MPI and PNX Updates, January 28, 2012

I am reducing the TP for MPI from 6.35 down to 5.88 to coincide with COL's conservative view for 2013 for the benefit of our beginner investors. Why? Because the Philippine Stock Exchange Index has never reached a level this high before. We are now in uncharted territory, and what do we do if in unknown territory? We tread carefully.

Thus, MPI - cp 4.88, tp 5.88, bbp 5.11

If you unfortunately bought at 5.17 (the highest MPI has reached but was below the previous BBP), don't worry about it.

If you have 1000 shares of MPI (the boardlot for the 0.5-4.99 range, which should be the minimum number of shares you have due to the buy recommendation for MPI was around that time.), and sold at 5.88, you would still have P634 net gain.

If you bought at the 5.17 range and only have 100 shares, you will still have P23 net gain. Better than being it be negative.

For PNX, the company has declared a stock dividend of 30% (i.e. if you hold PNX until ex-date, you will gain an additional 30% number of stocks) + P0.1 cash dividend (i.e. you will earn P0.1 x the number of stocks you hold.)

If you don't already hold PNX, DO NOT BUY anymore. For holders, we are only after the capital gains. Our TP  for PNX is 14.9. If TP is not hit on the day before ex-date(to be announced), then you have 2 options:
1.) Hold PNX to get the stock dividends +cash dividends then sell.
2.) Sell PNX on the day before ex-date since this is the last day that any investor can be recorded to be eligible for the dividends.

As I kept warning about this stock, this is a high risk dividend play, and you should monitor PNX weekly, if not daily.

Also, there is a link on the bar to the right to subscribe to my blog via email(its free). I highly recommend you guys subscribe using your main email so you can check for sudden updates like this one. One of these days (hopefully not soon) I might give the recommendation to go liquid or to sell everything you have. That time will happen when the PSEi is already so overheated that a market crash will soon occur.

Remember, the stock market has its risks and we reduce this risk through market study and educated guesses, but no one has a crystal ball. So if there are strong indicators of a market crash, and I tell you to sell, please do. Don't wait for a confirmation the next day or the next week so that you can prove your point that I was wrong or try to be greedy and not sell because you just bought into a stock.

"Be greedy when others are fearful, but be fearful when others are greedy" - Warren Buffet

By this time, alot of people will have heard of the PSEi breaking records every week. They will want to join the bandwagon and buying stocks left and right without the correct emotional discipline and information.

As always, Caveat!