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Monday, July 14, 2014 Book recommendations from successful people

In the age of information technology, its sometimes hard to believe that people do still read books. When was the last time you finished a good old fashion piece of literature? Because the last time I did was about a year ago and that was an audiobook. A one point or another I'm sure a lot of us have asked the question: who still reads books?

Apparently successful people do...

I'm currently obsessed with The site tracks a wide the list of books that businessmen, politicians, influential people/ celebrities and even what writers love to read. And its interesting to read about what people read because it feels like a gateway into a persons mind or thought process.The site also provides a brief synopsis for each book making it easier for one to find books to add to his or her reading list.

Everyone needs a mentor/ role model and while we may not have access to the people we admire, this information age makes it possible to connect without contact. Just some successful people on the site listed at the top of my head: Elon Musk, Bill Gates, Malcolm Gladwell, Jay-Z, Oprah, Steve Jobs, Bill Gates and the list goes on...

Wednesday, July 9, 2014

Absolutely Insane Megastructures!: Dubai Mall of the World

If you've been to the tallest tower in the world, the Burj Khalifa in Dubai you may have noticed a quote saying that:

“The word impossible is not in the leader’s dictionaries. No matter how big the challenges, strong faith, determination and resolve will overcome them.” 

Yeah! H. H. Sheikh Mohammed bin Rashid Al Maktoum said that. And in essence with his leadership this encapsulates everything you need to know about Dubai. Dubai quashes all our preconceived notions proving that nothing is impossible with its massive urban planing projects and breathtaking mega structures. Just when you thought the Dubai Mall was friggin' insane, out comes the mother of  malls.
The Mall of the World will also include a 3-million-square-foot wellness district and theaters modeled after famous cultural landmarks like the West End and Broadway. There will be 100 hotels and service apartments built on the 48-million-square-foot premises in order to accommodate the 180 million visitors the mall hopes to host annually. "The objective is to create an integrated city with a plethora of best-in-class options within pleasant environments," said United Arab Emirates Prime Minister Sheikh Mohammed bin Rashid Al Maktoum in a statement.

Neither a budget nor a completion date have been announced as of yet. The Mall of the World might seem like an outlandish, capitalistic fantasy, but Dubai is no stranger to extravagance. Among other things, the city is famous for containing the world's tallest building and throwing a record-breaking fireworks display.


Tuesday, June 24, 2014

Episode 72: Calling out Analysts' Bullshit (Part 2)...

Brokerages are all alike. The end goal after all is to make money and that is why we're here...

When it comes to trading, all is fair in love and war. Shame on you if you fool me once, shame on me if you fool me twice. I could list down a dozen other cliches but who gives a fuck! Right?!

In the last couple of days, Philex Mining was one of the hot stocks in the market. A combination of higher gold prices due to concerns in the Middle East and lifting of the Padcal mine suspension after 2 years made the stock skyrocket. While a lot of foreign fundies shied away from the stock, only ATR was on top of it.

Atr Kim Eng started buying in at 9 peso something and cashed out above 12 pesos for 20-30% profit. Not bad for a couple of days work. ATR was the first one in and the first one out.

If you've been in the market for the last year or two, you'd probably know that mining fell out of the favor. The governments indecisiveness on the mining revenue sharing scheme and metal prices plummeting worldwide made it tough for the sector.

ATR's company update pegged Philex's future value at Php31.12 pesos from Php34.54 in June 2013. The stock was only going for Php9.31 back then. Several months later, ATR lowered its target price to Php17.19. Just yesterday, ATR was selling at an average of Php12.18.

This just goes to show that you can't trust analysts' forecast. We are all motivated by making money. An analyst may say one thing probably even believe it if we give them the benefit of doubt, but they need to make money in the short term  otherwise they wouldn't be very good at their jobs.

In all my years in trading, if there's one thing I've learned is to never fight the biggest meanest bully in the playground. It's great when you have them on your side, but hell hath no fury like a fundie scorn

Just take a look at what Deutsche Bank did to Belle Corp when it found out that the parent company, Belle was injecting its gaming interest into Sinophil. It sent out a comprehensive analysis on Belle with a future value of Php7.20 and sold down the share at less than Php5 the same day.

Some might say its unethical, the bastard/ douche thing to do, but ethics doesn't really have much to do with making money. We've seen far worse in this market. Like how BDO securities was the first to cash out on Belle corp before we even knew what was going down. Or how deviously shrewd money makers such as Felipe Yap cashed in on the Philex hype by selling shares of Lepanto.

There are only two types of people in this market:winners and losers. If you want to add a third then its the trained monkeys pushing buttons to buy and sell for their clients. You need to decide which one you are...

Wednesday, June 4, 2014

Episode 71: Calling out Analysts' Bullshit...

Social media is one of life's great oxymoron. It has the power to destroy us and create us. As a day trader, the internet is my daily driver. I look to twitter for constant updates and occasionally pop into Facebook and forums for inspiration. While experience has made me more discerning in who to trust, there are a lot of newbie traders out there with tunnel vision a.k.a greed. Hence the object of this post.

I really respect those who go out of their way to call out analysts' bullshit, because while analysts don't have a magic crystal ball, they can't keep going back and forth saying our market is too expensive to saying its bargain hunting season at the same time...

I don't often see it, but it pisses me off when analysts say one thing and do another...

For someone who's issued a price target of Php12.70 for Travellers International (RWM) last April 21, 2014, they sure are selling an awful lot of shares. And looking at the image below, it seems that their selling some shares at a loss as well.

It's understandable for a regular joe to flip flop. It's what the market does. It messes with our heads. It sounds cheesy quoting Spiderman, but "with great power comes great responsibility"...

As far as Balanced fund goes, First Metro's is definitely out of the box. A typical fund would usually contain loads of blue chip stocks like Ayala (AC, ALI, BPI), Gokongwei (JGS, URC) and Aboitiz (AP, AEV) companies or even ICTSI because Razon's terminal business is solid. But not First Metro's balance fund, looks entirely random as if a person threw darts on the wall to decide on stock picks.

The number 1 rule in investing is to know what you're getting into. 
While this fund may make me eat my words one day, I think its' highly unlikely. The primary fund constituent is its own savings bank, PS Bank. Seems sketchy for a fund to put such emphasis on a stock without volume or trades if you ask me.

Number two on the list is Lafarge. A stock that's purely speculative and volatile due to the parent company's merger with Holcim (again another stock with little volume). With Del Monte Philippines (DMPL) and Pure Foods (PF) on the list, I'm beginning to get how this fund operates. The fund manager's plan to just wait for the ask side to thin and the price curve elasticity to work its magic. This guy is lazy if you ask me...

 And we're back to Travellers again! I get a feeling that this was someone's expensive mistake that they're trying to correct. This is a fund which I assume to have thousands of investors, so whoever puts that much percentage on this wildcard needs to find another job really!

I know there are more unconventional funds in the market. I think Sun Life has a 3rd liner fund and so does ATR Kim Eng. But people who invest in those funds know what they're getting into which is high risk high reward funds. I really really hope that those who invest in this balanced fund know what they're getting into.

Saturday, May 31, 2014

Talk Nerdy! SpaceX Dragon V2, Google's Driverless Car, Ebay Hack and Avengers Shield Station

I haven't done one of these posts in a while, but here's what you need to know in tech.

1. SpaceX Unveils New Spacecraft the Dragon V2
There's nothing Elon Musk can't do. I'm actually starting to believe that he is Iron Man! The race to space just got a little bit more real for the Tesla Motors founder as he unveils their newest spacecraft.

2. Google's steering wheel-less self driving car
Google just threatened millions of professional drivers everywhere with the unveiling of its steering wheel-free driver-less car. According to Google their car is safer than any other car out there as it eliminates the uncertainty risks brought about by reckless driving.

We won't see this technology running around in our streets for a while though, seeing as there's still regulatory risks and price issues to be smoothed out. Nevertheless the technology is here and if there's a company that could bring this mainstream it's Google!

3. The mother of all Hacks!
Ebay just got served! If there's ever a time to start being paranoid, its now. The world isn't a safe place anymore. It probably never was to begin with, but as more and more institutions get hacked its becoming more real.

Hackers got a sizable amount of information from birthdays to encrypted passwords which they can no doubt decrypt through time if they were smart enough to get the info in the first place.

Seeing as most of us have one password for everything, its time to exercise a bit of precaution. If they can get into your email, they can get into virtually anything!

4. Avenger's S.T.A.T.I.O.N. exhibit at the Discovery Times Square
I love Marvel Comics.Admittedly I'm one of those freaks who watches their movies in the big screen and once they come out on DVDs. Marvel just unveiled its Avenger's Station in New York. For those living in the big apple, entrance is $27 for adults and $9 for kids.

Personally, like the Agents of Shield tv show it feels like a ripoff. I'd say let's just wait and see for Marvel to hit Disneyland instead.

Episode 70 Psei Update (Part 3 of 3): Where are we going?

 What's next for the Philippine Stock Exchange?

What happens next is anyone's guess. Before the disappointing 5.7% GDP (consensus forecast above 6%) came out last Thursday, stock market pundits were divided between 7,000 and 6,500. Those who opted to take the money and run apparently did the right thing.

Last year when the PSEi reached its all time high of above 7,400, foreigners were selling as we reached the top. We saw heavy foreign selling day in day out, and the locals (myself included) bought into the madness only to realize that the bottom was about 1,000 points down.

Every "strong support" broke down starting from 7,000 to 6,500 to 6,000 and don't even get me started on the minor supports analysts pegged as strong supports (6,800 - 6,700 - 6,600 - 6,500 - 6,400 - 6,300 ... 5,800). What a bunch of bull crap!

Now here's the ugly hypothetical if and when hell freezes over. If you look at the chart above there's a slight resemblance between January to May of 2013 and February 2014 onwards. From May to June last year, volatility reached 50% and the index plummeted touching bear territory which by definition is 20% down from its high.

There is an inverse relationship between the index and volatility. In theory, if we literally trace the chart's descent from May to June last year (as one does, because we think like a 5 year old without boundaries and a wild imagination), then we get to the theory that: if volatility reaches 50%, then the index could plummet to 5,200 to 5,300. So let's hope that the strong supports hold this time around.

What's a normal investor to do?
You wait it out. Gravitate towards safety and free up some cash. If winter is indeed coming then you can wait for your favorites stocks to reach a normal level and an acceptable valuation. The index which was almost at 20x P/E a couple of days ago is too expensive considering that our other Asean peers are at 14-17x. You start accumulating stocks again as they fall from the stratosphere and reach a level that you're comfortable with.

For those who are in the market, get real. We're not creating higher highs and higher lows anymore. It's lower highs and lower lows time. 

There's no logic in chasing a measly couple of centavos when you're risking a couple of pesos. The upside should always be greater than the downside risk. If the situation were reversed and the upside was enormous, then I'd say game on, but right now almost 75% of all analyst calls are a sell or a hold. When there's no easy money anymore and we're all playing for hard money it's better to call it quits.

When you're up against the big guys, you don't ever throw caution to the wind. Money managers turn into skilled financial terrorists when they need to be. They can down a market in a blink of an eye. You don't play with fire unless if you want to get burned.

All posts in this series:
PSEi Update (Part 1) : Downing of the Ayalas #TheEndIsNear
PSEi Update (Part 2): Smokes and Mirrors Game feat. Megaworld Corp
Psei Update (Part 3): Where are we going?

Episode 69 PSEi Update (Part 2 of 3): Smokes and Mirrors Game feat. Megaworld Corp.

In the last post I talked about certain issues including Ayala stocks being forced close down, so it seems only fitting to tackle the forced close up stocks for this article. Today was a roller coaster ride for holders of JG Summit (JGS), SM Prime (SMPH) and Megaworld (MEG).

Megaworld in particular really kept us guessing. At one point I actually thought that it would plunge below 4.50, but thank goodness for little mercies as it recovered and closed at the high for the day. MEG's volume was ballistic today with 903 million shares changing hands compared to the average 78 million. Its net foreign buying for the day was at 1.7 billion pesos. A giant red flag in my opinion.

There's no smoke without fire.
We've already seen the smoke. There has been some days with net foreign selling this week and we're down by 400 million for the week.

Something unusual though is the presence of smokescreens. For several weeks now we've seen foreigners sell down stocks to cover their tracks and present an illusion that they are bullish buyers. Smokescreens provide the illusion of a strong and upbeat market rather than a ticking time bomb waiting to explode.

Megaworld is a good example of this. Without the Php 1.7 billion foreign buying our market would have had a Php 1.2 billion net foreign outflow today. It sounds like a conspiracy theory, but foreigners are very careful in opening the floodgates this time around, because they have billions ensconced in our market and they stand to lose a helluva lot.

Another great smokescreen is MBT.

Since the start of May, foreigners were massive buyers of Metrobank which hardly appreciated in price during that period. Money managers who hold big funds aren't dumb. They don't buy into anything unless if they like what's in it for them. This can only mean two things, speculation or manipulation of the market.

You don't want to bring a knife to a gun fight

While we cannot check for sure if its a coverup, nevertheless we remain fearful of the massive ask side on several issues as of closing.

All posts in this series:
PSEi Update (Part 1) : Downing of the Ayalas #TheEndIsNear
PSEi Update (Part 2): Smokes and Mirrors Game feat. Megaworld Corp
Psei Update (Part 3): Where are we going? 

Friday, May 30, 2014

Episode 68 PSEi Update (Part 1 of 3) : Downing of the Ayalas #TheEndIsNear

The Beginning of THE END...
You know the end is near when the biggies start slashing the prices on our favorite blue chips. Most of the Ayala shares including Ayala Corp (AC), Ayala Land (ALI), Bank of the Philippine Islands (BPI) and Manila Water Corporation (MWC) got nuked today at closing.

Seeing as it's "window dressing" day and stock prices seemed to be inching up by the end of the trading day, I really didn't see this coming. This also comes quite as a shock considering the strength in their real estate arm and venture in utilities.

Recent Ayala related news:
On another note:

And it wasn't just the Ayala stocks that got hit, foreign favorites including Jollibee (JFC) and ICTSI (ICT) also got hit. 

All posts in this series:
PSEi Update (Part 1) : Downing of the Ayalas #TheEndIsNear
PSEi Update (Part 2): Smokes and Mirrors Game feat. Megaworld Corp
Psei Update (Part 3): Where are we going? 

Tuesday, May 13, 2014

Slow Internet in the Philippines and Unfair Telco Internet Practices

A couple of weeks ago, several articles about how slow and expensive internet was in the Philippines spread across the web like wildfire. While its already a given that this country's internet sucks (Philippines $25.59 vs Global $6.12), telcos such as Globe and Bayantel have found a way to stick the metaphorical knife in further by cheating its customers who are sadly clueless about it.

Just one person's story... but if it happens to one it must also happen to others.
Our internet was down couple of days ago and I called Bayan to check on our connectivity status. Looking at their site for the contact information, I passed by their products and services page and found out that a 5 Mbps plan costs Php2,099 the price we were paying.

While reporting our dodgy connection, I asked the customer service agent what our current speed was and he said 2.5 Mbps. I asked him why their site was offering 5 Mbps and only 2.5 Mbps to us and he said that they could give us the same speed, but only after we have our connectivity issue resolved.

That really pissed me off! It's Bayan who messed up my connectivity and I can't even get what we paid for. Whatever happened to customer loyalty or just basic decency to say the least. Making someone pay for an inferior product at a premium price is not fair at all. And it sucks because if I didn't check their site I would have never known at all.

As of typing, I'm using a combination of the said dodgy Bayan internet and my Globe Telecom's sketchy mobile internet which can almost always only get EDGE because we live in a busy high-rise. HSDPA works but I have to sit in my car out in our parking lot.

FYI. We had edge since the dawn of the old black and white Nokias which have died in the day.

Thursday, May 8, 2014

Episode 67: It's Official: Standard & Poor’s upgrades the Philippines to BBB

Here's something to calm all the jittery investors out there. The Philippines gets another credit rating upgrade from Standard & Poor’s from “BBB-” to “BBB.” Don't too cocky though, ironically today is the first day in what seems to be a lifetime that the foreigners have started selling (Php -182 million today).

Just a little flashback to March 2013... When Fitch Upgraded the Philippines to BBB-, people panicked and bought the market up at opening only to get crushed momentarily. If you're in the market at the moment, great! You might want to profit take... I seem to recall how foreigners ripped a new one last year, when the S&P upgraded us to BBB- almost the same time last year.

Currently, the Philippines has one of the highest PEs in Southeast Asia. It being at 20 and Indonesia at 22. Vietnam is getting crushed at 13 because of the on going geopolitical tension with China which makes me queasy. Aren't we sorta in the same boat as Vietnam?

Here's a sneak peak of March 2013. Look at the crazy sell side..

Full disclosure: Almost 85-90% of my working capital are in stocks at the moment. I've been working on cutting this number down.


Tuesday, April 29, 2014

Walmart in China/ China's foreign food craze


It's common knowledge that a bulk of goods sold in Walmart come from China. I think I read somewhere that their warehouses are located in Shenzhen (a train ride away from Hong Kong). Therefore, making China perfect for the Walton's worldwide expansion.

Recently on a trip to Guangzhou, we visited the Walmart in Wanda Plaza at Feixiang Park which is a bit of a trek from the station. I wasn't really expecting much, since we've been to another Wal-mart in Shenzhen two years back and it was extremely localized and practically comparable to almost any other China supermarket.

Walking in the store, I was thoroughly surprised to see how Wal-mart actually leveled-up, stocking the shelves with their own great value private label for food and Mainstays brand for home goods such as towels, etc.

In typical Walmart fashion, ipon entering the store, you'll notice the clothing department which had crazy affordable prices considering the fact that Guangzhou has become increasingly expensive due to industrialization and the influx of expats.

Its fun to note how, foreign brands have penetrated China. Carlos Chan's Oishi Philippines has done a great job in the market, but that's another story for another day. Going back, it perplexes me how Snickers and M&Ms can occupy a great amount of shelf space as pictured above. It makes me wonder if the demand for chocolate matches the supply.

While I love savoury Chinese flavored Lays such as asado and hong ma, the steak and pizza flavored Lays also intrigued me.

It's notable that there's a bit of an oreo craze in China. Kraft probably had more than a dozen SKUs including hybrid oreos (half peach half grape, half blueberry half strawberry, half mango half orange), birthday cake, tiramisu, cupcake?!, lemon cheesecake oreo and individually packed snack size oreos and wafer oreos (not pictured) aside from the normal ones seen in store. I too have been bitten by the bug taking home my favorite birthday cake oreo which is to die for.

Walmart China in my opinion has achieved the perfect go between being local and being multinational. I just love how the the dumpbins are filled with local and multinational products that are cheaper than other stores. Because lets face it, it wouldn't be a Walmart without the dumpbins filled with great value deals.

Monday, April 7, 2014

Episode 66: Double Dragon Debut (50% up)

No charts, no tables, no nothing!!! 
Whenever you hear that an IPO is 14x oversubscribed you go for it. I've been in the market for quite sometime now and I've never heard of 14x oversubscribed. 3 maybe, 5 yes, but 14 times that's blows my (figurative) socks off!

Being cheap sucks ass (excuse the language)! I placed an unserved bid at 2.40.

Yeah it sucks, but no harm no foul. This is only the beginning. Looking at two of the IPO babies of last year that bit the dust shows that its better to be safe than sorry...

However, we're talking about the dream team here, SM + Jollibee Group + Injap Sia (the wunderkind who created Mang Inasal, that David that could have brought down Goliath but instead joined forces with Goliath).

The way I see it, Double Dragon is going the missionary route. Like how Cebu Pacific changed the aviation/ tourism industry by going to sub-destinations thereby beating our flagship carrier, Philippine Airlines. It's blue ocean in its core. By building community malls (which is obviously small business for the SM group who's focused is massive China malls and townships), they carve a niche for themselves and with SM already on board there's no Goliath to trample them or stand in their way.

Its a Win-win! The rich gets richer and our best chance is getting a slice of the pie no matter how minute it is.

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