Investing in the Philippine Stock Market has become more prevalent nowadays, thanks to those

few and exceptional individuals who keep on spreading financial literacy all throughout the
country.

The stock market is now being actively thrown into discussions of many Filipinos when it comes
to managing their own finances.

I was once a complete idiot on the stock market myself. Even when I was already in college, I'd
take pride of my self-formulated knowledge regarding the stock market: it's one big market that
sells all kinds of stuffs, from A to Z! Almost nothing is wrong with that, really. Except that I'm
thinking of it as the market I know - literally!

So there I was, a graduating student of a Bachelor degree, taught to solve complex computer
algorithms...ignorant of the terror lies about the real world I'd soon be facing. I was dumb. I was
an idiot. Why shouldn't I be?

No one ever taught me.

Today, I now invest in the Stock Market. I hope you will too! Why? Because investing in
paper assetssuch as the stock market is one of the many vehicles that we can ride to our own path
to success and wealth. Don't miss it! And may you soon enjoy the ride...

So, what's the “Stock Market”?

I'm sure you've heard it -- a lot. Many times, the stock market is in
the news, in the business section of a magazine or newspaper, and even in the Internet. But like
most Filipinos, we don't burn much calories trying to figure out what the heck is this thing
called “Stock Market”. And mostly, we are taught to believe that the Stock Market is only for
the “damn few rich”.

Simply put, the stock market is a place where portions of publicly listed companies are being
traded. In the Philippines, the physical location of the trading actually takes place at Ayala Tower
1 in Ayala Avenue, Makati City.

Let me tell you what and how the stock market works in a simple narrative:
Jeff wanted to open a softdrinks delivery business. For this venture, he would need
10,000 pesos as initial capital. But he only has 9,000 on his savings account. So he asks
his friend Kent if he could lend him his 1,000 and in return, he will own 10% of Jeff's
business. After a month, the business did well and it earned 1,000 pesos in its opening
month!

Since Kent owns 10% of the business, Jeff gave him 100 pesos (which is 10% of what the
store earned). This is called dividend.

But that 's not all.

After a year, the business is thriving well. From softdrinks, it now sells beers and all
kinds of popular sodas in the market. From 10,000 worth of initial capital, the business
is now worth 20,000 pesos.

And so Jeff's other friends, Mark and Alex were now interested in joining the business
as well and they learned that Kent actually owns 10% of it. So they asked Kent if one
of them can buy his shares.
If Kent decided to sell it, he would now earn (10% of 20,000) 2,000 pesos! This is
called Capital Appreciation based on market value. But then, Kent has a problem.
There were 2 of his friends both asking to have his 10% share of the business.
So Kent simply decided to have them bid: whoever among Mark and Alex is willing to
pay more for the 10% share that is now worth 2,000 pesos.
Of course, Kent decided to sell the shares to Mark, who countered Alex's offer to pay
2,500 with 3,000. This is called Capital Appreciation based on perceived value (which
is based on the demand from his 2 friends).

This is how simple the stock market works.

Now that you have been acquainted with the Stock Market in its simplest sense, the following
nuggets will make more sense to you.

Do I need to go (personally) to Makati to buy or sell stocks?

No. You will do everything online - with the help from an online broker which I will tell you more
about later.

What do you mean by “portions of listed companies”?

A company who wish to be listed or included in the Stock Market should have at least 12% of its
total value available to the public. Meaning, if a company's total worth is 1 Million pesos, 120,000
should be owned by the public. This portion is what you call stock or share.
And who is this “public”?
This “public” is actually us - you and I included - normal people that do not even know who runs
that company. So yes, even you can have a hand on these huge companies, because you are a
member of the “public”.

But why would companies go public?

Let's go back to Jeff's softdrinks business above. If he wanted to open up another branch but don't
have enough money, what's the best thing for him to do?

He has 2 options:

1. borrow interest-bearing money from the bank or

2. borrow money from his friends.

The same is true for the listed companies. Instead of borrowing money from the bank, they go
public. So people would buy shares from them in return of their cash. Hence, the company will be
able to collect funds from the public, which they can use to improve their business.

What do people get when they “buy shares”?

When you buy a share of a company, that basically means you “own” a small portion of that
company. If the company grows, so as the value of your shares. And this is where you earn money
in the long term.

How do I make money from buying stocks?

The logic is simple: Buy Low, Sell High. It's like buying an item with a lower price, and then selling
it to others with a value higher that what you initially paid for. The good thing about investing in
the stock market is that the company is more valued over time, unlike cellphones and cars, which
decreases value over time. Stocks are like gold, the longer you hold it, the better its value is
appreciated. This is called Capital Appreciation. Of course, the bigger the company you choose
the better for you.

When you buy a share of a company, the price or value will change. Therefore, buying 100 shares
for 4 pesos each will have a value of 6, 7, 8 or who knows in the long run? Eventually, you will
sell these shares when you've profited already. That is how you will earn.

Is there a guarantee that I will earn?

NO. There is no definite guarantee. There would be times that you might buy a price of 4, only to
see its price drop in a matter of minutes, hours or days! But that's OK. Because it will eventually
go up...even higher!

Your investment in the stock market can be compared to a hiker:

He starts in the foot of the mountain, just like your investment. Eventually, he will
start to climb the mountain and expects to struggle at times on his way up, including
slippery rocks which may even cause him to fall!
But that's OK, since his goal is to reach the top of the mountain! So he'll just rest,
gather some more strength and start climbing again.
During those falls, hikers have ropes that would save their lives in case such accidents
happen. These ropes can be compared to the foundation of a company. Bigger
companies have stronger ropes compared to weaker ropes the little ones have.
The difference of the hiker from the company you invested in is that, once the hiker
reached the top of the mountain, his journey comes to halt. Not with the Stock Market.
Because once it reached its peak, it will try to reach for new heights.

Sky is the limit!

Is this LEGAL? Is this not some sort of a SCAM?

Of course it is legal. The stock market is being regulated by the Philippine Stocks Exchange (PSE).
They set the rules and regulations on listing, trading, suspending and all activities involved in the
process.

How regularly do they trade?

The stock market trades from 9:30 AM to 3:30 PM, Mondays thru Fridays, except during Holidays.

Below is the complete daily schedule of the market:

9:00-9:29 AM Market Pre - Open

9:30 AM Opening
9:30-11:59 AM Continuous Trading
12:00-1:29 PM Market Recess
1:30 PM Continuous Trading
3:17 PM Market Pre - Close
3:20 PM Closing
Run-off or Trading At
3:20 PM
Last
3:30 PM Market Close

But they say that the stock market is very risky!

Yes, that is very true. But as many mentors would say, it is trading that is dangerous and not
investing. Trading means you buy and sell within the day or few days! Investing, on the other
hand, is buying stocks and holding it for a longer period. Trading means you speculate on a
particular stock if it will go up or down, and speculating, without due knowledge, can be simply
coined as gambling!
Would Anyone Know If a Stock Will Go Up or Down?
No. There is no imaginable way for anyone - not even geeks and billionaires combined (Tony
Starks, anyone?) -- to determine if a stock will go Up or Down...nor will there ever be!

This is mainly because of the fact that there are thousands of people that are holding the stocks of
a particular company! Say, how do you predict what's on the mind of these people? Would you
know when exactly will they sell or buy another share? No! That's why it's impossible for anyone,
including the company itself, to know the exact numbers of what will be the lowest and highest
price/share for the day or in the future.

What most investors do, however, is to “predict” the market mood or what is commonly known
as“timing the market”. Timing the market is simply predicting when is the best time to buy and
sell your stocks. However, just like any other “predictions”, this too can either be a make or break
case. These predictions are just but “estimates” based on certain factors such as past performances
(which is NOT a guarantee of any future performance), volume trades, rumors (Yeah, it's like
showbiz at times.) and news.

Should I care about all these rumors and news?

Yes. Why? Since there is no way for us to predict the market, news (including rumors) will play a
big role in the decisions of all investors.

All news and rumors about the company you invested will affect the price movement of its
stocks. Good news such as acquisition, dividend declaration, earnings disclosures will have a
positive impact on the decisions of investors because this will trigger their confidence on that
company. Therefore, more investors will be persuaded to buy shares from this company. News
such as a company being sued or facing legal battles or damage to one of its properties will have
a negative impact on investors because they might lose confidence to the company. Eventually, if
a company loses the trust of its stock holders, the shares will be sold, which will cause the price of
the company's stocks to go down.

Let's make it a little graphic for you:

One day, after reading this great article (Says who? Me!), Jay decided to invest in the
stock market.
He bought 100 shares of ABC Mining Corp. at 9/share. Excluding online broker's fee
and taxes (more on this later), he paid a total of 900. After 3 months, the price/share
for ABC Mining Corp.'s stocks were doing good. It now trades at 14/share. Hence, the
total value of Jay's shares is now worth (14*100) 1,400. So Jay will already earn (1400-
900) 500 if he decides to sell his shares.
But one day, news broke: “1 mining facility of ABC Mining Corp. in Benguet was closed
due to environmental issues...”
This news will surely have an immediate impact on many investors, including Jay.
From 14/share, the price dove down to 13.20/share on the first day when the news
went public.
Should Jay sell his stocks?
Should he hold on?
We wouldn't know.
But since Jay has already earned on his investment, it is expected of him to sell his
shares, rather than stick to it because of his fear that it might go as low as to 9/share
again, or worse - lower than 9! If that happens, Jay would have a negative portfolio.
And this too, would be a great time for other investors to buy shares from ABC Mining
Corp., since they will be able to buy shares with relatively lower price! So if Jay sells,
others will buy.

Someone sells, someone buys.

This is the reason why the market goes Up...and Down. So as an investor, it's your responsibility
to also check any news, good or bad, about the company you invested your money in. It's all there
- in the TV, internet and business section of a local newspaper. Please do yourself and your country
a favor: Do not waste too much time on that Entertainment section!

Are you saying that I should withdraw all my hard-earned money from the bank and buy
stocks?
No! You should always have an emergency fund. The purpose of this is in case of unwanted
expenses such as emergency, you will not be forced to withdraw your money from the Stock
Market. This is critical because what if by the time you needed your money, the market is down?
If you do that, you will loss a substantial amount and might give you a stomach ache!

What would I need if I were to start investing in the market?

There are at least 2 important things you need to get you started: a broker and of course, money.

A broker is either a person or an institution that will represent both sides: you and the company
you wish to buy shares from.

Personally, I do not know a broker (person) and I am in no position to neither encourage nor
discourage you to have one. But I'm pretty sure that requiring one means you have a lot of money
to use for buying stocks. In that case, I suppose you don't have that much since you've gotten this
far to my article. Ha-ha! So, what I'll introduce to you are the institutional ones or what we simply
call ONLINE BROKERS.
Currently, there are a lot of certified online brokers in the Philippines, but I'll limit the list to 3 for
you.

 First Metro (Metrobank)

 BPI Trade (BPI)
 COL Financial (Citisec Online)

Both First Metro and BPI Trade are managed by the bank they represent, while COL Financial is
a plain online broker. The good thing about First Metro and BPI Trade is their convenience,
especially if you already have an existing account with them. As for BPI Trade, there is a minimum
daily balance requirement of 500 pesos, which earns interest just like a normal savings does.

For COL Financial, there is none. But the minimum initial investment for COL Financial is 5,000
pesos. As for BPI Trade, you can start investing for as low as 1,500 pesos provided that you
maintain 500 as your ADB (Average Daily Balance). But what's great about COL Financial is
their specialized service since they focus more on the trading. They even have a feature where they
actually suggest good stocks to pick for their customers.

But all these online brokers have broker's fee. Meaning, you will pay them for every BUY and
SELL transactions you do. The minimum fee (both for buying and selling) is 20 pesos. There is
also tax whenever you sell a stock. Below is the breakdown of BUYING and SELLING fee,
regardless of the broker you choose.

For BUY Transaction

■ Commission: 0.25% on the gross value (minimum Php20.00)
■ Value Added Tax: 12% is levied on the commission charge
■ PSE Fee: Php0.00012 for every Php1.00 gross value traded
■ SCCP Fee: Php0.00011 for every Php1.00 gross value traded

For SELL Transaction

■ Commission: 0.25% on the gross value (minimum Php20.00)
■ Value Added Tax: 12% is levied on the commission charge
■ PSE Fee: Php0.00012 for every Php1.00 gross value traded
■ SCCP Fee: Php0.00011 for every Php1.00 gross value traded
■ Sales Tax: 0.50% on the gross value

How do I know if it's a good company?

PSE (Philippine Stocks Exchange) has what they call an “index”.
This index (PSEi) is a composition of 30 “Blue Chips” -- the country's biggest companies based
on net assets that are actively traded (shares are bought and sold constantly in the market). The
PSEi is usually considered a “barometer” of the Philippine economy where a rising PSEi typically
denotes optimism in the country’s economic performance while a declining PSEi may suggest
possible economic contraction.

OK, so what makes these companies “blue chips”?

For companies to qualify in the PSEi, they must meet the following criteria:
■ Free Float — at least 12% of the total net worth of the company is held by public;

■ Liquidity – must belong to the top 25% by median daily value turnover per month for at least
nine out of 12 months; and

■ Full Market Capitalization — one of the highest-ranked market capitalization, measured by

the company’s stock price multiplied by the number of shares being publicly traded

What are these 30 companies, by the way?

As of March 2014, the PSE index is composed of the following 30 companies:
1. Ayala Corp. (AC)
2. Aboitiz Equity Ventures (AEV)
3. Alliance Global Group Inc. (AGI)
4. Ayala Land Inc. (ALI)
5. Aboitiz Power Corp. (AP)
6. BDO Unibank (BDO)
7. Bank of the Philippine Islands (BPI)
8. Bloomberry Resorts Corp. (BLOOM)
9. DMCI Holdings (DMC)
10. Energy Development Corp. (EDC)
11. First Gen Corp. (FGEN)
12. GT Capital Holdings (GTCAP)
13. Globe Telecom (GLO)
14. International Container Terminal Services Inc. (ICT)
15. Jollibee Foods Corp. (JFC)
16. JG Summit Holdings (JGS)
17. LT Group Inc. (LTG)
18. Manila Electric Co. (MER)
19. Metropolitan Bank & Trust Co. (MBT)
20. Megaworld Corp. (MEG)
21. Metro Pacific Investments Corp. (MPI)
22. Petron Corp. (PCOR)
23. Philex Mining Corp. (PX)
24. Robinsons Land Corp. (RLC)
25. Semirara Mining Corp. (SCC)
26. SM Investments Corp. (SM)
27. San Miguel Corp. (SMC)
28. SM Prime Holdings (SMPH)
29. Philippine Long Distance Telephone Co. (TEL)
30. Universal Robina Corp. (URC)
Has it always been like this? I mean, the list doesn't change?
No. The PSE conducts review of the index every six months based on the criteria I mentioned
above. Hence, there will be an updated list on September 2014, but not necessarily a change in the
listings since it all depends on the performance of the companies if they maintain their edge among
other companies outside the index.
What happens to a company if it's included in the index?
If a company outside of the index is included in the list, expect its price per share to go up since it
will have a significant impact in the decision of the investors.

What about the company going out of the list?

Likewise, the price per share would go down since some investors might lose their confidence on
the company.

So Ayala Corporation is the biggest in the country?

No, not necessarily. The list, if not obvious, in just in alphabetical order.

And how many shares can I buy from one company?

There is a pre-defined no. of shares you can buy for each company, depending on their current
trading price per share. This is called board lot. A board lot determines the exact no. of shares
required to either buy or sell. Meaning, you can buy at least 5 shares from Company A, whereas
you need to buy at least 100 shares from Company B. You may use the table below to quickly
understand.

The size of the lot will depend on the price of the stock. Mathematically, the lot size will be the
multiplier of the price. Thus, if a company's trading price is 30/share; its lot size will be 100, based
on the table above, which will cost 3,000, since 30x100=3,000. The tick size simply tells you how
the price changes from time to time.

Again, each company will have a different lot size since they are being bought and sold at different
price per share.

I want to know everything first about a company that I want to buy, what should I do?
The price per share, board lot, price movement history for the last 30 days, the company's profile,
board of directors and every basic detail you wish to know are publicly available at the PSE
website.

A page similar below will be loaded in the PSE website, pls. take time to study the image below.

There you go! Now you'll learn so many things just by looking at the PSE Website, right? Let me
further explain each of the parts I labeled. The Search boxat the upper-right corner of the site is
where you will (duh?) type the symbol of the company you wish to view. Now how would you
know theStock Symbol for each company? All listed companies and their corresponding stock
symbol is readily available from the PSE Website. But remember our online brokers? They too
have an updated list of all listed companies and their corresponding symbols. But for your
convenience, you can further check the following links for your own preference (pls. note that
some may not be updated though)It is important to note that a stock symbol does not always
need to be a 3-letter acronym like JFC, MBT or BPI; it can sometimes be as long as SMPH or
BLOOM. Once you know the stock symbol of the company you're interested at, you just type
that in the search box and click the name that appears. It will then load the page particular for the
company you chose.

First, you'll notice the Last Trade Price; this is the current price/share of the company you're
looking at. You should be aware that this price changes every single minute or (even seconds!)
depending on how many trades are happening as of the moment. You need to refresh this page
every time you want to see the latest price/share since it does not refresh automatically.

You can see the board lot or the lot size I was referring above in the Board Lot section in the
right side of the page. From here, you can now compute for the estimate of how much will it cost
you to buy shares for a company, that is, by multiplying the Last Trade Price to the no. of Board
Lot. The value you will get will not be the same in the actual cost of buying though, because
there would be additional fees such as your broker's fee and tax (see Buy and Sell computation
above).

The 52 week High (52WH) and 52 week Low (52WL). These 2 are important when you're
deciding to buy. 52WH tells you the highest price/share ever reached by the company for the
current year whereas the 52WL is, of course, the cheapest or lowest value of the price/share
within the year. It would be a good practice NOT to buy stocks if the current price/share is near
the 52WH so that you're more confident that there is much room to grow.

The Free Float Level or Public Float shows you how much (in percentage) of the company's
market capitalization is available to the public. The Market Capitalization, displayed just below
the Free Float Level, tells you how much capital the company currently has. Market capital can
be computed by simply multiplying the Previous Close value and the Outstanding
Shares value.

The Profile tab is where you'll see the basic details about the company - the type of business it is
taking, affiliates (if any), brief history, past and present achievements, future undertakings and
plans, company website, contact numbers, board of directors, President of the company and
more. Be sure to take a look on this tab if you're entrusting your hard-earned money on a certain
company.

The performance of the company for the last 30 days in the stock market is best reflected on its
previous trades. So you might want to check out the Historical Data tab, where you can see the
price/share for the last 30 days. Here, you will see the Highest and Lowest price/share for month,
including the Highs and Lows for each trading day.

In Corporate Disclosures tab, you can view and download (in PDF format) all the company
news, clarifications and disclosures about the business such as dividend declaration, merging or
acquisition news, additional listings, etc.

- o0o -

What's next for you?

Now that you have been guided to a brief walk through on the “Stock Market”, I hope that this
writing tickled your curiosity at the very least.

If you want to start trading investing in the Stock Market, and have the money to do so, I
encourage you to join us - wise people who make up less than 10% of the total Filipino
population who invest in the market!

Just remember that it does not require too much reading for you to invest in the market. Once
you understand the basics, start investing! After all, it's not how much you know, but how much
you actually apply. What's the use of knowing the ABCs of the Stock Market when you don't
invest? No, I'm not a geek nor a millionaire (at least not yet), and I only know the ABCs, not the
entire A-Z of the Stock Market, but I was able to write this article -- because I invest myself. I
apply whatever I've learned. I wish you do the same.

To invest or not to invest is now a decision that awaits your approval. And if your next question
is“When is the best time to invest in the Stock Market?”, the answer is plain and simple -- Now!