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Stock Investing Basics. Presented by: Hernan F. Segovia Summit Securities, Inc. Disclaimer. I’m not an expert I’m a small investor Thoughts are based on experiences. Why The Stock Market?. Liquidity Opportunity for Higher Returns Better prospects for Long term growth Easy Access
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Stock Investing Basics Presented by: Hernan F. Segovia Summit Securities, Inc.
Disclaimer I’m not an expert I’m a small investor Thoughts are based on experiences
Why The Stock Market? • Liquidity • Opportunity for Higher Returns • Better prospects for Long term growth • Easy Access • Low Interest Environment
To whom is stock investing for? • To those who desire to grow their EXTRA cash • To those who desire to monetize what they know • To those who have emotional maturity • To those who love the never ending journey of learning • To those who enjoy talking about ideas • To those who love a rewarding mental exercise • To those who wish to improve his/her outlook in life • To those who have patience • To those who wants to improve his/her financial literacy
When should you invest? • When you are ready. Readiness means how equip you are in stock market investing. • Having steady source of Investible Funds. • Favourable Market Conditions ... But • Depressed Markets will bring the best of you
New Investors Mistakes • Identity Crisis • Wrong Principles being Applied • Shortcuts – Greed vs Patience • Little or No Emotional Maturity • Uses Hope as Strategy • Buys Long Term but Think Short Term • Revenge leads to Gambling
How to Get Started in Stock Investing? • Set aside cash (enough to keep your emotions out of the stock market) • Find a broker • Selecting and buying your first stock
Set aside cash • Pay all your debt • Set aside cash as emergency fund (6 month worth of salary) • Doing the tasks above will free you form any emotion in stock investing
Find a broker • 2 types of broker • Traditional • Online brokers • Things to consider in selecting a broker: • You are COMFORTABLE doing business with • Commission rate • Unquestionable character • Experience counts
Selecting and buying your first stock • Sound Fundamentals • Trending Technical • Generous Dividends • Historical Price Performance
Fundamentals • China Banking Corporation (CHIB) was incorporated on July 20, 1920 and commenced business on August 16 of the same year as the first privately-owned local in the Philippines. CHIB resumed operations after World War II on July 23, 1945,and played a key role in the post-war reconstruction and economic recovery by providing financial support to businesses and entrepreneurs. CHIB acquired its universal banking license in 1991. CHIB started by mainly catering to the Chinese-Filipino commercial sector, but has since expanded its market scope to include the retail and consumer segments. CHIB's main businesses include corporate and SME lending, retail loans including mortgage and auto loans, treasury and foreign exchange trading, trust and investment management, wealth management, cash management, insurance products through wholly-owned subsidiary China Bank Insurance Brokers, Inc. and affiliate Manulife ChinaBank Life Assurance Corporation, internet banking and mobile banking services and remittances through tie-ups with remittance companies and exchange houses in the Middle East, Asia and major US cities. The Company also expanded its foreign currency deposits to include Yuan, offering CHIB Yuan Savings Account to cater to clients' trade, investment and remittance requirements in this currency. On December 18, 2013, the Company obtained the approval-in-principle of the merger between Planters Development Bank (PDB) with either CHIB or China Bank Savings, Inc. (CBSI) within three years from December 13, 2013 (the date of MB approval), the first stage of which is the acquisition by CHIB of 84.77% of the outstanding subscribed capital stock of PDB. The Company's other subsidiaries consist of CBC Properties and Computer Center Inc.; CBC Forex Corporation; and Unity Bank, A Rural Bank, Inc. CHIB's products and services are made available across multiple distribution and delivery channels, particularly through its 367 branches and 561 ATMs nationwide. Source: http://www.chinabank.ph
How to become a Successful Market Investor • Excellent Emotional Maturity • Avoid SCAM (Stocks Con Artist Mined) • Study / Deciphering Disclosures • Know the movers and shakers • Discipline • Patience • Proven Strategy • Listen to your elder’s advice, not because they are always right but because they have more experiences of being wrong – senor INDO of SMP
How to make money in stock investing? Ways to make money is the stock market: • Dividends – Cash, Stock and Property. • Capital appreciation – Prices of stocks increases • Stock Rights – Prices of stocks offered at a discount • Preferred Shares – Have a fixed rate as high as 8.5% per annum • Private Placements – Offered to institutions at agreed price (discounted over last traded price) • Window Dressing Play – Look for stocks that poised to end higher on the last few days of trading year
How to make money in stock investing? Ways to make money is the stock market: • Tender Offer Play - Offer by company to minority stocks holders like us. recently PAX and COAT. • MSCI play - stocks that have been added or increase weighings to MSCI indexes are likely to benefit from the program. Local version is our PSEindex rebalancing every six months (May and Nov). • Contest – The ForexChampionship, Sparkprofit.com , Stox+ • FOO – Follow on offering. Usually cheaper than market price.
3. How to avail PNB Stock Rights without shelling out a cent • January 10, 2014 at 2:51 pmLeave a commentEdit • Date of Approval by Board of Directors Nov 7, 2013Entitlement Ratio 15 new shares for every 100 old sharesOffer Price P71.00/shareNumber of Shares to be Offered 162,931,262Ex-Rights Date Jan 13, 2014Record Date Jan 16, 2014Start of Offer Period Jan 27, 2014End of Offer Period Feb 3, 2014 • For our example if you wanted to hold on to your shares. you have 1,000 shares of PNB bought at say 85. You are entitled to 150 shares. That will cost you 150 shares x 71/share = 10,650 Pesos.Since you have no funds, you will probably hit that NO button, right? Big Mistake. • So: What to do? • So What: You sell some PNB to pay your stock rights. Since you need 10,650 pesos, you need to sell, say 150 shares at 77 (granting pnb will correct more), that’s 11,550 pesos gross. • So What Now: Problem solved. earning you some meals along the way. Your 1,000 shares original shares less 150 shares you sold is now 850 shares.. BUT wait, you have 150 shares as rights making your holdings still at 1,000 shares.
3. Now for CHIB Stock Rights… • For every 8.834 shares you have, you are entitled to buy 1 share of CHIB at 49.50 per share. At current price of 61+ pesos, that’s a 20% discount • So lets do the simple math (no commission/charges for easy solving) • For traditional brokers, we advise clients to take the rights. If they don’t have the money then they can sell some on the ex-date. Example if said client got 2,000 shares, he or she is entitled to 226 shares at 49.50, that’s 11,187 pesos. • Client then can sell, say 190 shares come ex-date (say at 60) and comes out with the proceed of 11,400 pesos, enough to pay for the rights. • His or her 2,000 shares less 190 shares is now at 1,810 share but upon paying the rights of 226 shares (using the proceed), he or she will now have (come payable date) 1,810 + 226 = 2,036 shares. A 36 shares gain. Better than doing nothing and not availing the stock rights.
3. SRO Plays can be found at • www.spyfrat.wordpress.com • Stockmarketpilipinas.com fb page • https://www.facebook.com/groups/321440561264185/permalink/783879768353593/
4. The Best Preferred Share to end 2013 (gain of 32.56%) • December 20, 2013 at 9:51 am • My admiration goes to FGEN Series “G” with 4 cash dividend declarations of 3.8904 pesos per share (since inception, cash div given semi annual) and with price appreciation of 17% (high of 117 from offer price of P100 face value). • Inception Date: May 2012Yield: 7.7808 per yearFace value: 100 Pesos • FGEN Series “G” 19-month return is 32.56%. This beats our former star, Petron preferred share of 31% gain for 2 years (price appreciation of 15% and 2 yrs of 8% yield). • http://spyfrat.wordpress.com/2013/07/02/preferred-shares/
6. Insider’s Guide for Window Dressing Play / Broker’s Analysis
7.Tender Offer Play - PAX • Tender is 3.20 per share • You buy max price 3.17 (for those who have 0.25% commission) • Most rewarded for big players as they have been bucks to accumulate • Small investors can earn too. • Example: buying pax 10k shares at 3.10 (10k x 3.10 x 1.0029) = 31,089.90 ; you tender your shares at 3.20 will yield around 31,840 for a gain of 750.10 • Now if you’re a big player and instead of 10k shares, you buy 1M shares. You gain 75k.
Technical Analysis • What is Technical Analysis? • Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time. • Technical analysis is applicable to stocks, indices, commodities, futures or any tradable instrument where the price is influenced by the forces of supply and demand. • Source: www.stockcharts.com
Strengths of Technical Analysis • Focus on Price If the objective is to predict the future price, then it makes sense to focus on price movements. • Supply, Demand, and Price Action In its most basic form, higher prices reflect increased demand and lower prices reflect increased supply. • Support/Resistance If prices move above the upper band of the trading range, then demand is winning. If prices move below the lower band, then supply is winning.
Strengths of Technical Analysis • Pictorial Price History The price chart is an easy to read historical account of a security's price movement over a period of time. With this historical picture, it is easy to identify the following: • Reactions prior to and after important events. • Past and present volatility. • Historical volume or trading levels. • Relative strength of a stock versus the overall market.
