OFW (Overseas Filipino Worker) and SSS (Social Security System)

September 30, 2011 5 Comments


One of my colleagues asks me this question: Is it advisable for an OFW (Overseas Filipino Workers) to continue paying its SSS contribution?

Of course, my reply is a big “YES”.

Why? Because, time will tell us that we will not be working as an OFW (with better compensation) forever. Actually, when we reach our retirement age (in which we could not hardly work or even walk), we will need this additional stream of income to sustain our day to day expenses. Unless, you have an investment that’s worth 10 times of your annual income and a gargantuan savings of 10 times of your annual income, I guess you are exempted from paying your SSS contribution.

If you don’t have those numbers above, you should start contributing now before time runs out. It is true that the pension you will be getting from SSS will not be sufficient to sustain your expenses but it’s better than nothing.

The monthly SSS contribution for Filipino working abroad is a bit higher compare to those working in the Philippines. Anyway, I was shocked to learn that from our group of 15 OFW, only 2 of us were religiously and continuously paying our SSS.

After working more than 7 years abroad, I observed that many OFW were not keen on investing, saving and planning on for their retirement. Actually, it’s hard to resist the luxuries that you see while working abroad. And this is the reason why some OFW return home empty handed.

I was thinking that if POEA instead of just issuing an OEC (OFW Overseas Exit Clearance), will also conduct a Financial Literacy seminar to every Filipinos before going abroad. I think by doing this, many Filipinos working abroad will have an idea on how to manage their finances, save and invest for their future.

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Stocks Fundamental Measurement : Dividend Yield

September 29, 2011 Leave a comment


Stocks Fundamental Measurement : Dividend Yield

A stocks dividend yield is the annual cash dividend payment divided by the current stock price. Actually, there were only few stocks listed in the PSE that pays cash dividend.

Formula:

Dividend Yield = (Annual Dividend/Current Stock Price) x 100%

For dividend investors, one of the metrics they are looking from a stock is its dividend yield. This measurement tells us the percentage return a company pays out to shareholders in the form of cash dividends.

Example:

If Company A, annual dividend is 5php, and the stock prices is traded at 100php. The dividend yield is 5% (5php/100php).

Again, I may say that the concept of dividend were somehow boring since, there were only few companies paying it. However, we should not discount the fact that companies paying dividend is profitable and healthy in their industry.

Of course, well established companies pays higher dividend. For companies listed in the Philippine Stock Exchange, utility company like PLDT (Ticker : TEL) pays an annual dividend yield of almost 10%.

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Stocks Fundamental Measurement : P/E Ratio (or Multiple)

September 28, 2011 Leave a comment


Stocks Fundamental Measurement : P/E Ratio (or Multiple)

P/E ratio is the king of value measures. For me this numbers, could tell the whole story of the stock. The P/E ratio looks at the relationship of the company stock price and its EPS. Normally, it is the most popular metric of stock fundamental analysis.

Actually, a stock price by itself is meaningless. You have to put the price in context with the company earnings. The P/E will give us an idea on what the market is willing to pay in reference to the companies earning.

P/E Calculation:

P/E = Stock Price/ EPS

Example:

Company A share price is 150php, with an EPS of 10 has a P/E ratio of 15.

So, what does this P/E ratio tells us?

Investors are paying 15php for every 1php the company earns.

Higher P/E

The higher the P/E, the more the market is willing to pay for the companies earnings. High P/E indicates that the market has a high sentiments for the stocks future however, for some investor high P/E indicates overbought stocks.

Lower P/E

For low P/E stocks, it has sometimes the vote of no from investors but others find it as sleeping stocks that the market has overlooked. Many value investors found wealth in this overlooked stock, before the market realized its true worth.

What is the right P/E ratio?

Looks like there is no right answer for this, the more investors are willing to pay means that they believe in the growth story of the stocks. However, we should not discount some stocks with low P/E, look for the value hidden on these stocks.

The right P/E depends on every investor’s decision making process.

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Stocks Fundamental Measurement : EPS (Earnings per Share)

September 26, 2011 2 Comments


Stocks Fundamental Measurement : EPS (Earnings per Share)

You always see the word fundamentals on my blogs about Stock Market investing. Stocks Fundamental analysis, examines financial information about the company’s health and potential to succeed. Choosing good companies is the foundation of successful investing.

I will try to explain some fundamental stock measurement that will be helpful for every newbie and individual investor.

I will start with the EPS or Earnings per Share fundamental measurement. EPS is the king of company’s growth measure, it is the ratio of the company’s earnings with the number of outstanding shares.

One of the big challenges in evaluating stocks is by establishing an “apple to apple comparison”. Comparing the earning of one company to another doesn’t really makes sense, and using this raw numbers alone ignores the fact that two companies have different number of outstanding shares.

So, how does EPS help us in evaluating stocks?

Example:

Company A and Company B both earned 100php, but company A has 10 outstanding shares and company B has 100 outstanding shares. Which company stock do you want to own?

EPS =      Net Earnings/Outstanding Shares

From our example:

Company A EPS =   100php/10shares = 10 earnings per share

Company B EPS =   100php/100shares = 1 earnings per share

So, you should go for company A with 10eps. The EPS is helpful in comparing companies in the same industry.

Earnings per Share measurement is still a useful measurement. It won’t need exceptional intelligence to understand the EPS. The bigger the number, of course the better. The more the company earns, the more successful it is, and it will be more attractive to investors.

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Story of My Stock Pick (In Philippine Stock Exchange)

September 22, 2011 6 Comments


One reader of this blog sent me an email, and asks me about my stock position on the Philippine Stock Exchange. And in case, I am willing to share my stock holdings to him, he wants to know why I choose these stocks.

Actually, I was so surprise that this blog has a loyal follower (or maybe followers – just kidding).  And, to my loyal followers, below are the lists of some stocks I owned.

SMPH – SM Prime Holdings

JFC – Jollibee Foods Corp.

URC – Universal Robina Corp.

AMC – Alaska Milk Corp.

SMC – San Miguel Corporation

TEL – PLDT

BPI – Bank of the Philippine Island

MER – Meralco (Manila Electric Company)

MWC – Manila Water Company

So, why do I choose these stocks? Because, they have a good business fundamentals and a good growth story. (Actually, I was an OFW now, but before I work overseas I consider these wonderful companies to have an influence in my life.)

To give you a short story on why I say these stocks has great influence on me?

One Sunday Morning, my Family goes to the church. After the mass was ended, we go to the SM Mall because, we were so amazed by its slogan “we’ve got it all for you”. Since, they claimed that they got it all for us, where else can we go. I guess it doesn’t need further justification that every weekends, most of the families that went out would probably go to SM Mall near their home. In case you didn’t know, SM Mall is run and operated by SM Prime Holdings (SMPH).

We enter the SM Mall, and after a couple of minutes walk (with window shopping). My kids get hungry, so it’s time to ask where they wanted to eat. If I am going to ask my 6 years old daughter, her 2 options is the Jollibee restaurant at the ground floor and other choice is the Jollibee at the 3rd floor. So, it leaves me no choice but to dine in this famous Jollibee restaurant. But, their are times that my wife and my eldest daughter make an objection. They will complain that last week it was already Jollibee and we should go for a new place to eat. And here we go “Chowking Restaurant”. Again, in case you didn’t know Jollibee and Chowking Restaurant were owned and managed by Jollibee Foods Corporation (JFC).

After our lunch, it’s now time to go to supermarket. Our groceries were mostly milk (AMC- Alaska milk), snacks and beverages (URC – Jack n Jill, C2), meat and other dairy products (SMC – the famous purefoods).

It’s now time to go home. And after reaching home, I suddenly realize that we forgot to pay our bills. But thanks to the convenient of internet, that paying the utility bills become easier and hassle free. We have a Telephone Line with internet courtesy of PLDT (TEL), the largest and profitable telecommunication company in the Philippines.

And since we have an internet connection, I can easily access my BPI (Bank of the Philippine Island) online account to pay my electric and water bills. Again, BPI is the biggest bank listed in the PSE in terms of market capitalization. Up to now (even I was working abroad), I still use my BPI online account to pay other bills like insurance and funding my online trading account.

The wonder of internet and online banking, save me from making a late payment from my electric (MER – Meralco) and water (MWC – Manila Water) utility bills. Just think if these utility companies doesn’t exist. Do you want to live in darkness or die of thirst?

End of the story.

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Anyway, I was not an employee of any of this company. But, I am trying to send a message to every newbie investor that you should invest only on the business you know. Keep your investment portfolio plain and simple.

Look for these criteria on the company.

  1. A growing industry
  2. Good earnings
  3. Good Management Credibility
  4. Selling superior products and services
  5. Strong Business Fundamentals

Are you dreaming of becoming rich someday? Start investing early and achieve your financial freedom.

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Stocks Are Good Investment

September 19, 2011 1 Comment


Anybody can make money in the stock market.  And before getting your feet wet on these type of investment, every investor should know why it is a good investment.

There are 2 reasons that I know why stock market is a good investment.

1. Stocks allows us to own successful companies.

Stocks are good investment instruments because it allows us to own a successful companies. If your are owning stocks of profitable company, you will have an equity in that company. In other words, you will become a part owner of a company, and as part owner you will have a share of it’s prosperity and growth.

Imagined owning a wonderful company like SMPH (SM Prime Holdings), JFC (Jollibee Foods Corp.), BPI (Bank of the Philippine Island) and other blue chip companies listed in the PSE (Philippine Stock Exchange).

Although, you are owning only 0.00001% (or less) of these companies, it is good to think that you are a part of its business success.

2. Stocks have been a good investment over time

History will always tell us that stock market is a good investment instrument.

I was looking at the PSE index chart and found out that the PSE yields almost 15% year on year (based on their 10 years chart) . The Corporate and Government Bonds in the Philippines yields less than 10%. Note that the bond yields usually ran neck to neck with the inflation. It only means that a conservative bonds investment returns almost nothing after the inflation and tax deduction.

If you have an investment horizon of more than 10 years. It is wise to invest in the stock market.

For more than a century, the principles of investing never change. Invest your money in a company with strong fundamentals and you will surely win.

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New Website of ICAP (Investment Company Association of the Philippines)

September 16, 2011 1 Comment


It’s been a month that I cannot access the website of ICAP (Investment Company Association of the Philippines). Before it was
http://www.icap.com.ph
  and, now it was 
http://www.pifa.com.ph/index.asp.

For those who are tracking the performance of their mutual fund investment, you can go and search for it in this new link.


http://www.pifa.com.ph/index.asp

Actually, I don’t have any idea why they change their website address.

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Before Jumping Into Investment

September 14, 2011 2 Comments


After a series of articles encouraging every Filipino to invest. Are you ready to venture the exciting world of investment?

Here are some tips before jumping into Investment.

  1. Make sure to set aside at least 6 months of emergency fund. This will protect your investment in case you need big amount money for an emergency.
  2. Do your homework. Don’t fall to an investment scam. Beware of the investment companies that offers double your money scheme. For a newbie, I suggest to start 1st on a mutual fund or UITF.
  3. Match your risk appetite with your investment choice. If you have a low appetite for risk, I suggest you go for a conservative investment like bonds (fixed income) or money market. However, if you want a higher return and you can withstand the high volatility of equity market, you can invest directly on the stock market.
  4. Know your Investment Horizon. If you have an investment horizon of more than 5 years, I think it is wise to go for a high yield and high risk investment instrument. It is proven that a longer investment time will ride out stock price volatility.

Goodluck and Happy Investing…………

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Investment Tip : Buy Low, Sell High

September 12, 2011 1 Comment


Investment Tip : Buy Low, Sell High

When the price of the stocks has fallen, that is low, and that is the good time to buy. Similarly, when the stock price sky rocketed that is high and that is the time to sell. Sounds common and pretty easy isn’t it?

Normally the stock market behaves like this “Buy on Good News and Sell on Bad News”.

In good news, the stock price sky rocketed and many investors flocked to get a hold of this popular stock. While most are fighting their way in, it is sometimes wise to get out and pocket your gains.

In good news or favorable situation, don’t let greed affect your decision.

In bad news, the stock prices plunge and many investors is finding their way out of this mess. For a company with good business fundamentals, there is always an opportunity when the stock prices goes down. While most are looking for a way out, it pays to have a position on this fundamentally sound stock.

Most of the time, it pays more to go against the crowd. While most are fighting for a single opportunity, have your eyes wide open for another opportunity that may come.

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Quotes :

In the short run, the market is like a voting machine–tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine–assessing the substance of a company. — Benjamin Graham

 

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Philippine Stock Exchange Index Composition (Effective Sept.12,2011)

September 10, 2011 2 Comments


Below are the complete list of the new PSE index composition. Every 6 months (March and September of the year), the PSE index composition is review and to qualify the listed companies are required to meet the following criteria.

1. Free Float Level of at least 12%.

2. Trading liquidity must be among the top 25% by median daily value per month for atleast 9 out of 12 months.

3. Top 30 based on market full capitalization.

The PSEi, is composed of 30 publicly-traded company in the local bourse, and it generally represents the overall  condition of the Philippine economy. It is usually used as the benchmark index for funds heavily invested in the Philippine equities.

Below are the new list of PSE and all the 6 sector indices effective Sept.12,2011.

PSEi Index Composition

1 Aboitiz Equity Ventures (AEV)
2 Aboitiz Power (AP)
3 Alliance Global Group, Inc. (AGI)
4 Ayala Corporation (AC)
5 Ayala Land (ALI)
6 Banco de Oro Unibank, Inc. (BDO)
7 Bank of the Philippine Islands (BPI)
8 Belle Corporation (BEL)
9 Cebu Air Inc. (CEB)
10 DMCI Holdings (DMC)
11 Energy Development Corporation (EDC)
12 First Gen Corporation (FGEN)
13 Globe Telecom (GLO)
14 International Container Terminal Services Inc. (ICT)
15 JG Summit Holdings (JGS)
16 Jollibee Foods Corporation ( JFC)
17 Manila Electric Company (MER)
18 Manila Water Company (MWC)
19 Megaworld Corporation (MEG)
20 Metro Pacific Investments Corporation (MPI)
21 Metropolitan Bank and Trust Company (MBT)
22 Philex Mining Corporation (PX)
23 Philippine Long Distance Telephone Company (TEL)
24 Robinsons Land Corporation (RLC)
25 San Miguel Corporation (SMC)
26 Semirara Mining Corporation (SCC)
27 SM Development Corporation (SMDC)
28 SM Investments Corporation (SM)
29 SM Prime Holdings (SMPH)
30 Universal Robina Corporation (URC)

Financial Index

  1. BANCO DE ORO UNIBANK (BDO)
  2. BANK OF THE PHILIPPINE ISLANDS (BPI)
  3. CHINA BANKING CORPORATION (CHIB)
  4. METROPOLITAN BANK & TRUST COMPANY (MBT)
  5. NATIONAL REINSURANCE CORPORATION OF THE PHILIPPINES (NRCP)
  6. PHILIPPINE NATIONAL BANK (PNB)
  7. RIZAL COMMERCIAL BANKING CORPORATION (RC B)
  8. SECURITY BANK CORPORATION (SECB)
  9. THE PHILIPPINE STOCK EXCHANGE, INC. (PSE)
  10. UNION BANK OF THE PHILIPPINES (UBP)
  11. VANTAGE EQUITIES (V)

Industrial Index

  1. ALLIANCE TUNA INTERNATIONAL, INC.
  2. CHEMREZ TECHNOLOGIES, INC.
  3. EEI CORPORATION
  4. FIRST GEN CORPORATION
  5. FIRST PHILIPPINE HOLDINGS CORPORATION
  6. GINEBRA SAN MIGUEL, INC.
  7. HOLCIM PHILIPPINES, INC.
  8. JOLLIBEE FOODS CORPORATION
  9. MANILA ELECTRIC COMPANY
  10. MANILA WATER COMPANY, INC.
  11. PETRON CORPORATION
  12. PICOP RESOURCES, INC.
  13. PNOC-ENERGY DEVELOPMENT CORPORATION
  14. REPUBLIC CEMENT CORPORATION
  15. ROXAS HOLDINGS, INC.
  16. SAN MIGUEL CORPORATION
  17. SOUTHEAST ASIA CEMENT HOLDINGS, INC.
  18. TRANS-ASIA OIL & ENERGY DEVELOPMENT CORPORATION
  19. UNIVERSAL ROBINA CORPORATION

Holding Index

  1. A. SORIANO CORPORATION
  2. ABACUS CONSOLIDATED RESOURCES & HOLDINGS, INC.
  3. ABOITIZ EQUITY VENTURES, INC.
  4. AJO.NET HOLDINGS, INC.
  5. ALCORN GOLD RESOURCES CORPORATION
  6. ALSONS CONSOLIDATED RESOURCES, INC.
  7. ANGLO-PHILIPPINE HOLDINGS CORPORATION
  8. APC GROUP, INC.
  9. AYALA CORPORATION
  10. BENPRES HOLDINGS CORPORATION
  11. DMCI HOLDINGS, INC.
  12. ETON PROPERTIES PHILIPPINES, INC.
  13. FILINVEST DEVELOPMENT CORPORATION
  14. HOUSE OF INVESTMENTS, INC.
  15. JG SUMMIT HOLDINGS, INC.
  16. MINERALES INDUSTRIAS CORPORATION
  17. PACIFICA, INC.
  18. PRIME ORION PHILIPPINES, INC.
  19. SINOPHIL CORPORATION
  20. SM INVESTMENTS CORPORATION
  21. WELLEX INDUSTRIES, INC.

Property Index

  1. A BROWN COMPANY, INC.
  2. AYALA LAND, INC.
  3. BELLE CORPORATION
  4. CEBU HOLDINGS, INC.
  5. CROWN EQUITIES, INC.
  6. CYBER BAY CORPORATION
  7. EMPIRE EAST LAND HOLDINGS, INC.
  8. EVER GOTESCO RESOURCES & HOLDINGS, INC.
  9. FIL-ESTATE LAND, INC.
  10. FILINVEST LAND, INC.
  11. INTERPORT RESOURCES CORPORATION
  12. MEGAWORLD CORPORATION
  13. METRO PACIFIC INVESTMENTS CORPORATION
  14. MRC ALLIED INDUSTRIES, INC.
  15. PHILIPPINE REALTY & HOLDINGS CORPORATION
  16. ROBINSONS LAND CORPORATION
  17. SHANG PROPERTIES, INC.
  18. SM DEVELOPMENT CORPORATION
  19. SM PRIME HOLDINGS, INC.
  20. SUNTRUST HOME DEVELOPERS, INC.
  21. UNIWIDE HOLDINGS, INC.

Service Index

  1. ABS-CBN BROADCASTING CORPORATION
  2. ASIAN TERMINALS, INC.
  3. BOULEVARD HOLDINGS, INC.
  4. DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC.
  5. GLOBE TELECOM, INC.
  6. INTERNATIONAL CONTAINER TERMINAL SERVICES, INC.
  7. IONICS, INC.
  8. ISM COMMUNICATIONS CORPORATION
  9. LEISURE & RESORTS WORLD CORPORATION
  10. MACROASIA CORPORATION
  11. PAXYS CORPORATION
  12. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY
  13. PHILWEB CORPORATION
  14. PILIPINO TELEPHONE CORPORATION
  15. PREMIERE ENTERTAINMENT PRODUCTIONS, INC.
  16. WATERFRONT PHILIPPINES, INC.

Mining and Oil Index

  1. ABRA MINING & INDUSTRIAL CORPORATION
  2. APEX MINING COMPANY, INC.
  3. ATLAS CONSOLIDATED MINING & DEV’T CORPORATION
  4. BASIC ENERGY CORPORATION
  5. GEOGRACE RESOURCES PHILIPPINES, INC.
  6. LEPANTO CONSOLIDATED MINING COMPANY
  7. MANILA MINING CORPORATION
  8. OMICO CORPORATION
  9. ORIENTAL PETROLEUM & MINERAL CORPORATION
  10. PETROENERGY RESOURCES CORPORATION
  11. PHILEX MINING CORPORATION
  12. SEMIRARA MINING CORPORATION
  13. THE PHILODRILL CORPORATION
  14. UNITED PARAGON MINING CORPORATION
  15. VULCAN INDUSTRIAL & MINING CORPORATION

You can click the link below to download the list of the PSE and Sector index.

PSE_Composition_Sept2011

source: Philippine Stock Exchange (http://www.pse.com.ph)

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