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Showing posts from January, 2012

the Philippines is on its way to be the 16th largest economy

In 40 years that is, according to HSBC's "The World in 2050" report. When I wrote in 2009 my reasons for keeping invested in the country, I was never as optimistic as this report. Who would have thought that the Philippines would be attending the G20 meetings. The report says:

"The country is projected to be the 16th largest economy by 2050, a striking rise of 27 places from its current ranking."

“There are some truly remarkable hot spots in Asia... The star performer, however, is the Philippines where the combination of strong fundamentals and powerful demographics gives rise to an average growth rate of 7% for the coming 40 years.”

That should give some encouragement to those who maintain a positive outlook for the country. If we are on the way to becoming a large, developed economy, then it should take the value of our investments along for the ride. Again, the Philippines has so much potential and we are only beginning to make use of it. If we are to fully dev…

investing with the water dragon

Well, there's really nothing that will change with my investment decisions now that we've entered a new lunar year, and you should not either. Its funny how some people associate the arrival of a new animal sign with predictions of where or how we should invest. Rational thinking should prevail my fellow investors. For instance, would Manila Water (PSE: MWC) be a good stock to buy because it is involved with water or would a beachside property be excellent because it also has to do with water? Not that either of these two are bad, MWC has solid earnings and people would always pay their bills, it also has the backing of Ayala Corp., a large conglomerate with good management record. And who wouldn't want to relax in your own private beach house. The fact is that these two would be good investments whether it be the year of the pig, dog or dragon as long as you do your research before investing.

A second point I would like to highlight is the propensity of the Chinese to suc…

cash maybe king but it doesn't reign forever

I was going through my coin and banknote collection the other day and realized something: Cash maybe king but it doesn't reign forever. Proof of that was the collection itself. It had 2-peso, 5-peso and 10-peso banknotes. So at some point in the past, these denominations actually had sufficient value for them to be printed as banknotes instead of being minted as coins, which is what we have now. So what happened? Since governments or central banks are able to print currencies out of nothing, hence the term fiat currencies, the ever increasing supply of it causes its value to diminish. That is why our grandmothers always complain about how expensive things are these days because they were able to buy so much more with the same money in their younger days.

What does this mean for investors like us. If you have a bundle of cash now and would not need it in a year or two, please don't hide it under your bed. In three years, inflation would have reduced its purchasing power by 9-12%…

ASEAN trading link

The Association of Southeast Asian Nations (ASEAN) is promoting more cross-border collaboration by promoting the ASEAN Exchanges, made up of seven stock exchanges from Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam(2). I am particularly excited with the upcoming ASEAN trading link connecting the bourses and offering Filipino investors easier access to opportunities in our neighboring countries.

An excerpt from a press release from www.aseanexchanges.org says:

The CEOs also announced the awaited roll-out plan of the ASEAN Trading Link which will see the participation of member exchanges taking place progressively in stages. The first stage will see the connectivity of Singapore Exchange and Bursa Malaysia in June 2012 and the Stock Exchange of Thailand added in August 2012 after its new trading engine goes live. The participation dates of the other ASEAN Exchanges collaboration members, namely, Hanoi Stock Exchange, HoChiMinh Stock Exchange, Indonesia Stock Exch…

Philippine stocks at record high, time to stay away

If you adhere to an investment allocation principle, then its time to evaluate your portfolio. Because stock prices have gone up, you maybe overexposed to stocks. Let's say you follow an allocation of 40% stocks, 40% cash and 20% bonds. Two years ago, you invested 50,000 accordingly: 20k in stocks, 20k in cash and 10k in bonds. Now that Philippine stocks are near record highs, the value of your stock investment is taking up more than 40% of your portfolio. If you have additional funds to invest this year, its time to stay away from stocks. Otherwise you will miss your allocation target.

This is easier said than done since the tendency for investors is to buy high and sell low, very much the opposite of what a prudent investor does. In good times like what we have now, when we see the value of our stock investments go up substantially, it is very tempting to pour more money into such investments thinking it would go up even more. Restrain your emotions, fellow investor. Stick to you…

Chinabank's investment products

Chinabank offers several investment products to its clients, aside from the usual deposit and loans. For peso-denominated investments, they have treasury bills, retail treasury bonds, fixed-rate treasury notes and prime corporate (peso) bonds. For dollar investments, they offer Republic of the Philippines (ROP) dollar bonds, Banko Sentral ng Pilipinas (BSP) dollar bonds and prime corporate (dollar) bonds. For euros, they have ROP euro bonds.


These bonds are, to put it simply, a promise to pay the bond holder the full amount after a certain period of time and also paying an agreed interest for allowing them to borrow your money. This interest is usually paid quarterly and subject to 20% witholding tax. Also note that these products are not insured with PDIC. Like all debt, its security its relative to the financial stability of the borrower, so if you think the government will honor its promise to pay, then its pretty safe. These investments are also liquid and you can sell them to the …

I owe, I owe, so off to work I go...

Sounds like the song of the modern city worker. Mortgage, car loans, credit card bills, the list is long but the message is clear: we need to manage our debt. Managing your debt is an important part of investing. In fact, do not even bother to invest your money if you have bad debts floating around. There is no sense in earning 7% from an investment if you are paying 20% interest on a loan. Start paying those with the highest interest and work towards keeping your debt at a comfortable level relative to your income; and stop taking on new ones.



Remember the saying:

Gold is the money of kings,
silver is the money of noblemen,
barter is the money of peasants,
debt is the money of slaves.

This is the best investment ever created

Let us examine this investment: it is 100% safe, risk free, offers infinite returns and you don't even need money, only your time, to invest. What is it? It's investing in yourself. It is investing in your knowledge, your skills, your personal development. No other investment can come close to this one. First, it is safe and risk free. Even if financial armageddon comes with banks closing, stock markets crashing and entire nations defaulting on their obligations, you will survive.


It offers infinite returns and you can never tell how it would help you. I love the story of how the late Steve Jobs took a calligraphy course in college and ten years later, it helped him design the typography in Mac and basically influenced the typography in computers we have today. All the neat space in between letters, the fonts, the subtle art form that we seldom appreciate when we read words on the screen wouldn't have been here without that calligraphy course. Investing in your knowledge ca…

My bold predictions for 2012

The title is misleading, of course, as I have zero ability to see the future. If I can, then I'd buy tomorrow's winning lottery ticket. For investors, you don't base your decisions on predicting the future. You don't buy stocks because of an insider tip that it will go up. Remember Lehman Bros., the first casualty of the 2008 financial crisis, they were given triple AAA credit rating. So I guess the ratings agencies cannot see the future either. No one can predict the future and anyone who claims so is daydreaming, and if you follow that person, you're being stupid. Yes, Europe may trigger a second round of global financial crisis, stocks may lose 50% of its value, real estate prices could go down, oil prices could go through the roof if Iran continues causing trouble. On the other hand, clean energy technology could usher a new wave of investments, Asia would continue its growth and the Philippines could leapfrog into the ranks of the industrialized countries.


As …

What happened to Philippine REITs?

I was anticipating the offering of real estate investment trusts (REIT) but leave it to the government to ruin its growth. Why would SM, Ayala or any major developer give up a huge 67% ownership (the public float demanded by this government) of its income generating properties. Comparatively, most of our neighboring countries only require a float of 10-25%. I don't know what the "bright minds" of Pres. Aquino's economic team are thinking but if the major developers are not availing of the investment vehicle, then something is wrong with the rules you have laid out.


They should revise the guidelines for it to be palatable for Philippine developers to make use of REIT. It helps them by offering a cheaper avenue to raise capital and it offers Filipinos the chance to own a share in income generating properties.


This is discouraging, and quite frankly, I sometimes ask myself why bother investing in the Philippines when I have access to first world investment products here. …

returns on stock investments

I would like to share the 12-month returns on my stock investments with citiseconline:

Percentage of portfolio STOCK 12-month return

25% AC 9.81%

4% AEV 3.47%

4% CHIB 3.95%

2.7% GMA7 -2.15%

3.7% JFC 11.25%

0.2% LPZ -23.96%

2.1% PNX -3.93%

4% PX -14.4%

2.7% SM 13.6%

12.4% SMC 2.95%

19.8% TEL 15.69%

10.1% URC 17.63%

8.61% VLL -9.44%

100% Total 6.36%

A 6.36% return (excluding dividends) is quite good compared to the PSEi which yielded 4.07%. The returns on Sunlife's Equity fund perfromed slightly better than the index, returning 4.1%.
Wouldn't it be nice if I had just invested everything with URC and got 17.63% in a year, but then again, that is in hindsight. Going forward I could have just easily investe…

A new year, a good time to examine your wealth

As a new year begins, it is a good time to reflect on where we are on our journey to wealth. Let us start with what I consider the most important indicator of wealth, your health. That's right, health is indeed wealth. How's your blood pressure? your cholesterol levels? your liver, kidneys, bones? Whether you are a young adult or a senior citizen, being healthy is of utmost importance and investing towards it is truly worthwhile. The good news is that it is not expensive to make sure your healthy, but it requires discipline to exercise regularly, eat a balanced meal and learn to manage stress properly.


The second component we can examine is the quality of your relationships. How is your relationship with your other half, your children, your parents, friends, co-workers, customers, business contacts, facebook buddies. It is said that your network determines your net worth. This is true since it is impossible to become rich by oneself, we need the right people to grow with us.


Nex…