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!

Stock Update as of January 21, 2013

Legend:
Current Price = CP
Target Price = TP
Buy Below Price = BBP

How this works: If the current price of the stock is still below our Buy Below Price, continue buying that stock. If the price hits BBP, stop buying and wait until it reaches the Target Price. Once Target Price is reached, sell the stock and reinvest into another stock.

Divide the money from the sold stock into 3 so that you purchase this new stock in 3 months time and not in one go.

Banks and Financials Sector
BDO - cp 76, tp 95, bbp 82.65 *buy!
MBT - cp 105.2, tp 130, bbp 113 *buy!

Property Sector
MEG - cp 3.2, tp 3.65, bbp 3.17 *hold

Commercial and Industrial Sector
MPI - cp 5.04, tp 6.35, bbp 5.65 *buy!
MER - cp 279.8, tp 327, bbp 284.49 *buy!
AP - cp 38.1, tp 40.20, bbp 34.97 *hold
PNX - cp 9.06, tp 14.9, bbp 12.96 *buy! -high risk stock

Conglomerates
FPH - cp 99.95, tp 120, bbp 104 *buy!
AGI - cp 17.72, tp 20.57, bbp 18.1 *buy!

Index
PSE (the stock) - cp 415, tp 600, bbp 522 *buy! -slow mover

Consumer
PGOLD - cp 31.95, tp 40, bbp 34.80 *buy!

Education
IPO - cp 9.0, tp 14, bbp 12.18 *buy! -slow mover. Volume is nearly non-existent. We might need to shift our focus to other stocks. If you've already bought this, just hold and do not add anymore. This stock pays good dividends so this is still a solid stock 5 years down the road.

Caveat!

The Best Investment

I was surfing around on the web and stumbled upon a video by my "mentor", Warren Buffett with regards to the best investment.

And he said that the best investment is investing in yourself. What does this mean? It means that you take the time to learn and expand your circle of competence. I discussed circle of competence in a previous post, but I'll explain it again here.

Your circle of competence is your environment. The people you deal with, the products and services you buy, the company you work for, the school you went to.

Lets take for example my circle. I live in Cebu city, so the electricity I use is supplied by VECO, which is owned by Aboitiz Power(AP). I buy my groceries from Robinsons owned by JG Summit(JGS), or in SM (SMPH), or in Ayala (AC), which ever is more convenient for me. I use Banco de Oro(BDO) as my bank.

I am currently using Globe(GLO) as my cellphone network. I buy my vitamins and medicines from 360 pharmacy, owned by PGOLD.

So just by living day-to-day, I am already doing my market research...As a consumer, I am always looking out for the best products.

Please note that I said "best" and not cheapest. Best is defined as follows: perceived value = product/service.  In the  Philippines and everywhere else in the world, almost all products are produced by China, and these products dominated the market due to its low price. So people went off to buy China-made dvd players, Television sets, umbrellas, cellphones, furniture, candies, children's toys, etc.

As time passed, people began to realize that cheap doesn't mean value. DVD players would stop functioning in 2-3 months, furniture would break down in a year. Candies and children's toys had poisonous chemicals in them.

My point is, we need to look beyond the price and focus on the value. Heck, I worked my ass off for my money and this is the sh*t I get? Hell no!

So I learned my lesson. I now look for quality that will give me what I think is my money's worth. But then, how do I know if its good quality or not? How do I know if the company I'm planning to invest in will give me substantial Return On Investment(ROI)? Simple...you already have your circle of competence.

What's important isn't how big your circle is, what's important is that you stay in it. So don't pay attention to people when they begin to talk about some mining stock you've never heard about. It's not in your circle.

When people talk about an e-company that is the number one online game provider in the Philippines,  it's not in your circle. Just listen, absorb, process, and discard for future reference.

Now, going back to investing yourself. I remember reading Sherlock Holmes and his take on a human's memory capacity. Did you know that Sherlock Holmes, the greatest fictional detective did not know that the earth revolved around the sun? Read A Study in Scarlet if you don't believe me.

Sherlock Holmes said that a person's memory is like a room. Each piece of information is like a piece of furniture you put into that room. You can only put so much furniture in there that it gets full. So what do you do? you throw out other furniture to make room for new ones.

What he's trying to say is that one must be selective in allowing what information to retain, and what to discard.

"So what's your point Crimson?", you ask. My point is: expand your circle slowly with quality information. And to be honest with you, my circle isn't that big. I am now very very selective on what I focus on, and you should too.

And I am so very thankful to Bro. Bo Sanchez for changing my way of thinking. Sure, I learned from Warren Buffett, Peter Lynch, and William O'neil, but it was Brother Bo Sanchez who made me want to learn.

And change is not easy because change must come from within you.

So invest in yourself... expand your financial literacy. For me, the starting place was in Bro. Bo's Truly Rich Club.

And I invite you to join because the mp3 downloads you will have access to are priceless. And the books Bro. Bo gives every Christmas are such excellent gifts. And the spiritual growth you gain from his daily emails fills you with harmony.

Join the Truly Rich Club now!

May God bless you and your investments!

P.S. I'll be giving out a stock update later today, so watch out for it!

Market Summary as of January 16, 2013

• The PSEi declined for the second straight day as the index dropped by 40.15 points or 0.66% to close 6,047.52.

• Index decliners led gainers 21 to 8 while 1 issue remained unchanged. All sectors were on the red last trading session except for Financials (+0.08%). Significant decliners were ALI (-2.92%), JGS (-2.82%), PX (-2.82%), ICT (-2.71%), and MPI (-2.55%). On the other hand, notable gainers were JFC (+2.26%) and BPI (+1.94%).

• Value turnover declined to Php7Bil from Php9.1Bil last Tuesday. Foreigners were net sellers, disposing of Php268Mil worth of shares.

PSE as of Jan. 15, 2013

• The PSEi inched lower declining by 6.23 points or 0.10% to close 6,087.67.

• Index decliners led gainers 15 to 10 while 5 remained unchanged. The Financials (-1.08%) sector was the weakest during the last trading session. This was partly offset by the increase in the Property (+1.17%) and Mining and Oil (+1.02) sectors. Significant decliners were BPI (-3.06%), AC (-1.85%), JFC (-1.76%), BEL (-1.57%), and AGI (-1.49%). On the other hand, notable gainers were PX (+3.26%), ALI (+3.01%), and RLC (+2.58%).

• Value turnover declined to Php9.1Bil from Php9.2Bil last Monday. Foreigners were net buyers, acquiring Php178Mil worth of shares.

Market Summary as of January 14, 2013

• The PSEi treaded higher as the index increased by 42.15 points or 0.70% to close at 6,093.90.

• Index gainers led decliners 22 to 8. The strongest sectors were Financials (+1.53%) and Property (+1.48%) while all other sectors were on the green last trading session. Significant gainers were MPI (+2.88%), PX (+2.87%), ALI (+2.51%), BDO (+2.46%), and MEG (+1.90%). On the other hand, notable decliners were FGEN (-3.29%) and JGS (-1.89%).

• Value turnover declined to Php9.2Bil from Php9.4Bil last Friday. Foreigners were net sellers, disposing of Php923Mil worth of shares.

Stock Market as of January 13, 2013

Market Summary

• The PSEi again reached a new high increasing by 42.28 points or 0.70% to close at 6,091.18.

• Index gainers led decliners 21 to 7 while 2 issues remained unchanged. All sectors went up last trading session especially Mining and Oil (+1.42%) and Property (+0.90%). Significant gainers were MER (+3.36%), RLC (+2.76%), MBT (+2.22%), PX (+1.97%), and AEV (+1.85%). On the other hand, notable decliners were BEL (-1.54%) and CEB (-1.13%).

• Value turnover increased to Php8.5Bil from Php7.5Bil last Tuesday. Foreigners continued to be net buyers, acquiring of Php451Mil worth of shares.

Stock Update as of January 11, 2012

Just saw COL's 2013 new Future Value estimates...and all I can say is wow. Here's the stock update with the new Target Prices.

Remember...choose only 3 stocks to focus on. One from a different sector. Example, choose 1 from Banks, 2nd from Property, 3rd from commercial sector.

Banks and Financials Sector
BDO - cp 75.2, tp - 95, bbp - 82.65 *buy!
Metrobank (MBT) - cp 107, tp - 130, bbp - 113 *buy!

Property Sector
MEG - cp 3.13, tp 3.65, bbp 3.17 buy!

Commercial and Industrial Sector
MPI - cp 4.87, tp 6.35, bbp 5.65 *buy!
MER - cp 279.6, tp 327, bbp 284.49 *buy! -new addition
Aboitiz Power (AP) - cp 38, tp - 40.20, bbp - 34.97 *hold
PNX - cp 9.06, tp 14.9, bbp 12.96 *buy!

Conglomerates
FPH - cp 98.05, tp - 120, bbp - 104 *buy!
AGI - cp 17.26, tp 20.57, bbp 18.1 *buy!
Index
PSE - cp 413, tp 600, bbp 522 *slow mover

Consumer
PGOLD - cp 32.25, tp 40, bbp 34.80 *buy!

Education
IPO (ipeople) - cp 9.3, tp 14, bbp 12.18 *slow mover

Caveat!

Short term play

For a 3 month play. Risk: High

PNX cp 9, tp 14.9, bbp 12.96

March will be PNX's release of dividends. historically, this company has been very generous in giving out stock dividends. But I am only interested in the capital gain of 65%. Whether I get dividends or not, I don't care.

As always, CAVEAT!