7 Rules of Stock investing

source: http://www.h-l.co.uk/

I know I have mentioned this rules already but I want to reiterate it for the benefit of new stock investors in the Philippines.

Again these rules are our personal rules me and a bunch of my stock investor friends keep on reminding ourselves in our quest to be financially free. I hope these will also benefit you as you step into this vehicle or means of achieving financial freedom.

1. Only free cash

Most people believed that only the rich with tons of money can invest in the stock market. In reality you only need a minimum of 5,000.00 pesos to invest in the Philippine Stock Market using an online stockbroker. Now we only say invest only your free cash because it would be miserable to pull out what you have invested when the need for cash arises. And the worse is when you pull out your investments the stocks you are holding have a market price below your average cost thus ending at a loss. 

2. Don't be ashamed to ask

In the stock market information plays a big part. Knowing what is a stock, what is the companies current situation, what is the trend, what is the entry point and the likes. As you ask you must be able to acquire knowledge which you can use to guide you as you do your stock investing activities. Learn from your mistakes and research or analyze why you did not get your stock purchase or why is the stock at a low level.

3. Pocket your profits, moderate your greed

No one can really tell when will the stock market will go up or down. Thus one has to set until where you are willing to accept profit so that when the stock price reaches that level you sell your stock and keep the profit. Most of the time people keep on waiting and waiting for the stock to be high and when the stock price suddenly drops they wont be able to sell their stock at the desired price thus ending selling their stock at lower profit or worst at a loss because the stock went down abruptly.

4. When in doubt don't buy


Always do your due diligence or research before buying. Don't buy because your neighbor says so. Always research about the stock you wanted to purchase. In relation to this don't be afraid to ask people who knew and also invest in stock. Most people ask opinion from people who are not investing thus they make wrong stock picks. Educate yourself. In the very first part it would be very hard since everything to you is new. The terms will make your nose bleed and your brain freeze and you might think you are talking to an alien who have advanced intelligence when you talk to someone who has been successful in investing. They are the mentors and though they themselves are mentors they too do research. So when doubtful about a stock that you want to purchase do your research first before  buying.


5. Set aside emergency fund for personal use and another for bargain buying


Again in relation to put only free cash in stock investment, one has to set aside emergency fund to avoid pulling out your investment at a loss. Also set aside free cash for bargain hunting. Often times the market goes into what we call a healthy correction. When this comes prices go down to correct itself from being saturated. This is the best time to buy specially blue chips since most will have a lower price due to saturation. Those who own the stock before are now selling thus in order to sell they have to lower their asking price. It is also the best time to cost average for the stocks that you have been holding.


6. Trade at your own risk


Again as we said nobody can say when will the stock go up or down thus you should be accountable for your own stock bids and not blame somebody else when you make bad buys. You might buy a stock today and it could be possible that the next day the stock will be down and the other day and still the next week. Even if a mentor or a person with a good track record at stock investing said so and you relied on his word you should not put the blame on them when you made a bad stock buy. It could be that they are in a different but advantageous position thus they are able to make profit out of it and you on the other hand loss.


7. Share your blessings


Always set part of your blessings to give back to charity. Giving makes that sense of abundance because you can give a portion of what you earn. When you think abundance it creates that feeling of fulfillment and it would make you feel not limited thus you also make your bids as if you are a millionaire and big time investor.

 

7 Rules of Stock investing

source: http://www.h-l.co.uk/

I know I have mentioned this rules already but I want to reiterate it for the benefit of new stock investors in the Philippines.

Again these rules are our personal rules me and a bunch of my stock investor friends keep on reminding ourselves in our quest to be financially free. I hope these will also benefit you as you step into this vehicle or means of achieving financial freedom.

1. Only free cash

Most people believed that only the rich with tons of money can invest in the stock market. In reality you only need a minimum of 5,000.00 pesos to invest in the Philippine Stock Market using an online stockbroker. Now we only say invest only your free cash because it would be miserable to pull out what you have invested when the need for cash arises. And the worse is when you pull out your investments the stocks you are holding have a market price below your average cost thus ending at a loss. 

2. Don't be ashamed to ask

In the stock market information plays a big part. Knowing what is a stock, what is the companies current situation, what is the trend, what is the entry point and the likes. As you ask you must be able to acquire knowledge which you can use to guide you as you do your stock investing activities. Learn from your mistakes and research or analyze why you did not get your stock purchase or why is the stock at a low level.

3. Pocket your profits, moderate your greed

No one can really tell when will the stock market will go up or down. Thus one has to set until where you are willing to accept profit so that when the stock price reaches that level you sell your stock and keep the profit. Most of the time people keep on waiting and waiting for the stock to be high and when the stock price suddenly drops they wont be able to sell their stock at the desired price thus ending selling their stock at lower profit or worst at a loss because the stock went down abruptly.

4. When in doubt don't buy


Always do your due diligence or research before buying. Don't buy because your neighbor says so. Always research about the stock you wanted to purchase. In relation to this don't be afraid to ask people who knew and also invest in stock. Most people ask opinion from people who are not investing thus they make wrong stock picks. Educate yourself. In the very first part it would be very hard since everything to you is new. The terms will make your nose bleed and your brain freeze and you might think you are talking to an alien who have advanced intelligence when you talk to someone who has been successful in investing. They are the mentors and though they themselves are mentors they too do research. So when doubtful about a stock that you want to purchase do your research first before  buying.


5. Set aside emergency fund for personal use and another for bargain buying


Again in relation to put only free cash in stock investment, one has to set aside emergency fund to avoid pulling out your investment at a loss. Also set aside free cash for bargain hunting. Often times the market goes into what we call a healthy correction. When this comes prices go down to correct itself from being saturated. This is the best time to buy specially blue chips since most will have a lower price due to saturation. Those who own the stock before are now selling thus in order to sell they have to lower their asking price. It is also the best time to cost average for the stocks that you have been holding.


6. Trade at your own risk


Again as we said nobody can say when will the stock go up or down thus you should be accountable for your own stock bids and not blame somebody else when you make bad buys. You might buy a stock today and it could be possible that the next day the stock will be down and the other day and still the next week. Even if a mentor or a person with a good track record at stock investing said so and you relied on his word you should not put the blame on them when you made a bad stock buy. It could be that they are in a different but advantageous position thus they are able to make profit out of it and you on the other hand loss.


7. Share your blessings


Always set part of your blessings to give back to charity. Giving makes that sense of abundance because you can give a portion of what you earn. When you think abundance it creates that feeling of fulfillment and it would make you feel not limited thus you also make your bids as if you are a millionaire and big time investor.

 

When in doubt dont buy a stock

source: http://www.ipprospective.com

I have been out for quite some time... so here am I again...

At times one may be hesitant and then let the day pass then we learn that the stock we are planning to buy just drop further or if worst bad things happen and the company started to go from one problem to another.

Back then the SEC(Securities and Exchange Commission) made an ad on all TV stations regarding the part of the public to know more about the companies that one may invest into. The message was" Invest: Investigate". That time a lot of Pre-need and insurance companies are closing one after the other and one has been all around the news for the alleged embezzlement of the officers of the company.

So I guess you are thinking then we shouldn't invest in companies anymore because they might close down run away with our money. The thing is as an investor one should always do what we call due diligence. What is "due diligence" then?

Wiktionary defines it as:

A legally binding process during which a potential buyer evaluates the assets and liabilities of a company.

Investopedia defines it as:

1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.

2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party. 

In a due diligence this is where audit and Fundamental analysis comes. But such is too hard to do so for ordinary investors like us we should always check their Financial statements that is filed to the SEC. 

 source: http://nrgshift.com

At least we can check how is the standing of the company. 

Is it Liquid(by means of the Current Ratio or Working Capital Ratio which should be at less 1:1)? 

How big its Liability in relation to Shareholder's Equity(by means of  Debt to Equity Ratio that shows if such company is debt strapped that is the likelihood of control is to creditors)? 

Is it Profitable(by means of the Profit and Loss Statement), Is it growing(by comparing This year from last year which is commonly known as Fluctuation Analysis) .

Again that is why when picking stock to invest into one should make a background check on the company. Some stocks have not so good fundamentals and performance and thus they end up into what they call speculative stocks. Investors and players speculate that a good news about the company will make a short uptrend thus players buy it at a lower price and sell it once the price goes 2-5% up. They use volume to profit from such. But as an investor in which one looks at the long term benefits of an investment one should always do what we term "home work".

Again a reminder to do due diligence, invest in fundamentally sound company, invest only free cash, and trade at your own risk.

When in doubt dont buy a stock

source: http://www.ipprospective.com

I have been out for quite some time... so here am I again...

At times one may be hesitant and then let the day pass then we learn that the stock we are planning to buy just drop further or if worst bad things happen and the company started to go from one problem to another.

Back then the SEC(Securities and Exchange Commission) made an ad on all TV stations regarding the part of the public to know more about the companies that one may invest into. The message was" Invest: Investigate". That time a lot of Pre-need and insurance companies are closing one after the other and one has been all around the news for the alleged embezzlement of the officers of the company.

So I guess you are thinking then we shouldn't invest in companies anymore because they might close down run away with our money. The thing is as an investor one should always do what we call due diligence. What is "due diligence" then?

Wiktionary defines it as:

A legally binding process during which a potential buyer evaluates the assets and liabilities of a company.

Investopedia defines it as:

1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.

2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party. 

In a due diligence this is where audit and Fundamental analysis comes. But such is too hard to do so for ordinary investors like us we should always check their Financial statements that is filed to the SEC. 

 source: http://nrgshift.com

At least we can check how is the standing of the company. 

Is it Liquid(by means of the Current Ratio or Working Capital Ratio which should be at less 1:1)? 

How big its Liability in relation to Shareholder's Equity(by means of  Debt to Equity Ratio that shows if such company is debt strapped that is the likelihood of control is to creditors)? 

Is it Profitable(by means of the Profit and Loss Statement), Is it growing(by comparing This year from last year which is commonly known as Fluctuation Analysis) .

Again that is why when picking stock to invest into one should make a background check on the company. Some stocks have not so good fundamentals and performance and thus they end up into what they call speculative stocks. Investors and players speculate that a good news about the company will make a short uptrend thus players buy it at a lower price and sell it once the price goes 2-5% up. They use volume to profit from such. But as an investor in which one looks at the long term benefits of an investment one should always do what we term "home work".

Again a reminder to do due diligence, invest in fundamentally sound company, invest only free cash, and trade at your own risk.

Earnings Per Share: One of the numbers to understand when investing

source: http://cdn-viper.demandvideo.com/media/

Earnings Per Share or EPS is a measure of profitability just like the name itself.

There are lot of qualifications when computing this number but a simple computation is dividing the net profit by the outstanding shares at end of the period. As we have said it is an indicator of the companies profitability. It is a allocated share on the company's earnings to each stock. This number gives you an idea of the companies possible dividend. also by reverse computing you can compute the total net income by multiplying this number to the outstanding number of shares.

In the same way when choosing to invest one might just focus on the number itself, which is unwise. For example you are interested in two companies which has the same EPS. So you are undecided which to put your money on. Though this two companies have the same EPS by reverse calculation one can determine which company is generating income from capital efficiently. The better company is the one with lesser outstanding shares. Let say both has an EPS of 10 and Company A has 10,000 outstanding and Company B has 1,000. So in this case Company B is more efficient because it is able to potentially give its 1,000 shareholders 10 pesos dividend with a smaller capital investment.

Earnings Per Share: One of the numbers to understand when investing

source: http://cdn-viper.demandvideo.com/media/

Earnings Per Share or EPS is a measure of profitability just like the name itself.

There are lot of qualifications when computing this number but a simple computation is dividing the net profit by the outstanding shares at end of the period. As we have said it is an indicator of the companies profitability. It is a allocated share on the company's earnings to each stock. This number gives you an idea of the companies possible dividend. also by reverse computing you can compute the total net income by multiplying this number to the outstanding number of shares.

In the same way when choosing to invest one might just focus on the number itself, which is unwise. For example you are interested in two companies which has the same EPS. So you are undecided which to put your money on. Though this two companies have the same EPS by reverse calculation one can determine which company is generating income from capital efficiently. The better company is the one with lesser outstanding shares. Let say both has an EPS of 10 and Company A has 10,000 outstanding and Company B has 1,000. So in this case Company B is more efficient because it is able to potentially give its 1,000 shareholders 10 pesos dividend with a smaller capital investment.

Earnings Per Share: One of the numbers to understand when investing

source: http://cdn-viper.demandvideo.com/media/

Earnings Per Share or EPS is a measure of profitability just like the name itself.

There are lot of qualifications when computing this number but a simple computation is dividing the net profit by the outstanding shares at end of the period. As we have said it is an indicator of the companies profitability. It is a allocated share on the company's earnings to each stock. This number gives you an idea of the companies possible dividend. also by reverse computing you can compute the total net income by multiplying this number to the outstanding number of shares.

In the same way when choosing to invest one might just focus on the number itself, which is unwise. For example you are interested in two companies which has the same EPS. So you are undecided which to put your money on. Though this two companies have the same EPS by reverse calculation one can determine which company is generating income from capital efficiently. The better company is the one with lesser outstanding shares. Let say both has an EPS of 10 and Company A has 10,000 outstanding and Company B has 1,000. So in this case Company B is more efficient because it is able to potentially give its 1,000 shareholders 10 pesos dividend with a smaller capital investment.

PSE website: Board Lot Table Part 5

We're back again at investing in Philippine Stock Exchange. It is worth knowing what this table is. Below is a screen shot of the table I got from PSE's website:

This table is a guide on how much one can buy depending on the stock price thus it follows also how much money one needs to buy stocks. 

Let say you want to invest in Bank of the Philippine Islands with the stock symbol BPI which is currently at Php 43.00 so based on the board lot the minimum number of shares you can buy is 100 shares and thus you need Php 4,300.00 to buy BPI shares.

How about PLDT with the stock symbol TEL which is currently at Php 2,380.00? Minimum shares you can buy is 10 thus you need Php 23,800.00 to buy 10 shares of TEL.

Or how about United Paragon Mining with the stock symbol UPM which is at Php 0.01 per share. The minimum share is 1,000,000 thus you need Php 10,000.00. Also if you notice the second column says minimum fluctuations. This is a guide for the stock trading prices either you are buying or selling.

To learn more go to  http://bit.ly/EXPERT-STOCK-SCREENER

When you are buying you are said to be bidding. And in the stock quote the number of fluctuations allowed is three starting from the last trade. So for example BPI's minimum fluctuation is Php 0.50 thus the possible bid prices you can bid is 43.00, 42.50, and 42. On the other hand if you are selling you are asking. The asking price starts from the next increment as per the boards fluctuation. So for BPI the ask price are 43.50, 44.00, and 44.50.

PSE website: Board Lot Table Part 5

We're back again at investing in Philippine Stock Exchange. It is worth knowing what this table is. Below is a screen shot of the table I got from PSE's website:

This table is a guide on how much one can buy depending on the stock price thus it follows also how much money one needs to buy stocks. 

Let say you want to invest in Bank of the Philippine Islands with the stock symbol BPI which is currently at Php 43.00 so based on the board lot the minimum number of shares you can buy is 100 shares and thus you need Php 4,300.00 to buy BPI shares.

How about PLDT with the stock symbol TEL which is currently at Php 2,380.00? Minimum shares you can buy is 10 thus you need Php 23,800.00 to buy 10 shares of TEL.

Or how about United Paragon Mining with the stock symbol UPM which is at Php 0.01 per share. The minimum share is 1,000,000 thus you need Php 10,000.00. Also if you notice the second column says minimum fluctuations. This is a guide for the stock trading prices either you are buying or selling.

To learn more go to  http://bit.ly/EXPERT-STOCK-SCREENER

When you are buying you are said to be bidding. And in the stock quote the number of fluctuations allowed is three starting from the last trade. So for example BPI's minimum fluctuation is Php 0.50 thus the possible bid prices you can bid is 43.00, 42.50, and 42. On the other hand if you are selling you are asking. The asking price starts from the next increment as per the boards fluctuation. So for BPI the ask price are 43.50, 44.00, and 44.50.

PSE website: Board Lot Table Part 5

We're back again at investing in Philippine Stock Exchange. It is worth knowing what this table is. Below is a screen shot of the table I got from PSE's website:

This table is a guide on how much one can buy depending on the stock price thus it follows also how much money one needs to buy stocks. 

Let say you want to invest in Bank of the Philippine Islands with the stock symbol BPI which is currently at Php 43.00 so based on the board lot the minimum number of shares you can buy is 100 shares and thus you need Php 4,300.00 to buy BPI shares.

How about PLDT with the stock symbol TEL which is currently at Php 2,380.00? Minimum shares you can buy is 10 thus you need Php 23,800.00 to buy 10 shares of TEL.

Or how about United Paragon Mining with the stock symbol UPM which is at Php 0.01 per share. The minimum share is 1,000,000 thus you need Php 10,000.00. Also if you notice the second column says minimum fluctuations. This is a guide for the stock trading prices either you are buying or selling.

When you are buying you are said to be bidding. And in the stock quote the number of fluctuations allowed is three starting from the last trade. So for example BPI's minimum fluctuation is Php 0.50 thus the possible bid prices you can bid is 43.00, 42.50, and 42. On the other hand if you are selling you are asking. The asking price starts from the next increment as per the boards fluctuation. So for BPI the ask price are 43.50, 44.00, and 44.50.