ONE million each
    • One hundred shares: Market Value: rises over time = 100 PESOS “Par Value” Constant 1 peso
    • Market Value: “Land TITLES” rises Just like real estate Original Cost: One peso per square meter
    • Market Value rises... when many Customers The Company: shareholders
    • Cash Dividends Shares of Stock BUY Capital Gains You become a “Winner”
    • Meralco 390 Capital GAIN: 70% a year for 5 years. 262 P60 in 2008 20 300 / 60 = 5x
    • Cash Dividends Cash DIV ÷ AEV = 4% AP = 4% GLO = 5% MER = 3% RLC = 3% Semirara = 4.5% TEL = 8% URC = 4.5% Price ANS 1/5 = 20% ! = Yield Cash “incentive”
    • Cash Div, 1 -------------------Share price, 5
    • 1.00 / 5.00 = 20%
    • CHINA Bank 12 / 57 = 21%
    • PhiL WEB In 2011: 916m Capital GAIN  59% a year, for the past three years Net profit in 2008: 292m “I cannot put up my own Lottery. But I can be partowner of one.”
    • Union Bank Capital GAIN  61% a year, for the past three years Net profit in 2008: 13bn In 2011: 18bn
    • D M Consunji DMCI. 30 years in construction firm, … on retirement… lump sum P1m *One peso per share, at start 18 *SOLD at Six pesos Share price: One Peso Gosh, 61 47
    • Dizon Mines Exports Copper & Gold… 6 P100K from uncle.. U, expert on Economy, …on Business. IF Price of Copper & Gold  Will Sales  UP ? IF SALES go  WILL Profits  UP IF Profits  UP 55 15 WILL Share Price go UP 
    • Auntie’s Portfolio: Value Shares P1 million of ABC 100 sh P1 million of DEF 500 sh P1 million of GHI 600 sh
    • “Choose Three of these Stocks” Imagine, that you had invested in THREE stocks, some years ago. Write down the names of the three stocks. AYALA LAND ABOITIZ POWER ABOITIZ EQUITY VENTURES BELLE CORP ICTSI …… JG SUMMIT JOLLIBEE ..… MERALCO METROBANK ..…. PLDT UNIVERSAL ROBINA 1. ............... ? ? ? 2. ............... 3. ...............
    • Ayala LAND Malls, Build-andSell, Offices 10 Next: A Pwr 35 x 3.5
    • Aboitiz Power 37 Generate Electricity Next: A E V 10 x 3.7
    • Aboitiz Equity Ventures Electricity, Banking 56 2008 Profit 4.3bn Next: BELLE 10 x 5.6
    • Belle Corp. 6.5 Next: ICTSI x 4.3 1.5
    • ICTSI Next: JG Summit 94 24 x 3.9
    • JG Summit Cebu Pacific AIR Robinson’s Land Summit Media 5 Next: JFC 47 x 9.4
    • Jollibee F.C. Next: MER 141 55 x 2.5
    • Meralco Next: MBT 395 200 x 1.98
    • Metrobank Next: TEL 134 48 x 2.8
    • Next: URC PLDT 3190 2600 x 1.23
    • URC 20 130 x 6.5
    • “What if” Portfolio Belle + Meralco + Aboitiz Equity V P1 million of BEL x 4.3 = 4,300,000 P1 million of MER x 1.98 = 1,980,000 P1 million of AEV x 5.6 = 5,600,000 TOTAL, three-years’ investment = 11,880,000
    • You may Calculate: Jollibee + JG Summit + PLDT P1 million of JFC x 2.5 = 2,500,000 P1 million of JGS x 9.4 = 9,400,000 P1 million of PLDT x 1.23 = 1,230,000 TOTAL, three-years’ investment = 13,130,000
    • Why do prices move up, or down
    • Who wants to buy Who wants to sell
    • Toyota CAR Buyer “I want to buy that car, for : “ 700K I “bid”... Sellers 900K 900K 900K 900K I “ask”...
    • House for Sale Buyers 7m 6m 5m 4m I “bid”... Seller “I want to sell this house for ...” 5 million I “ask”...
    • Buyers & Sellers …fight over the price. volume BID Who wants to buy 5,000 10,000 60,000 10 8 6 LATEST TRADE: 12 ASK volume Who wants to sell 12 14 16 3,000 15,000 100,000
    • You may post any price. You may jump the queue Ask for a LOWER selling PRICE of 10 BID HIGH at “12” volume BID INSERT 5,000 10 10,000 8 Who wants to buy 60,000 1.06 LATEST TRADE: 12 ASK volume INSERT 12 3,000 14 15,000 1.16wants to sell 100,000 Who
    • Seller can PLACE 5 orders, to capture all the BIDS volume 5,000 10,000 60,000 29,000 30,000 BID 10 8 6 4 2 LATEST TRADE: 12 ASK volume 12 14 16 18 20 200,000 15,000 100,000 100,000 100,000 12 02
    • BUYER can place 4 separate orders, to capture all the ‘ASK’ volume BID 315,000 10,000 60,000 10 8 6 LATEST TRADE 18 10 10 18 16 14 12 15,000 100,000 100,000 100,000 ASK volume 18
    • You can SEE All the BUYERS & SELLERS Buyers Today: BID Sellers Today: ASK
    • Buyers Today: which Brokers Sellers Today: which Brokers
    • When can you execute trades? till When can you ENTER an online ORDER? AFTER HOURS ! ANY TIME NEXT DAY It gets implemented by 930am
    • Yesterday: 20 Computer: matches “buy” orders with“sell” orders What’s the mood of the market, today?
    • What IF: More Sellers Less Buyers
    • FEW Sellers What IF: There are More BUYERS
    • Investing in Equities Investing versus Trading
    • Bonds SAME Amount at the start +/- 1 +/- 1 +/- 1 Money +/- 1 +/- 1 +/- 1 Cash 5 4 3 2 1 0 Money Over TIME 18 16 14 12 10 8 6 4 2 0 In Three Years…
    • 200 THINK Stocks KEEP COOL WAIT WAIT Money BUY ! Over TIME 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 In Three Years…
    • Disciplined, Patient Decide to invest, then... Make a plan. Stick to it. Buy NOW Buy Now WIN You get the “average” 54
    • 3,000 1. Persistent, Disciplined BUY BUY “Way, Better” BUY 200 100 BUY Years and years “Investing”
    • 2. “Patient, Long-term” THINK WAIT WAIT BUY Years and years “Investing”
    • 3. How to buy stocks, like an expert: style of impatient shortterm “maximization” SELL BUY SELL SELL BUY SELL BUY SELL BUY BUY BUY “Trading”
    • Do research, before buying. Check the sales, profits, of the listed company
    • Get the news first, ahead of the rest Check the economic forecast, the outlook for industry, the flow of money. Check the Price History, and find out the Potential of a stock.
    • If PLDT goes up 1 dollar, then + P41 Monitor RetaiL Investor: is in the cozy bedroom. www.firstmetrosec.com.ph
    • BUY ! Amateur, beginner. Indecisive: WAIT Afraid to Make a Move. WAIT WAIT WAIT WAIT WAIT WAIT WAIT WAIT WAIT WAIT “Afraid”
    • Amateur client : Indecisive, always Late. CRY PARALYZED WITH SHOCK Forecast BUY BUY BUY SELL WAIT SELL FROZEN WITH FEAR WAIT NOW SELL Over TIME
    • Amateur, beginner. Buy, when i’m excited. Sell, when i’m depressed BUY BUY BUY BUY SELL SELL SELL BUY SELL WAIT SELL “Emotional”
    • Phone in: Several minutes, per order Phone Investor Internet Broker Walk - In INTERNET… MANY ORDERS per second.
    • 160 Stocks You buy at … 120 OK! … Now, when do i sell? Next Month 100 80 Also: Stock FUNDS Or, Next Week What should you do, this this case? 40
    • CASE ONE: recovery 25 24 22 Yes, you can BUY, and BUY, and WIN 16 30
    • 160 CASE TWO: this happens Down from 1998 to 2012 BYE 1997 BYE 2003 Vista Land. Brittany, Crown Asia, etc. Housing 2012 3
    • 130 CASE TWO: this happens BYE BYE 65
    • Investing in Equities How to set “take Profit” &“CUT Loss”
    • FOR Trading: You buy at … 120 What to DO? 100 80 Always Monitor ! Something Wrong …
    • FOR Trading: You buy at … 600 ! 300 120 What to DO? 100 Always Monitor ! Let profits run
    • FOR Trading: You buy at … 100 80 Always Monitor ! Emergency Exit. CUT loss. Something Wrong … 1
    • Stocks You buy at … “What “Bui-set” iF…” 100 “Sell, na nga...” 80 Also: Stock FUNDS 8 1
    • The Objective The ‘principle’ is easy. Sell HIGH Wait The ‘execution’ REQUIRES Buy NOW LOW superhuman strength. 74
    • The rational approach SELL HIGH 1 …know the future WAIT… 2 … execute trades Buy LOW 75
    • Forecast, then Invest PRICE TARGET 1 …know the future 2 … execute trades 76
    • The Amateur Forecast, Beginner but WAIT (?) BUY ! CONFIRMED? WAIT BUY? huh? PRICE TOO BUY !TARGET LATE 1 …know the future CONFIRMED? WAIT SELL ! 2 … Hesitate 77
    • Consistent, disciplined Cure: Regular Intervals Fixed amount BUY PLDT, Meralco, GT Capital… 78
    • Buy P30,000 of Stock A, per month, for one year So on  12x BUY STOCK "A" BUY STOCK "A" BUY STOCK "A" BUY STOCK "A" BUY STOCK "A" BUY STOCK "A" PLDT, for Year 1 BUY STOCK "A" Start JAN FEB MAR  DECEMBER
    • Buy P30,000 of Stock B, per month, for one year So on  12x BUY Stock "B" BUY Stock "B" BUY Stock "B" BUY Stock "B" BUY Stock "B" BUY Stock "B" Meralco, for Year 2 BUY Stock "B" Start JAN FEB MAR  DECEMBER
    • Buy P30,000 of Stock C, per month, for one year So on  12x BUY Stock "C" BUY Stock "C" BUY Stock "C" BUY Stock "C" BUY Stock "C" BUY Stock "C" BUY Stock "C" Start JAN FEB MAR  DECEMBER ___?, for Year 3
    • “Accumulate” ₱ Stock Price ₱ ₱ ₱ ₱ Month Month Month Month Month ₱ ₱ Month CONSISTENT, REGULAR
    • •  stocks to choose from . PPT
    • PRICE TARGET  Standing Order, “Good Till Month” ENTRY PRICE Emergency EXIT
    • ? Might not reach ? PRICE TARGET In case “something wrong went”….  Evacuate ! Emergency EXIT !
    • Active trading requires expert control over Emotions. Buy, when “stocks are down” Sell, when “stocks are UP.” SELL BUY SELL SELL BUY SELL BUY SELL BUY BUY “Trading”
    • The Amateur Beginner Falls, from the sky.
    • Amateur, beginner: Buy, and then.. Bahala na. DO nothing, even if “FAIL.” BUY
    • Until you have plenty of of stocks in your account. For investing Regular Intervals Fixed amount BUY PLDT, Meralco, GT Capital… 91
    • Mistake of the Beginner Focuses on the PAST Thinks only of the PRESENT “Ang Taas na, ng Market” “Ayoko Bumili”
    • Mistake of the Beginner Focuses on the PAST Thinks only of the PRESENT “Ay, DOWN ang Market” “Ayoko Bumili”
    • Excuses, not to BUY Sayang, I missed that move “Sobrang mahal na, lahat ng Wait for the stocks” stock to come down! “magresearch muna ako”
    • If the price comes down… “Masama ang Panahon” Because the This must be a lousy stock price is dropping! “magaral muna ako”
    • How do you learn to drive? By FACING YOUR FEARS… Not by reading books Not by watching other drivers
    • How do you … learn to Swim? By diving into the water. When you are about to drown..
    • Mistake of the Beginner Thinks only of the PRESENT Focuses on the PAST What is the mark of a professional
    • Mark of a professional Focuses on the FUTURE Thinks only of the STRATEGY, to get from HERE to THERE.
    • “COOL under Fire,” training.. Face your fears “I’m not afraid of bullets. I have my own weapon.”
    • Investing in Equities Method for buying stocks: ON-site / Phone / Internet
    • Phone in: Several minutes, per order Phone Investor Internet Broker Walk - In INTERNET… MANY ORDERS per second.
    • How to open a stockbroker account How to buy Mutual Funds
    • Deposits are insured: “Safe” Savings B Comm’L B Universal Bank, does both, plus, it can For Risky Assets: Unsafe, Uncertain ! Stockbroker PRIVATE BANK Investing your millions for you MUTUAL FUND & “U.I.T.F.” Investing your thousands for you own insurance They put money company. “to work”
    • Which “bank” invests your millions for you? Private Bank: Minimum = $5 million DOLLARS Charges = 4% per year
    • Who can invest your P5,000 for you, at low cost. Mutual FUND. The “private bank” for ordinary people. Minimum = P5,000 Charges = 1.7% percent a year.
    • Mutual Fund 1. You have money. 2. You hire a professional, to manage it. Unit Investment Trust Fund: 1. BANK Trust Fund, open to the public. 2. You buy a UNIT. 107
    • OPERATED BY A STOCK BROKER OPERATED BY A BANK Mutual Fund Unit Investment Trust Fund Sold by SALES AGENTS Sold at bank branches 109
    • Buy 100K of stocks, directly Buy 100K of mutual funds: Pay P2000 now. Pay P 261 (2% of assets) in commissions, Pay P1700/year (1.7% of assets) for the entire Like: Hiring a trade. “Driver”
    • 2006 Net Yield 2007 Net Yield 12.62% 2008 Net Yield -30.70% 2009 Net Yield Equity Fund 67.58% 53.11% 2010 Net Yield 63.37% 8.18% 2011 Net Yield Properties 21% YTD Yield (8/23/12) CAGR Fixed-Income and other Stocks 47% Holding Companies 13% Transport Power 10% 2% Telecoms 7% • • • • 18.88% 24.40% P 8 bn Growth -Oriented All Stocks For Aggressive Investors
    • How to buy mutual funds 1,000 shares Buy MORE shares, each month At 5 / share Invest 5,000 Get application forms at: www.fami.com.ph
    • To Choose High returns, % Your personality determines your approach Inflation, 4% AGGRESSIVE CAPITAL GAIN ALL Stocks 24% / year Moderate CAPITAL GAINS 18% / year CONSERVATIVE MODEST GAINS 11% / year Safe (good credit) Half Bonds, Half Stocks ALL Bonds RISKY (uncertain)
    • Track record High returns, % Get Forms: at www.fami. com.ph “Save & Learn” ALL Stocks Stocks Fund, 24% / year “Save & Learn” Balanced Fund, 18% / year Half Bonds, Half Stocks “Save & Learn” Fixed-Income Fund, ALL 11% / year Bonds Inflation, 4% Safe (good credit) RISKY (uncertain)
    • www.firstmetrosec.com.ph www.firstmetrosec.ph
    • FAMI “Equity Fund”
    • Balanced Fund Deposits 24% Others 1% Stocks 49% Bonds 26% 2007 Net Yield 2008 Net Yield 2009 Net Yield 2010 Net Yield 2011 Net Yield YTD Yield (8/23/12) CAGR 4.07% -4.86% 45.36% 61.97% 6.62% 17.26% 18.54% • P3 Bn • Launched in May 2007 • For Long-term investment • Moderate Returns • A balance of stocks and bond investments
    • The Objective The principle is the same: Sell HIGH Wait Buy NOW LOW To consistently make money: invest LONGTERM 118
    • With Stocks: With Mutual Funds: You ‘drive your car.’ You decide freely. They ‘drive your car.’ They decide freely. You get the stress They get the stress
    • Stocks: You choose the companies. Mutual Funds: They choose the companies.
    • Drive your car, yourself? Or: hire a driver 121
    • 65,000 FAMI EQUITY FUND JULY 2012 FEB 2013 52,000 50,000 46,000 48,000
    • Adjust the percentages. Depends on your info. __% in Stock market MUTUAL FUND __% in Stocks that you will personally select and monitor A D B C E F
    • B.... (BLUE) is leading A Which fund: best track record B Depends on the TIME of Measurement Time 124
    • Fair CLAIM A.... (RED) is leading A B ALL are “number ONE” Time 125
    • Choose a FUND A Test their customer service B The FUND that > takes care of you > answers your phone calls > replies to your emails. Performance is the same. 126
    • Earnings in 2013 Expensive Earnings in 2012 Expensive Earnings in 2011 Cheap 2011 Cheap What drives the market upwards: earnings growth 2012 2013
    • 61% 14% 12% 11% -7% -1% -1% 2008 2009 2010 2011 2012 2013 2014
    • Earnings grow +12% Expensive in 2013 Earnings grow +14 % in 2012 Expensive Earnings -6% in 2011 Cheap 2011 Cheap Know when to BUY, know when to SELL. 2012 2013
    • The price moves from “cheap” to “expensive,” and cheap again. SELL BUY BUY BUY Company Earnings = net profits
    • Which is cheaper Can of fuel Same fuel Small Can Big Can P50/Liter 200/5 Ltrs More expensive per Liter Cheaper despite bigger price tag
    • PLDT Preferred Shares Earnings per Share x 10% Therefore: Cash Dividend: 10% / share PLDT Common Shares Earnings per Share x 10% Share Price ...varies Cash Dividend Share price = 8% - 11%
    • Deposits are insured: “Safe” Savings B Comm’L B Universal Bank, does both, plus, it can For Risky Assets: Unsafe, Uncertain ! Stockbroker PRIVATE BANK Investing your millions for you MUTUAL FUND & “U.I.T.F.” Investing your thousands for you own insurance They put money company. “to work”
    • Outlook for PHILIPPINE stock market index 12,000 Now Normal Trend: zig zag 6700 2013 2017
    • Yes, stocks have overshot their Long-Term Average. 2010 - 2020: 6.5% 2000 -2010: 4.5% 1990– 2000: 2.5% YEAR 2002 ECONOMI C GROWTH 6,400 6,000 YEAR 2013 2002– 2012: 20% 1,200 1987 – 2012: 10%
    • Stocks have overshot their Long-Term Average 13,200 Participate for the LONG TERM ! Next 5 years: + 15%/yr 6,600 6,000 Annual growth of INDEX % 2012: 33% 2002– 2012: 20% 1,200 1987 – 2012: 10%
    • The value that investors attach, to Philippine stocks PER: 16x “Moderate Value” PER PER: 12x 1980 1990 2000
    • PLDT .... “Telephone” Forms a CUP and HANDLE 3,500 3,000 2,700 2,500 2012 2013 ‘14 140
    • P166 bn market value of these stocks 141
    • To introduce: Alexander Gilles • • Lecturer on “MARKET EDUCATION” for First Metro Securities (stockbroker) Financial analyst. Educator. agilles@firstmetrosec.com.ph
    • agilles@firstmetrosec.com.ph www.SLIDESHARE.COM/SANDYGILLES 8590600 / customerservice @firstmetrosec.com.ph Invite me, to conduct seminars; to give lectures