Newbie’s questions to investing in the Philippine stock market

The Philippine stock is the first and the longest operating stock market (since 1927) in Southeast Asia. Despite its being the first and being the longest operating stock exchange sadly it is one of the smallest in terms of trading volume, known as having the shortest trading hours of any stock exchange in Asia and is among the stock exchange having the least involvement among its citizens.

It is said that more foreigners are actively investing in the Philippine stock market than the Filipinos themselves. A pathetic less than 1 % of the entire Philippine population is investing in the Philippine stock market. As one newspaper comments, the growth of the Philippine stock market reflects the poor economic growth of the country.

Nevertheless despite its slow or even near stagnant growth, opportunities abound in the Philippine stock market. Just like any stock market, investing in the Philippine stock market can be quite profitable. Because of its current situation, the Philippine stock market has more room and opportunities for growth considering also the fact that the eyes of the world are now focused on Asia. It is my humble opinion that a tsunami of economic growth will soon inundate Southeast Asia in particular and that the Philippine stock market will hopefully ride at the top of the wave. That is why I consider it a blessing and an opportunity to be investing in the Philippine stock market.

One of our readers who is new to investing in the Philippine stock market has asked several questions with regards to the matter. I hope to help educate the public with regards to investing in the Philippine stock market so I am sharing to all of you her questions.

Dear Ashley,

Thanks for your queries with regards to investing in the Philippine stock market. I am always willing to answer questions. Normally I answer questions comprehensively via blog post for various reasons which I already have mentioned in my other posts. However take note that I have blogged about your questions so my answers below will refer you to some past posts I have written on the matter. Judging by your latest comment in my blog it seems that you have already read some of the posts in my blog regarding investing in the Philippine stock market. However, just to be sure, I will still try to answer the questions you sent via email and via a comment.

I have been wanting to write a free ebook on the subject, but I am still collecting ideas on how to go about it, how to make it more user friendly for newbies to investing in the Philippines stock market and what will be its general format and outline. In a sense the posts that I write and will be writing regarding investing in the Philippine stock market will form part of a future ebook on the subject. So keep your questions coming as it will give me an idea on what newbies in the stock market are looking for. Add to this is the fact that it forces me to write about the subject.

I’ve tried to collate your questions. Here are my answers to your questions regarding investing in the Philippine stock market and online trading in particular.

1.) Have you tried online trading like the one offered by BPI and other banks? I’ve been thinking on participating in buying/selling stocks BUT, i don’t even know how to buy/sell stocks!

– Yes I have, I’ve been doing online stock market trading for almost 5 years now. I mainly use BPI but I am not saying it is the one that you should use. You should try out other online stock trading services and decided for yourself which you should use. I highly recommend both BPI Trade and Citseconline. They each have their Pros and cons and I have written about this in the blog post entitled “How to invest in the Philippine Stock Market – Part 3” subtitled:  Starting to trade online.

2.) Is it true that online trading system offered by banks will enable you to buy/sell stocks real time?

Technically yes. Banks not only do Outer banks foreclosures they also do online stock trading. Aside from banks, other licensed stock brokers offer online trading as well. In online trading, you can buy and sell stocks in real time. The Philippine stock market opens at about 9: 30 a.m. Closing bell is at 12:30 p.m. A two hour afternoon trading session is planned to be added starting June 30, 2009. You can also enter “off hours” order even after trading hours.

3.) Does that mean that in a span of one day, I will be able to buy/sell my stocks as many times as I want? Is that possible?

Yes you can buy and sell stocks as many times as you want. However compared to other stock markets wherein there are lots of trading activities and the stock price wildly fluctuates in a matter of minutes the Philippine stock market is quite small, so it really makes no sense to buy a stock and sell it within the same day. (Although some day traders do this sometimes)

Those who dubbed themselves as “daytraders” can’t even do day trading in the strictest sense of the word. They are more of “week traders” “days trader” :-)  (Day trading is defined in wikipedia “ the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close of the trading day.”) I would say that day trading in the Philippine stock market would be non-existent unless the market volume increases and the trading hours are extended. There is a new development that the Philippine stock exchange is planning to link with several other Southeast Asian Stock exchanges within the next 3 to 5 years. This is good news for all stock market enthusiast especially the day traders.

4.) I looked at the demo of BPI online trading. Before you can actually BUY/SELL stocks, you must enter the Volume and the Price (is this price per unit?). I’m not sure what price to enter, do I enter the previous close price when buying or selling?

You may enter any price for as long as it is within the price limits. The price referred to there is “price per share.”

Remember that the Philippine stock market is a “market.” In a market the price, buying and selling depends on the law of supply and demand. In a sense when you enter a price for a certain stock you are offering to buy such stock for a certain price. Your online broker will then post your offer at the market and inform everybody that you are willing to buy a certain stock at a certain price. If nobody is interested in your offer than you can’t buy the stock you are trying to buy. If somebody would like to sell the stock you want to buy at the price you have proposed then you have a “match.” The same thing goes on for the selling process. So literally there are hundreds if not thousands of buying and selling activities going on every minute or hour during the trading hours at the Philippine stock exchange.

5.)” . . .. just emailed you a while ago and have been reading your posts for 2 hours now…I really wanted to do online trading (BPI) but it seems I really have a LOT of stuff to learn”

Although this is not a question you have asked, I would like to comment on what you said. I am glad that you have found interest in investing in the Philippine stock market.

I’ve always been an advocate in investing in the Philippine stock market. I even have disagreement with my family especially my mother and my brother. My mother firmly believes in investing in real estate, while my brother firmly believes in investing in start up businesses. While I do not dispute the fact that these ventures could also reap handsome profits, for me nothing beats investing in the Philippine stock market (I would always argue that Warren Buffett is more rich than Donald Trump:-) ) However before investing in the Philippine stock market, YOU MUST KNOW EXACTLY WHAT YOU ARE DOING. To do this you must do a lot of research and study. By the way I suggest you read my post first on the advantages of investing in the Philippine stock market in the post entitled “How to invest in the Philippine stock market – Part 2.”

Although I blog about a variety of topics, investing in the Philippine stock market is one of the main topics of this blog and they are all contained in the category entitled “Financial management and investments.” You might want to click on this and check out more post about investing in the Philippine stock market. Yes indeed, investing in the Philippine stock market requires a lot of hard work and lots of study. I would advice you not to give up and continue reading and researching about the subject matter. After a year or so you will somehow gain a mastery on investing in the Philippine stock market.

From time to time drop by this blog and you will find some gems of wisdom with regards to investing in the Philippine stock market. Should you have further questions please don’t hesitate to drop me a comment. I’ll be more than glad to answer your questions.

Sincerely,

The Guerilla investor :-)

Like what you just read ? Check these out !


zmd Hi ! my name is  Zigfred Diaz, Thanks for visiting my personal blog ! Never miss a post from this blog. Subscribe to my full feeds for free. Click here to subscribe to zdiaz.com by Email

You may also want to visit my other blogs. Click here to learn stock marketing investing.  Click here to learn more about How to Earn cash online. Visit my travel blog to learn more about great travel ideas.


This entry was posted in Financial management & investments and tagged , , . Bookmark the permalink.

31 Responses to Newbie’s questions to investing in the Philippine stock market

  1. ice_hot says:

    hi! investing in stocks is one good way to make your money grow. it is way better than putting your money in a bank account. however, i just would like to point out that you dont have control over the stock market. all you can do is hope that the stock prices go up. hence, i still believe the best way to invest is to start a business of your own. this way the returns are greater and you can greatly influence the fate of your money.

  2. its so risky and hard to put your money or invest in the stock market considering the fact of the recession or global financial crisis that we are experiencing ryt now..mas safe pa to save in the bank na lang and wait for regressions.

  3. zigfred says:

    Chris: That’s exactly my point. Now that prices are so cheap, it is exactly the time to get into the stock market. However I would like to ephasize that you should only do this if you know exactly what you are doing in the stock market.

  4. zigfred says:

    ice_hot: You may not have control over the stock market, but you have control over the stocks that you want to buy. The stock market is simple. Buy outstanding businesses with durable competitive advantage at a low price when others are fearful and sell high when others are greedy. That single sentence summarizes how to be very successful in the stock market.

    Owning your own business might bring you greater returns, but in the first few years it will bring you a lot of problems. Believe you me, I’ve been involved in several startup businesses. I prefer the stock market wherein I only study the company fundamentals. I don’t have to deal with people. :-)

  5. Hi!I’m Arlene. just an ordinary housewife at present. I’ve just read your ideas about the stock market inthe Phil and Im interested to know more about it. Maybe you could be a good source of help to satisfy my curiosity. Thanks.

    From: ma. Arlene C. Marasigan

  6. zigfred says:

    Ma. Arlene: Yes, the stock market is a good investment. When investing in the stock market, do not think that you are investing in stocks, think that you are investing in businesses. Like Warren Buffett, always take a “Business-like” investing approach. As Buffett’s mentor Benjamin Graham said “Investing is most intelligent when it is most business like.” If you do this you will never loose in the stock market.

    Drop by this blog from time to time or subsribe in to my feeds to learn more about investing in the stock market with a business perspective. Thanks for visiting this blog.

  7. Emman says:

    Hi! I really like your blog and i think we believe in the same principles hehe!
    I believe that stock trading is easy as eating with chopsticks,at first there are a lot of things you need to learn but once you get a hang of it then its automatic to you. According to a bok that ive read,investing in stocks are so easy that even kids can do it,some people make it sound complicated but its not.now is the right time to invest because stocks are at a bargain price and theres no othe way but to go up,if stock prices are high,you should be selling. Buy low,sell high. Putting money in the bank as timedeposit or savings account is loosing money,kinakain lanh ng inflation ang value ng pera mo.

  8. Hi!I appreciate your message. I guess you have a very positive view about investing on stocks which I think is something encouraging and to look forward to. Maybe putting money in the bank as timedeposit or savings account is losing money TO A CERTAIN EXTENT as you have mentioned due to inflation if that’s the only way you put ALL your hard earned money or savings but I think it also helps in a way to put SOME on short term investments like such for the purpose of safekeeping while the need or use of it for a purpose hasnt arise yet. Afterall your money could still earn a certain interest. However, It gives us a feeling of dismay with the value or rate it has earned after the long waiting of the maturity date. Di ko maappreciate kasi kulang pa pandagdag sa pamalengke ko. He!He!Ok na sana kung makabili man lang ng isang gallon ng icecream. Thanks ha..

  9. zigfred says:

    Emman: Thanks ! Yes it’s quite easy once you get the hang of it. You could even say it is a no brainer. What your really need most in investing is temperament and the pateince to wait for the fat pitch. My favorite Warren Buffett quote with regards to this is when he said “Success in investing doesn’t correlate with I.Q. once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”

  10. zigfred says:

    Ma. Arlene: My former professor in Corporation law who is a former banker himself calls banking as “hiway robbery” because of the law interest rate they give depositors. I wouldn’t go to as far as calling them hiway robbers but to some extent I agree with him.

    Study shows that investing in the stock market over the long term (Say about 20 years) range from a positive 18 % return minimum to about 28 %. I’ve read about it somewhere, I still need to find the article. I’ve not seen the figures for this study yet, but the article was published in a major newspaper, so I’m sure the data based upon by the author is somewhat reliable. Similair studies in the U.S on their stock exchanges there reveal the same thing. Anyway, I’ll inform you when I write a post about why I believe stocks are the best investments.

  11. HELLO!In fairness no one can say that an endeavor such as investing is a ‘no brainer’ one because I think there’s still a certain amount of thinking to be utilized here.The brain is a major part of the body used for critical thinking in order to achieve success in any undertaking and I think everyone possesses the I.Q.to get into it. This might sound elementary and yet it matters to say that it takes brains to engage in investments and depending on your level of intelligence for one to be able to exercise a mature decision after given the proper information or education.Otherwise, trouble could sometimes creep in not in investing but in accepting the idea. You’re right in saying that temperament is needed to control…and temperaments come from one’s valued emotions. If one has the right education no matter what level you may have, it takes brains to control your temperaments..a matter of acceptance or not maybe would be the next issue. The brain is still the one that helps control those urges. With the correct education the door to success may be opened to anyone.Your ideas are brillant and important to everyone like me. I guess I just need to grow more just like you. Keep it up!Thanks for the SHARING..

  12. Emman says:

    Thinking and doing are two different things. There are a lot of highly intelligent people who are still poor because they keep on thinking but theyre not doing anything, they keep on aspiring but they keep on sitting and wait for the green light to flash. Of you keep on waiting for the perfect moment then you’ll forever be poor.

    If youre scared of investing then dont go away from it,instead,face i and learn from it,study a lot. Read a lot of books specially the ones that will boost your spririt and inspire you. I have never met a rich person who never became broke but i met a lot of people who never lost a peso but still theyre poor,attend seminars. Take action,dont sit and wait. Ive read an article about the secrets of the millionaire moms and admire moms who did not wait for their husbands paycheck and

  13. emman says:

    hi zigfred! i agree with your statements and i really believe that you dont have to be super intelligent to be a good investor, all you have to have is the willingness to learn.,
    dont ask to know more about the stock maket if you are not willing to change. you need to be very openminded, so open minded that you have to forget integral beliefs that you knew like saving money in the bank, you have to change your mindset and think you can do what you want to do.
    i was once scared and always seeking security, always afraid that i might loose it all, but i learned a lot from reading books about investing, now i am slowly gaining experience and taking little baby steps towards my goal. i think everyone can do what they want to achieve. open mind, brave heart and the courage to face failures is the key to be financially free.take action.

  14. zigfred says:

    emman: That’s great. Always keep an open mind, keep up at what you are doing an you are on your way to financial freedom :-)

  15. indiebot says:

    Hi, I’m curious about your opinion on which investing strategy works best here in our country with a very small market. Would value or long-term investing still work? Or would mid to short-term stock trading work better?

  16. zigfred says:

    indiebot: Hi there ! I am an advocate of value investing. Others call the investing strategy I am supporting as “Business perspective investing” or “contrarian investing” or even “long term investing.” A popular name is “Buffetology.” whatever name you want to call it, you can read about my investing strategies in my Financial management and investments section. Click here to go there: http://www.zdiaz.com/category/financial-management-investments.

    Yes, value investing does work in this country, you might want to read my post entitled: Applying value investing in the Philippine stock market where I’ve made a strong argument and presented evidence on applying value investing principles in the Philippines.

    From time to time drop by this blog to read my view points on stock market investing or you can subscribe to my posts for free. :-)

  17. Great post, Zig.

    I’m a newbie in stock trading and have mine in thru BPI. Ur right, it’s good that u know what you’re doing!

  18. zigfred says:

    x: Yes ! Cardinal principle in investing, never invest in something you do not understand so you must KNOW EXACTLY WHAT YOU ARE DOING :-) para walay mahay ba hehehehehe :-)

  19. zita says:

    i’m thankful that i found this blog in search for ways to understand better the basic investing information that i need before i start investing in stocks. I also believe that investing in stocks is a big deal if one wants to have passive income (while working / being an employee of another company / or having your own business). thank you for keeping us informed and helping us make healthy-investing decisions!

  20. megan says:

    Thanks for providing this info, it’s very useful to those who maybe interested to go into stock trading.

    I have a question for you – I’m unloading most of my stocks (Ayala Land and Anscor) which I had purchased back in 2000 when the prices were still cheap. I had lost contact with my stock broker since I had been travelling. How do you suggest I go about selling my stocks?

    Thanks and Regards!

  21. zigfred says:

    megan: Hi ! Thanks for reading my articles. Do drop by from time to time, soon I will be opening a new niche blog devoted to investments with focus on investing in the Philippine stock market. I will announce this a month or two from now.

    I agree that when you purchased your stock, it was still cheap during that time. We were still recovering from the Asian Financial crisis add to that EDSA 2 and 3. There was really blood on the streets. So from 1997 to 2003 it was a perfect time to buy. You should have sold your stocks sometime in 2007 when the market was really very bullish and going wildly mispriced stocks . (Remember the Warren Buffett rule on how to get rich – Be greedy when others are fearful and be fearful when others are greedy) We will be in for another bull market within the next 3 to 5 years so I suggest you hold on to your stocks instead of selling them. Prices are not so good for selling as of now, it still time to get greedy to buy.

    By the way who is your broker ?

  22. Dan says:

    If you are based in the Philippines, investing in the Philippine stock market through an online facility like Citisec Online may appear to be more exciting in the future. Six Asean bourses are now looking at the possibility of cross border trading. Meaning, if you’re based in the Philippines, there’s likelihood that you may also invest in company stocks of the Asean member.

  23. rhani says:

    hi, thank you so much for this nice blog. just one thing though, can’t seem to find the part 1 of your “how to invest in the philippine stock market”. you’ve post parts 2 & 3 above. could you please give the link if you got time. thanks.

    i’m an IT guy, so investing is a diff world for me. i just got interested on it because of my previous project here abroad, the company is involved in commodities trading in NYSE, CME, etc. if you are familiar with “futures/options”, that’s what we do ( i learned a few concepts on how it works ). would that be related to this article? hopefully i’d be able to equip myself with enough knowledge asap so i could start trading, really excited on this one =)

    thanks again.

  24. zigfred says:

    Rhani: Hi ! Thanks for visiting my blog. Part 1 is here: http://www.zdiaz.com/2007/12/how-to-invest-in-the-philippine-stock-market-–-part-1/ You might want to visit my new stock market investing blog at http://www.stockmarket-inveting.com. I’ve continued writing about stock market investing in that blog. Click here to visit the blog and learn stock market investing

  25. rhani says:

    that was quick =) thanks for the links!

  26. Hi Ziegfred,

    This is exactly what I needed! I am looking at investing in blogs and I need the most information I could gather so I could be fully equipped in the work of stocks. Thanks for guiding us through!

  27. zigfred says:

    Jonha: You are more than welcome !

  28. abby says:

    hi… im a student from CEU… and im so curious and want to learn more on how to invest and be familiar in the stock market… i have a small saving but if i will just wait for the bank to give me a small amount of interest,that’s not good idea.. so i want to learn more.. can you help me in entering the world of investing… im abby,,, can u send me your cellphone # so i can call you,pls…. in my e mail add… abby_quizon68@yahoo.com

    thank you so much in advanced….

  29. zigfred says:

    abby: Hi ! CEU is Centro Escolar University ? Sorry I don’t give personal information over the net. But if you like we could correspond via email. Just send me your questions via the contact form and I will be glad to answer them or point to resources that could help you. It is always my pleasure to help those starting out in investing in the market.

  30. cyrille says:

    hi .. im a student of jru .. may i know the stock valuation in international and philippine setting . please .. thanx!!

  31. zigfred says:

    cyrille: What do you mean ? Are you asking stock valuation for a specific stock ?

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>