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Showing posts from May, 2011

time to load up on san miguel corporation (SMC) shares

Finally, the ideal price for SMC has come. At P110 per share, this would be a fair buy for a blue chip like San Miguel. I can just imagine the anxiety of those who bought it at its peak price of P180 not so long ago. Herein lies the wisdom of buying stocks that are fairly priced and refusing to buy stocks that are overpriced. If you can't find a stock that meets this criteria, then do nothing and park your cash in bank account and when the time is right, pounce and load up on its shares. Generally, I try to buy shares that are selling at a discount to its fair price but that rarely happens with large companies like san miguel so I'm happy to pay the fair price for its stock. I believe SMC's fundamentals are good. It has good cash flow and is diversifying into other industries for growth. Now I can relate to Warren Buffett's statement when he said he felt like an oversexed guy in a whorehouse when the market offers quality companies at a discount. So for those with cash…

the permanent portfolio

I came across a very good article on Harry Browne's permanent portfolio. He recommends a 25% allocation on cash, stocks, bonds and gold respectively and all you have to do is to rebalance your portfolio once a year to maintain the said allocation. What draws me to his strategy is that it makes a lot of sense. According to him, the future economic environment is always uncertain and impossible to predict accurately, so a prudent investor need to have investments that will do well in each situation. In times of prosperity, stocks do well; in times of inflation, gold performs very well; when interest rates fall, bonds are the winners and in times of recession, cash is king. So regardless of the economic condition, the investor with the permanent portfolio will not lose all of his investment and he is guaranteed that one of it will yield very good returns that will compensate for the poor performance of the other three. The added bonus is that you only need to spend a few hours each y…