EW - sleeper update 2

So our sleeping East West finally took off. Yesterday's candle closed at 15.98 with a high of 16.30. I hope you accumulated this in the 15.24 area, because psychologically, the downturn wouldn't scare you.

We began our vigil for East West here: East West Sleeper Play
And the first update can be found here: EW sleeper update 1

Immediate support should be at 15.35. RSI 30 shows EW attempting to breach 50 but wasn't successful. Expect the stock to go down abit further possibly to the 15.58 which is the 61.8% fibonacci retracement level. Check the image below. (click to enlarge)

Sell or hold, it is up to you. If it begins to go below 15.58, then sell to lock in your profit. Please note that price during the IPO was in the 20 peso level. Congratulations if you've made it this far!

Caveat and God bless your investments!

EW: sleeper update 1

We've seen that East West Bank fluctuate. Fortunately the fluctuations have been mild. Also, because of the $81 million money stolen from Bangladesh, EW was affected due to two of the accused as being former employees of East West Bank (Maia Santos-Dequito, and Allan Penalosa). This likely affected the stocks performance (through market psychology), and potential buyers stayed away.

Here is an article today wherein EW Exec reaffirmed his statement issued during the senate hearing that his bank did not have any transaction linked to any violation of the Anti-Money Laundering Act (AMLA).

You can find the full article here: Don't drag us into your mess, RCBC told 

Let's check EW's chart. (click on the photo to enlarge)

The red mark-down arrow is when the two accused were mentioned as former employees of EW (the day Enrile wanted to cite Deguito in contempt). After that small dive, price action has moved along the upward trend line. 

There was resistance at 15.28, but now it has become support. Move stop loss from 15.02 to 15.14.

For now, refrain from adding into your stock positions. If you can, add this to your watchlist and buy only when 15.40 resistance has been broken (i.e. buy at 15.42 when price action increases with good volume).

We are in no rush. Just sit and wait and follow the trading plan.

Caveat and God bless!

FLI: sleeper update 3

Here are the last posts, in order, about FLI:

• First
• Second
• Last

Our first sleeper pick traded at the close of 1.75, with a high of 1.80. Today's candle shows a long wick which accounts for nearly 25% of the candle. This means that buyers/ bulls tried to drive the price up to 1.8, but there were more sellers at that level and the sellers/ bears drove the price back down to 1.75. (click on photos to enlarge)

Will price go down? Let's look at the stock's history: 

Resistance area closer to recent price:

If you notice on the photo above, I use RSI 30. I feel more comfortable with this setting than RSI 14. I learned this from Spyfrat and how it can be a powerful tool aside from just determining overbought and oversold areas. Here's a link to his blog: Spyfrat's Call

RSI 14 vs RSI 30. It's all a matter of personal preference.

FLI will likely go down tomorrow. Keep an eye on price action while it declines and see if it bounces off of the 23.6%, or 38.2% fibonacci retracement levels.

Retracement to price are as follows:

23.6% retacement = 1.70

38.2% retracement = 1.65 

Or you can use today's low as your stop loss (1.66). If it falls below that, then CUT to preserve profits.

Will write an article for EW soon, so keep an eye out for that, or subscribe to this blog (Its free!) so you can be notified via email once I make a new post. 

Caveat and God bless!

FLI: sleeper play update 2 - Breakout!!! Now at 1.63!!!

Our patience is beginning to pay off. We first began our vigil on FLI with this first post on Feb. 18, 2016: FLI: sleeper?

Below is the screen shot when I initiated my buy. (click photo to enlarge)

Here is the next photo from the last update on Feb. 24, 2016: FLI: sleeper update
(click on the photo to enlarge)

And here we are today. (click on the photo to enlarge)

If you didn't listen to my warnings and bought anyway, then congratulations! Hehe!

I usually use EMA 15/30 or EMA 10/20, depending on the stock. Each stock is unique so there isn't a once size that fits all of them.

I also put heavier reliance on RSI versus stochastics due to preference. RSI tends to be more accurate or clear for me when divergences occur.

What now? Monitor the EMAs. If the slower EMA begins to cross over or is crossing over the faster EMA, then sell. Simple as that. If the stock continues to go up, then you might consider adding a few more shares especially if it breaches the 38.2% fibonacci level with strength and volume.

Since this has already broken out, I am now looking for the next "sleeper play".

2GO looks promising.

Caveat and God bless!

PCOR Analysis with Elliott Wave

I am still continuing with my Charts and Technical Analysis (TA) self-study, and after reading Ms. Guillen Rocher's post about FNI, I wanted to try my hand using Elliot Wave.

You can read Ms. Rocher's post about FNI here: The Story of FNI-ipit (Simple Thesis)

From what I've read in stockcharts.com, the basic Elliott Wave sequence consists of Waves 1, 2, 3, 4, 5, A, B, C. You can read up on it here: Elliott Wave - Stockharts.com

Let's take a look at PCOR's chart. I tried doing the count with the daily time frame but wasn't successful. I switched it to weekly time frame and I think I have the sequence plotted. FYI, Although I have heard of the Elliott Wave pattern before, I never really bothered to use it in my chart analysis until now, so please bear with me. This is not a recommendation to buy or sell PCOR. This is to record my continued studies in using TA when analyzing charts.

Below is a screenshot of the PCOR chart back in late 2001. The waves are marked with text bubbles. (click on the photo to enlarge)



Based on the Guidelines shown in Stockcharts.com, one of the guideline states:

Guideline 2: The forms for Wave 2 and Wave 4 will alternate. If Wave 2 is a sharp correction, Wave 4 will be a flat correction. If Wave 2 is flat, Wave 4 will be sharp.

Also, after viewing some videos at youtube, I found this video particularly helpful: Simplied Approach to Elliott Wave Analysis, I learned that wave 2 usually retraces to 61.8% fibonacci from wave 1. If you look at the picture above, it does indeed touch the 61.8% line. This encouraged me that my count was at the correct area.

Let's continue the count. (click on the photo to enlarge)


Now this is where it gets tricky...I am not confident with my Wave A-B-C pattern. If you look right after the high of wave 5, there is a small rally and I do not know if the count should've begun right after 5, or if I should begin after the rally failed.

The picture below zooms in on the wave C area. (click on the photo to enlarge)



Assuming that the count is correct (yes...it is an assumption so please do not buy PCOR based on this article!), The recent rally ought to be Wave 1. Latest candle shows that the bulls are losing strength, and price should retrace back to 61.8% fibonacci area. The green arrow shows the possible bounce, purple arrow shows the possible breakdown.

Below is a picture of the support areas shown in green-dashed lines. (click on the photo to enlarge)


RSI is currently above 50 but is turning downward. Volume is also declining.

Now all we have to do is sit, wait, and observe what will happen next. If price does indeed bounce off the 61.8% fib retracement, then wave 2 will have been completed and the next one is the big wave 3.

Feel free to comment below. I didn't know that I had it disabled until now.

Caveat!

FLI - sleeper update

Here's the link to the previous article: FLI - sleeper?

Although FLI went down since Monday, it has found momentary support at P1.50 and has not negated the ascending triangle pattern.

I still have my stop loss set at 1.48. RSI 30 still shows a steady increase while Stochastics 14 showed a decline after reaching overbought area.



This play is experimental and I am not encouraging you to try it.

Caveat!

Stock in Focus: FLI - sleeper?

As coined by ZeeFreaks from his blog: Sleeper Plays 101. I would also recommend you read his article about bottom fishing.

I have always wanted to be a pseudo-position trader because I cannot check charts and prices due to my job. After reading this article, it got me to thinking and wanting to try my hand in spotting sleeping stocks.

My conditions were the following:

• Must at least be a 2nd liner.
• Must have good fundamentals with manageable debt.
• Must have good potential projects in development.

My strategic approach will be to employ a cost-averaging method for sleepers and use charts to check if the stock is still going where I want it to go. If not, then cut loss.

I made my first "sleeper play" today with FLI. See the chart below.

Resistance:1.54. Cut loss based on trendline: 1.48. Target Price: Based on trailing stops.

Intrinsic value: 2.44 (based on 10 year DCF with 1st 5-year growth at 10% and next 5-year growth at 5%)
ROE: 6% (yuck)
Total Liabilities payable within: 20 years (di puede 15 years na lang sana?)
Implied P/E at current price of 1.54: 11.7x
Beta: 1.46

This is a testing-phase for this system and I do not recommend you follow it just yet since this isn't tried and test. Caveat!

Stock in Focus: MCP possible iH&S

Todays movement of MCP has possibly formed the right shoulder for the inverted Head and Shoulders Pattern which is bullish.

Neckline is at the 2.35 area while the "shoulders" are nearly aligned at 1.86 for both Dec. 22,  2015 and today's candle.

I am weary of this particular iH&S because of the small consolidation slightly above the left shoulder.  This would indicate that if the neckline is broken at 2.35, price will bounce once before continuing the breakout of the 2.55 resistance (small arrows in Possible Scenario). The other scenario is a straight break out through 2.55 with a new resistance of the 38.2% Fibonacci retracement at the 3.55 price area.

Caveat

Stock in Focus: MCP

MCP showed a reversal candle today after a series of down days. Bought at 1.95. Set cut loss at 1.84. 

Resistance: 2.35

Support: 1.85-2.00 area.

This will be a swing trade. Caveat.

Stock in Focus: LC

Despite PSE diving 127 points, Lepanto Consolidated Mining A (LC) rose 48.35%. LC opened at the low of  0.191 and closed at a high of 0.27 with 237.85 million in volume. This is a 162% increase in volume versus an average of 112 million in volume for the past 10 trading days. The surge of LC could be attributed to the rise of gold prices which has risen by more than 12.5% since the start of the year.

In analyzing LC's chart, we will look at it from a Weekly and Daily perspective.

Weekly Chart:

Likely major resistance will be at the 61.8% fibonnaci retracement levels or 0.33 centavos. Increase in volume indicates that this is a strong upward trend due to the 162% increase versus the average past 10 days. Stochastics and RSI have yet to reach oversold levels.


Daily Chart:

In the daily chart, Stochastics and RSI are already within the oversold levels. Based on your trading strategy, you can opt to view charts at weekly ticks rather than daily ticks.

If you wish to join the trend, allocate a spot buy portion (20% of cash) for a test buy. Set cut loss at 0.17 which is a few ticks below today's long candle.


Caveat Emptor.

DNL

DNL traded with 18 million in volume last friday. Since Monday was a holiday (Happy Chinese New Year!), S&P's -35 point drop might slightly affect this uptrend. If the 8.40 price is broken, next resistance will be at the 9 peso level which is 50% of the fibonacci retracement.

Stochastics is nearing oversold territory however RSI still has to catch up.

Caveat Emptor.

Been Awhile...Posting the Graham Number and ROE of PSE's Index stocks

Hello All,

My sincerest apologies that I have not been posting. I've been quite busy with work and still trying to find that "Holy Grail" of investing. When I began this blog, I was sorely focused in using fundamental analysis when analyzing stocks in the Philippine Stock Exchange.

Lately, I've been studying Technical Analysis and see if the "Holy Grail" was there. Alas, it wasn't. I know many of you will think that value investing is the true grail, but I need to face the music...I suck at discounted cash flows. I can never stick to what percentages to use as growth rate. When I do, I then second-guess myself until I become paralyzed in my analysis.

Anyway, back to basics. I'll be posting summarized data for you such as the Graham's Number for Stocks and a complete ROE list for all stocks in the PSE. For now, this post will only cover the 30 stocks in the PSE index. Below is the screenshot:



The Graham Number's formula is the square root of (22.5*EPS*BVpS). I'm sure you have heard of Bo Sanchez and his Truly Rich Club.The number by itself should not be construed as the "end-all" intrinsic value of the stock since there are other factors that need to be considered. Such factors include debt management, ROE, growth in earnings year-on-year, management honesty and such.


The purpose of my using the Graham Number is to do a quick-scan of potential inexpensive stocks. I then review the company's ROE and benchmark it against other company's in that industry.

I'm sure you have heard of Bo Sanchez and his Truly Rich Club(TRC). It was in TRC that I learned of the concept of the Buy Below Price(BBP). I consider the BBP as a cushion or my own margin of safety(MoS). I know that Benjamin Graham meant other factors when he wrote about MoS, but as I mentioned already, this is for the purpose of doing my quick-scans.

CP stands for Current Price. The IF-ELSE statement in the spreadsheet will automatically tell me if the current price is below my MoS or BBP with a simple Yes or No.

I am slowly doing the entire list of PSE stocks but it might take awhile. Please note that the data used in this spreadsheet is for the 3rd quarter of 2015.

I will also begin to post technical analysis on "hot stocks" and where their possible supports and resistances may lie.

Thats all for now and as always Caveat.

~Crimson

Stock Update as of November 24, 2013

Wow…the PSE has been like a roller-coaster ride recently, and this has caused many of us to panic and want to sell. I don't blame you. After seeing your port go red and the image of that negative balance lingering in your head just won't go away.

My advice to you is to compartmentalize it, but its gonna be tough. You must make a conscious effort of not to think about it. Find a distraction or discipline your mind. Always remember that you are investing for the long-term. From the beginning of the PSE until today, if you had been invested, you would have had an annual growth of 12% even through the Asian Financial Crisis, and the global financial crisis in 2008.

Keep that in mind and stop looking at your portfolio everyday!

Last Friday we saw the PSE plunge from 6,165 to 6,085 at the close.

For the stocks that is on our list, see the table below:

As you can see, I've added the P/E ratio for your guidance. The lower P/E or Price-Earnings Ratio, the better, but this only applies if the company has a steady growth in sales, earnings per share, and has manageable debt.

From the list, we can see that now is a good time to buy MBT (with a P/E ratio of 6.5) and CPG (P/E of 7), but remember…the stocks highlighted in yellow should be the stocks you prioritize when doing your Peso Cost Averaging.

Let's see how this plays out and remember that we are investing for the long-term.

May God bless your investments,

~Crimson

Stock Update as of September 3, 2013

Whew! It has been awhile and I apologize for that. The whole month of August was quite busy for me. Anyways,  on to the update.

The PSE opened today at 6,072 and ended at 6,083 for a 22.11 point gain or  0.36%. Not much...

We are finally nearing the end of August Ghost month, or as others call it, Aughost month. MBT declared a 30% stock dividend and the ex-date was last August 29, 2013. Thats why there is the sudden drop of price by 30% also.

If you see your MBT portfolio red by 25%, relax. The additional shares haven't been credited just yet and the new shares will be credited to your account on September 16, 2013.

Now on to the table...

As you can see, all prices have gone down if you compare it to my August 29 stock update. The Ber months are now approaching (september, october, nov, dec.) so we ought to be seeing these stocks go up, BUT DON'T BUY TOO MUCH.

You may be wondering why the BBP levels have gone down. I increased the gain rate from 15% to 25% so that we will not be chasing prices to higher levels.

I'd advise you to buy minimally or by board lots only. Why? We need to wait on America's decision on whether they'll go to war with Syria or not...and yes, our stock market will be affected if they do go to war with Syria.

So be cautious for now because to be honest with you, this is the WORST ghost month I have experienced.

Remember to set your cut loss prices. Mine is -20% for stocks I am confident in, and -8% for stocks that I am not so confident in, unless you have nerves of steel. If you do have nerves of steel, then continue on with the Peso Cost Averaging method of investing. Why? Because 10-15 years down the line, these dips will not matter.

As for me, I'm going to be adopting a change in strategy and you can read all about it here: A Change in Strategy.

Caveat Emptor! And May God bless your investments.

~Crimson

Stock Update as of July 26, 2013

Hi Guys...been awhile, and I apologize for that. Been busy studying technical analysis to add to my arsenal.

Anyways, on to the guide. We can see now that the PSE's resistance points are at 6,800 level, and if that breaks, at 7,000-7100 levels. Keep this in mind when buying your stocks. Also, Ghost month (August 15 - September 15) is approaching. This usually means that stock prices will go down, so set aside some cash for buying opportunities.

The day started at the 6,815 levels, but the bulls failed to push past resistance, and so the bears took over and drove down PSE levels to 6,732 levels. As for our stock picks:

I've highlighted priority buys with yellow. BDO, MBT, and BPI are currently under review by Moody's on whether they will receive a credit rating or not. So far, Moodys has only given the PSE positive feedback which is good news.

You might have noticed MER's volatile price action due to SMC selling a lot of its shares. If you were able to buy during the dips, then congratulations. 

As I mentioned before, the Ghost month is approaching, so we will be experiencing little price movement towards our target prices. Remember to control your emotions and instill discipline. 

My Technical analysis is still a bit rough, but here a few charts to consider:

BDO seems to be in a short-term downtrend, but DMI doesn't confirm this. The candle touched the lower part of the bollinger band which is usually the support line. I added a few shares at this level.

LRI broke through support today, and the downtrend is confirmed by DMI (but DMI has been that way for awhile now). Anyways, Stochastics is headed towards the oversold levels. Watch out for a doji before buying.

MEG trend lines are showing an uptrend but isn't confirmed yet by DMI, but stochastics is in the overbought level. If this trend continues, we will see MEG at 3.65. Watch for a break in resistance levels before buying.

I encourage you to start studying technical analysis. Your investing plan should consist a mix of Fundamental analysis and Technical analysis. Fundamental analysis is for picking which stocks to buy. Technical analysis is for when to buy and when to sell.

Remember to always protect your capital.

Also, take my technical analysis with a grain of salt since I'm still quite new at it.

And as always, Caveat Emptor!

God bless,

Crimson

Stock Update as of June 24, 2013

The situation we are in right now is scary and I don't blame you when you see the value of your investments and money shrink away. The day started with PSE at the 6,150 level, only to drop all the way to 5,950 levels.

Take a deep breath and calm your mind.

Will the PSE go up anytime soon?

No...we are now in the downward trend.

Should I sell and cut my losses? It depends on what stocks you have. If you hold FPH and SMPH, cut loss on these 2 stocks now. Otherwise, if you followed the list I have been publishing, then you will be alright if you just hold. But, if you wish to cut-loss, that is okay.

I entered investing with a time frame of 20 years from now. Which means I will be 50 by the time I plan to use the funds in my portfolio...

that's a long time from now.

Either way, here the journey for maybe some of you ends. Will this drop scare you from investing in  stocks forever? Or do you see this as a buying opportunity?

Ask yourself that. If you wish to continue, then we will see each other again as I will keep on giving out stock updates.

If not, then may God bless you in all your endeavors for this is where we will part.

I know it may seem useless now, but I'll write anyway.

If you hold FPH and SMPH, cut loss these stocks. As for MPI and MWC, the government is stepping in to regulate water utilities. Since MPI partly owns Maynilad (a water supply company) their profits might also be affected, so if you plan to continue investing, HOLD from buying these stocks.

The Stock Market is likely to continue going down. My advice would be to buy slowly, if not hold your cash until the market reaches bottom.

Caveat and may God bless your investments.

~Crimson

Stock Update as of May 30, 2013

Today must have been a very bad day for investors that just started to put their money into the stock market.

I would like to talk about 3 topics on this update. They are the following:
1.) Stock Update
2.) New PSE products
3.) What happened today?

1.) Stock Update

The day started with the PSE index at 7,200 and slowly started to slide down to the 7,100 level. Then the news of the Philippine GDP was released. PH GDP was at 7.8% at the 1st quarter, beating estimates of 6.1%

Congratulations to AGI holders who sold on May 15 when TP was hit. FPH is currently on hold status because its subsidiary, FGEN, 500 MW plant had to shutdown due to fire and this affected the stock along with the slump we have seen.

2.) I attended a seminar given by PSE last May 23 at the Marriott hotel and learned that the PSE is developing some very interesting new products. They are the following:

Exchange Traded Funds (ETF) - These act like mutual funds, except you can buy and sell them using your online brokers. Basically, when you buy an ETF, you are buying the enitre PSE index. Instead of buying stocks for every one of the 30 companies in the index, you just need to buy ETF. Warren Buffet always said to buy index-based funds, and this is the one he is talking about. ETF will be available on June 2013.

Short selling - soon, the PSE will allow short selling. One of the ways to make money in the stock market right now is when stock prices go up. The other is through dividends. With short selling, investors can now gain money when a stock goes down. How does this work? Lets take for example stock ABC which has a current price of P10. You did your due diligence and think that stock ABC will go down to P2. Short selling is "borrowing" the stock from PSE. So, you borrow stock ABC from PSE, sell it at P10. After some time (I dont have the figures yet), you will need to pay PSE for the stock. If ABC goes down to P2 by the time you need to pay for it, you only need to pay P2 and pocket the P8.

Exciting stuff.

3.) What happened today was this: The US stock market went down by 10%. Big foreign institution buyers quickly sold their stocks here and transferred their funds to take the opportunity in buying cheap stocks in the US. It is as simple as that. Also, our stock market has been growing so fast, that it needed to consolidate.

Now, what should we do? I also don't like seeing red in my portfolio, but is better to establish a cut-loss and save your money than to continue risking it. Is the stock market overheated? Yes, I honestly think it is. Will it still move up some more? Yes, but it will be slower than how it did in 2012.

Rule of thumb: make your stop loss at 8% no matter what stock it is. Be aggressive in cutting losses.

For newer investors, let me introduce you to the saying: "Sell in May, then go away." I don't really know who was the first person to say this but I keep reading it a lot about investors who, when May comes, sell everything and lie low. 

Now, why does this happen in May? From what I know, it is the time of year that alot of investment people in Wall Street take their vacations which leads to inactivity in the market. Whether this is true or not, I cannot prove.

As I said above, I think our stock market is now overheated and is reaching its resistance level at 7000++. What to do? Our options are

1.) Go into the bonds market. Bonds are fixed income based and is risk free, but at a lower interest rate(1.5% per annum vs savings account of 0.275% per annum).  The downside to this is that current inflation rate is at 3.7%, so your bond earnings is not enough to beat inflation.

2.) Put your money back into your savings account.

The choice is yours. Yes, our market now is quite risky. As for me, I'll wait for a few more months. Then I will shift 50% of my capital to bonds.

Be more cautious and May God bless your investments.

~Crimson

Stock Update as of May 8, 2013

I gave out a HOLD signal from buying anything earlier. Please see this link for the full details:

http://pse-investing.blogspot.com/2013/05/hold-from-buying.html

What this means is that, if you added capital, refrain from buying for now. Why? Because prices might become cheaper in the next few days.

For those that do not know the term "support", this is the price level wherein if a price goes down in price, it is the level where people/buyers "feel" that the stock is cheap and will buy that stock once more. This rush in buying stops the stock price from going down further and is termed as the "support level".

Moving on to the update, congrats to MER holders for hitting the target price. I will soon remove MER from our next stock update.

As you can see from the above photo of PSE's price movement today, it started going up to the 7,185 level, and dropped back down to the 7,175 level until lunch break. Continue to observe the movement until this afternoon and tomorrow.

So based off the update above, we can see that EEI and COG have the largest upside. MPI is nearing TP, so I would set a GTC (for COL users) order to sell at P6.55 already by now. COL changed GTC order duration from 7 days to 60 days.

For non-COL users, try and see if there is a sell order that makes your order valid for 7-days or more.


As always, caveat emptor and may God bless your investments.

~Crimson

Stock Update as of April 23, 2013

The word for the day is----- RELAX!

 Yesterday the PSE breached the 7,000 level and reached 7,100.

Today, at 10:25 am, it began to dip to the 7,000 level, but went back up to the 7,050 level by lunchtime.

The market is always moving and some of my friends were asking me what to do? Should I sell? I want to sell! What else should I buy? Should I buy? I want to buy!

Take a deep breathe and relax. The market will always be there and will always move like this. Discipline yourself to follow the simple rules we have set:

1.) As long as the price is below the buy below price, we keep buying.
2.) Once it reaches target price, we sell.
3.) Maintain 3 stocks from different sectors.

Here's the stock update

I added CPG and MEG. Here's why:

Century Properties Group, Inc. from COL's research

• Net income reaches Php1.86Bil. Century properties reported a net income of Php1.86Bil for 2012, more than double from the previous year of Php866Mil. This is in line with our estimate as it accounts for 100% of COL forecast but only 93.7% of consensus forecast. Growth in income was driven by a 104% growth in revenues for the year as the company booked revenues from its launched projects.

• Pre-sales reached Php21.40Bil. CPG reported that full year 2012 pre-sales has reached Php21.4Bil, up by 16.6% from the previous year. Strong pre-sales figure came from the back of continued successful launch of existing projects. According to CPG, total units opened for sale as of 2012 were 92% sold. The company added that pre-sales as a percentage of inventories has now accelerated to 127%. The strong take-up brought unbooked revenues to Php27.9Bil, which is good for 24 months. Meanwhile, customer split leaned further to non-Filipinos, with international clients accounted for 74%, up from 69% reported in 3Q12.

Megaworld Corporation

• We reiterate our BUY rating on MEG and raise our FV estimate from Php4.00 to Php4.90 as we increased our NAV estimate from Php5.30 to Php6.53 to reflect the favorable impact of higher property prices on its landbank. Asset price appreciation is one of the key drivers for property companies. Higher land prices and the anticipation of further increases in the future resulting from low interest rates, strong economic growth and infrastructure developments have already benefitted the share price of companies like Ayala Land and Vista Land. However, this has yet to be reflected in share price of Megaworld, notwithstanding its huge landbank found in attractive locations in McKinely and Cebu.

• Asset price appreciation has been one of the themes for property developers since last year. Investors continue to buy shares of ALI despite its expensive valuation relative to earnings largely due to the increasing value of its landbank in Nuvali, Makati, Fort Bonifacio, and most recently FTI. As ALI continues to develop these properties, prices are expected to keep rising over the long term. VLL has also benefited from the increasing value of its land in Daang Hari property. As stated in our VLL report, the Daang Hari-SLEX link project has fueled a significant increase in lot prices in VLLs project in Daang Hari.

• We believe MEG will also benefit from the ongoing appreciation in property prices given the attractive location and size of its landbank. MEG has around 45 hectares of raw land in McKinley Hill, Uptown Bonifacio, and McKinley West combined. These properties are in close proximity to Fort Bonifacio and FTI, both of which have shown a significant increase in property prices recently. According to Jones Lang LaSalle, the price of commercial lots in Fort Bonifacio have climbed to more than Php400,000/sqm from Php250,000/sqm in 2011, while commercial lots in ALI’s recently-acquired FTI property were sold at a high of Php180,000/sqm. In line with the increase in prices of the said properties, we are raising our fair value estimate for MEG’s McKinley landbank from Php70,000/sqm to Php120,000/sqm.

• We also increased our estimate for MEG’s Mactan landbank to Php25,000/sqm. We previously valued the Mactan landbank a very conservative value of only Php4,800/sqm which is based on the company’s acquisition prices. Note that commercial lots in Cebu IT Park and Cebu Business Park are already being sold at Php50,000/sqm.

• We are positive on MEG’s prospects in Cebu given the rapid growth of in the region. In 2010 and 2011, the GPD of Central Visayas, which Cebu is part of, grew faster than the national GDP. Central Visayas grew 12.5% and 7.9% in 2010 and 2011 compared with the country’s 7.6% and 3.9% respectively. In line with its strong economic growth, the island of Ceub offers much promise in hosting the next-generation CBDs. It is also very appealing to the tourism market as it is frequented by not only locals but foreigners like the Japanese and Koreans. In fact, according to MEG, a lot of Koreans and Japanese have acquired residential units in their Mactan Newtown project. Property prices should increase further once the new Mactan-Cebu International Airport is constructed as it would expand the airport’s capacity from 4.5 Mil to 8 Mil passengers annually, facilitating the growth of tourist arrivals.

So CPG and MEG are from the Real Estate Sector. For SMPH holders, switch from it to another of these 2.

As stated above, relax! The more you move in and out of stocks, the more commissions you must pay and eat away from your profits! As Warren Buffett said: Don't dance in and out of stocks. Only your brokers will be happy.

May God bless your investments...

~Crimson

Stock Update as of March 26, 2013

SM is planning to merge SMDC with SMPH. As you may have observed, the stock price for SMPH dropped. Now, SMDC's current price is  8.48. Think about it this way, if we get the average of the 2 stock prices, what happens? 18.46 (SMPH) + 8.48 (SMDC) / 2 = 13.47. Thats what market psychology is thinking and that is actually what's going to happen.

For now, I advise you to put SMPH on hold. This is a good thing! If SMPH and SMDC merge, they will become the largest land developer in the country (SM Land). Just hold on and don't add for now.

A few weeks ago, I was very fortunate to have been invited to talk to new friends about investing in the stock market. Thank you for the invite and I hope your investments are doing well.

This brought to mind my state of thinking when I was just beginning to invest. I remember being all excited thinking "I'm gonna be rich!". Yes...in-time.

I remember checking out stock prices everyday, and resented the fact that I didn't have additional money to add whenever the market went down.

I recall when I made my first P500 I was so happy, I bought a magnum ice-cream bar to celebrate.

But after awhile, I got so busy with work that I forgot about monitoring the stock market everyday. I also lost some excitement because of the market's slow movement. I would check the newspaper during lunch and check prices really quick. I even missed selling 2 stocks when it hit TP!

And you know whats so funny? It was at that time that my portfolio grew the most. Why? because I wasn't meddling. I wasn't stressing myself over stock prices everyday. I somewhat didn't care how my stocks were doing. I didn't move in and out of different stocks. I just let my portfolio be...

I just knew that the stocks I had at the time made me content. That those companies were solid companies and that my fretting over prices everyday actually didn't make a difference whatsoever!

Right now, I know you are feeling all those things. Checking the market everyday... wanting to add more capital when the market is down so you can buy more shares...

But forget it. Let your portfolio be. Just follow your pledge of adding capital everymonth/quarter/year and leave your stocks to grow. Whats better is you don't even need to water them!

May God bless your investments!