Online Stock Market Investing by kwa28856

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									www.citiseconline.com




                  CitisecOnline
                        Presents
     “Investing in the Stock Market Today”
                                   Presented by:
                                   Juan G. Barredo
                                   Vice President
                                   CitisecOnline.com Inc.
Outline

            CitisecOnline: Who we are?


                Building of Wealth


                How to Pick Stocks


             Timing your Investments


          Powering up with Online Trading
   Who We Are

•CitisecOnline is the leading innovator in
online stock trading in the Philippines
•Established in 1999, actively trading online
since 2001
•Managed by professionals in the financial
and information technology industries
•Capitalized at over Php400 Million:
   -Listed in the PSE in July 2006
•Also a member of the HK Exchanges (HKEx)
PART ONE




       Building of Wealth
    The Rule of 72!
•How to double your money?
•To figure out how much you need to earn
each year compounded annually to make
your money double, divide 72 by the
number of years you plan to double it at:
      3 years = 24.0%
      4 years = 18.0%
      5 years = 14.4%
      6 years = 12.0%
        Interest Rates
                            Interest Rates (91-day T-Bill)
  %
22.00
20.00
18.00
16.00
14.00
12.00
10.00
 8.00
 6.00
 4.00
 2.00        Rates have come from 20 Year Lows!
 0.00
     1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
     Capital Market
    Various Instruments


           Stocks
                                 Savings            Investment
Pension
                       Bonds
Funds
           Capital
                                      Economic Expansion
           Market
 Real                 Savings
Estate                Accounts
          Insurance                                Natural Resources
                                 Jobs =
                                                      Processing
           Policies
                                 Income             Manufacturing
   Market Dynamics           The Stock Market
•Like any market, it is a place where people
converge to buy and sell.
•Instead of actual goods, shares of public
corporations (or Stocks) are what you buy and
sell.
•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 first
time a company sells its shares to the public to
raise cash
•High demand for shares is what makes prices
move up; low or no demand makes it subside.
    The Stock Market   What is a Share of Stock?

• Part ownership of a company
• Shareholders make money through:
   *Capital Appreciation
      The increase in market price of
        a stock driven by investor
        demand for a company’s
        shares
   *Dividends (Cash & Stock)
      A distribution of a portion of a
        company’s earnings handed
        in cash or shares
     The Stock Market          Earning Dividends
Profit sharing with shareholders made either in Cash,
Stock or a combination of both.
Cash Dividend          Stock Dividend            Dividend Dates
Money given           Additional shares        •Ex-Date – the cut off point
back to the            given to the              for dividend entitlement is a
investor as his        shareholder.              day before this date (you
share of distributed                             must be a shareholder as of
                       Ex. Stock div of
profits.                                         the day previous to this date)
                       20%: if I had 1000
 Ex. Cash div of      shares, I would get       • Date Payable – the day
20¢/share: if I had    200 additional shares;    when the dividend is given to
1000 shares, I         share price will adjust   shareholder (usually a
would get P200.        down by: price / 1.2      month after the Ex-date)
 The Stock Market

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



                                                 History has proven
                                                  that investing in
                                                  stocks, provides
                                                greater returns than
                                                 most investors can
                                                    earn through
                                                guaranteed savings;
                                                 plus gives a good
                                                run over inflation…
PART TWO




           How to Pick Stocks
What is Price?

• PRICE
   • That determined by Actual Value or the real value to
      which a stock can be said to be worth.
   • That determined by Market Value or that value
      determined by market forces (demand and supply),
      also known as the market price.
• The study of these two prices craft the two major sciences
  in market analysis:
   • Fundamental Analysis (studies Actual Value)
   • Technical Analysis (studies Market Value or Price)
Fundamental Analysis     Study of Actual (Fair) Value:

       Fundamental Analysis is a technique that
       attempts to determine a company’s value by
       focusing on underlying factors that affect its
       business, earnings and prospects.

     Look for companies that show:
     1)Value = Look for cheaply priced stocks
     2)Earnings Growth = Look for companies whose
      profitability is increasing or accelerating if not adequately
      maintained
    Remember: What you don’t know you don’t touch!
  Fundamental Analysis         Top-Down Approach

                     • Economic Analysis
                        •    Look into the Macro View; examine
                            your economic surroundings.
“Quality is never
an accident; it is   • Industry Analysis
always the result
of high intention,      •    Break it up into industry sectors,
 genuine effort,
    intelligent
                            then look for the norm and evaluate
  direction, and            outperformers.
      skillful
   execution.”       • Company Analysis
William A. Foster
                        •    Filter out the Best options by
                            comparing company performances.
  Fundamental Analysis       The Economy


                              2004       2005      2006     2007     2008
GDP Growth (%)                6.00       5.10      5.50      7.10     5.5
Ave 91-day T-Bill Rate (%)    7.30       6.40       4.89     3.4      6.3
Inflation (%)                  6.0       6.9%      5.0%      2.8     12.2
Real interest Rate (%)        1.30       (0.50)    (0.11)    0.60    (5.90)
EOY Forex (Php/$)             56.26      53.06     49.13    41.401    44
Budget Deficit (US$ Bil)     (187.10)   (146.50)   (62.2)   (9.4)    (51.6)
Source: NSO, BSP
  Fundamental Analysis       Industry View

Growth Stage of Philippine Industries



                                  Telcos
          Consumer
                                  BPOs
             Media
                            Banks            Manufacturing
          Mining
                              Property
               Power
                         Infrastructure
             Utilities
Fundamental Analysis          Industrial View
               Makati (Manila) CBD Commercial Lot Prices
                    Pesos / Square Meter (2007 projection)
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
 50,000
     0
    85

          87

               89

                    91

                         93

                               95

                                    97

                                          99

                                                 01

                                                        03

                                                               05

                                                                      07
                                               20

                                                      20

                                                             20

                                                                    20
Fundamental Analysis        Industrial View
                Bank’s Non Performing Loans (%)
                                                                  18
                                                                  16

                                                                  14

                                                                  12

                                                                  10

                                                                  8

                                                                  6

                                                                  4

                                                                  2

                                                                  0
     91 92 93 94 95 96 97 98 99 '01 '02 '03 '04 '05 '06 '07 '08
                          *as of mid 2008
    Fundamental Analysis       A Company’s Tale
•   Look at a company’s ability to GRO             W!
    Monitor Earnings Growth (Increase in Net Income or its Earnings
    per 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

                                                          Energy


                                                           Water


                                                       Construction
  Fundamental Analysis                 The Tale of the Tape

                               Which would you invest in?
                  Stock “ABC” P6.10                Stock “XYZ” P0.86

                    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%

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


* Sold new shares (dilution)
    Fundamental Analysis   ALI vs MEG: Winner is…?
                                                       13.75
                                      9.90           (+38.8%)
                                    (+62.3%)
A
B
C


                                       1.20
                                     (+39.5%)          1.56
X                                                    (+30%)
Y
Z
   Looking for Value        What creates / destroys value


Positive impact to price:       Negative impact to price:
1. Growth in Income/Value       1. Deterioration in Growth of
                                   Income/Value or a loss
2. Prospective Story for
   business expansion           2. No Story, no dividends, no
                                   nothing…
3. Buyouts
                                3. Uncontrollable debts
4. Worthy Dividends
                                4. Inefficiency / poor
                                   performance
PART THREE




   Timing your Investments
Two Investor Styles    Choose your fancy…


                      • Cost Averaging
                      • Make steady
    Passive             investments through
                        time


                      • Technical Analysis
                      • Time market swings
      Active            to provide entry and
                        exit strategies
Passive Investor   Passive: The easy way through…


                        •   Utilizes the methodology
                            of cost averaging
                        •   Keeps investors geared
                            for the long haul
                        •   No need to worry about
                            timing the market
                        •   We help in choosing
                            great stock picks
        Cost Averaging               Passive: The easy way through…

    Cost averaging is a technique designed to reduce
    market risk through the systematic purchase of
    securities at predetermined intervals and set amounts
                Buy fewer shares when prices are higher
                6                                           Month 1
 P5,000 will
only buy less                                                Month 2
                                                            Buy P5,000 worth
 shares here    5                                           of stock ABC at
                                                               Month 3…
                                                             Buy P5,000 worth
                                                            market price
P5,000 can                                                   of stock ABC at
                4                                              Buy P5,000 worth
 buy more                                                    market price
                                                               of stock ABC at
shares here
                3                                              market price
                    Buy more shares when prices are lower
Cost Averaging   Does it work? Well let history tell…




    Top of a
   Bull Market
     of Bull

                                                 Basket:
                                                  AC,
                                                  BPI,
                                                  MBT,
                                                  SMC
                                                  TEL
Cost Averaging   Does it work? Well let history tell…




Beginning
 of a Bull
  Market                                         Basket:
                                                  AC,
                                                  BPI,
                                                  MBT,
                                                  SMC
                                                  TEL
      Cost Averaging            Passive: The easy way through…
Our Premium Growth Stock GEMSS:
G- Growing industry              2000.0%
                                                                       Selected Premium Growth Stocks versus
                                                                                 Inflation 1990-2008
E - Earnings visibility          1800.0%

M - Management credibility       1600.0%

S - Superior products            1400.0%

                                 1200.0%
S - Strong balance sheet
                                 1000.0%

                                 800.0%
TOP 5                            600.0%

1) Jollibee -JFC                 400.0%

                                 200.0%
2) PLT - TEL
                                   0.0%
                                            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
3) Ayala Land - ALI
4) Bank of Phil Islands - BPI              Inflation                            JFC                          TEL                               ALI                         BPI                         MWC

5) Manila Water - MWC
    Active Investor             Active: Lets do some work…

Technical Analysis is the study of market action
(market price), primarily through the use of charts
for the purpose of forecasting future price trends
-- John J. Murphy ‘Technical Analysis of Financial Markets’




  Price        Study         Spot
  Action       Charts       Trends
      Technical Analysis     The Graphic Advantage


                                               The Highest
                                               price of the
                                               day
The First
traded price
for the day

                                               The Final or
                                               Last traded
The Lowest                                     price for the
price of the                                   day
day


               Stock:      “A”      “B”
  Technical Analysis   500,000
                                                 TOP
                       450,000
                       400,000
                       350,000
                                                                         BOTTOM
Land prices and        300,000
                       250,000

  Ayala Land           200,000
                       150,000
                       100,000
                        50,000
•Who topped                 0

                           91

                                 92

                                      93

                                           94

                                                95

                                                     96

                                                          97

                                                               98

                                                                    99

                                                                           00

                                                                           01

                                                                           02

                                                                           03

                                                                           04

                                                                           05
out first?




                                                                         20

                                                                         20

                                                                         20

                                                                         20

                                                                         20

                                                                         20
•Why?

•Market moves ahead
as people act in
anticipation of change.
      Technical Analysis   Trends & Consolidations
TRENDS
UP TREND
•Higher Highs and
Higher Lows
•Trendlines drawn by
connecting lows.
DOWN TREND
•Lower Highs and
Lower Lows
•Trendlines drawn by
connecting highs.

NO TREND
• Sideways shift/
Consolidation
• Prices must
breakout to re-trend
Our Roadmap
         Our Map   The Market Today

“PSEi”
PART FOUR




            Powering up with
            Online Trading
   Online Needs       All at the Palm of your hands
Get started?   CitisecOnline Provides:
                  • 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
Research   Looking for leads or stories…
     Stock Browsing                     Do your Homework




*Target Price = Estimated Fair Market Value   BUY   (Upside)   SELL (Downside)
    COL Rating:                               1     >16%        1     >16%
    BUY – Good and solid fundamentals         2     9%-16%      2    9%-16%
    SELL – Unexciting or poor fundamentals
                                              3      < 9%       3      < 9%
Stock Browsing   Get a Quote!
Stock Browsing   Examine its Trend!



                              Try our JAVA CHARTS!
                              What is the current trend?
                              Bullish or Bearish?
  Stock Browsing                Assess your Risk vs Reward
                                     (Try to maintain a 1:3+ ratio)



                              Reward
                                                                      Risk



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!
Buy / Sell     How to Execute an Order




                                               Term:
                                               ATO – at the opening
                                               GTC- good till cancelled
                                               ATC- at the close
                                               EIP – Easy Investment Prog
 MEG
 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
Buy / Sell   Monitor your Portfolio
  Stock Browsing                Reassess your Risk vs Reward

                    BUY-2
                    MEG                                Risk

                    2.90     Reward
                    2.60
                    11.53%

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!
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 Reward
•Trade active stocks; avoid thinly traded issues
•Do not overdiversify, concentrate on a few well
selected stocks (3-5 issues)
• Remember: Plan your trade and trade the plan
(discipline = success)
       Summary


1. The building of Wealth
2. The Stock Market Option
3. Understanding Price
4. Choosing Fundamentally Good
   Stocks
5. Passive or Active Investor
6. Plan your trade  trade the plan
   (discipline = success)                 “Knowledge born from actual
                                        experience is the answer to why
                                      one profits; lack of it is the reason
                                                              one loses…”

                                                       - Gerald M. Loeb
 www.citiseconline.com


            Thank you and have
                great day!

  To learn more about COL’s Easy Investment
 Program or know more about our services and
       seminars please visit our website at
www.citiseconline.com or call our customer hotline
                   at 6-333-777

								
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