How To Invest in The Philippine Stock Market Final 654A3E338C34F125EF98BBDFB838

How to Invest in the
Philippine Stock Market

A Step By Step Guide for Beginners
Copyright © 2017 by JULIUS ESPINA
DISCLAIMER
The author of this eBook has done his best to ensure that the information contained herein
is valid, truthful information. However, the Author cannot guarantee its accuracy and
validity and cannot be held liable for any errors and/or omissions. Further, changes are
periodically made to this book as and when needed.
By reading this book, you acknowledge that you will not hold the author liable for any loss
or other damages that may occur as a result of any of the information in this book.
The author disclaims any liability or risk as a direct or indirect result of the use of the
contents of this book. Past performance of a certain investments is not indicator of future
results.
“Great book! After I read the book in Chapter 8 – “Buying and Selling of stocks”, I was
amazed because of the secret that I’ve learned. You know why? Your income in stock
investing will rely on the process of buying and selling. If you don’t know where and how
to buy & sell your stocks, you will not earn. Thank you Julius for sharing your knowledge
thru this book, the price is WORTH it!”
Manchor Lemindog
Founder of Savingtips101.com
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"I like the way Julius explained the difference of gambling versus investing, well explained
chapters, easy to understand and as you go to the entire book you will surely pick good
insights that are essentials especially for those beginners who would like to play in the
stock market. Thank you Julius! My knowledge increased."
Oliver Pajardo
SEM Analyst
==================================================================
“Julius is a passionate in his advocacy to help everyone to be financially literate. His book
really helpful to anyone who wants to learn and start investing for their future through
stock market. He is a person worth following.”
Allan Mantaring
Best Selling Author, Speaker, Infopreneur and Founder of Pinoy Save and Invest
==================================================================
“Hats off to this new book by our fellow financial advocate here in Doha, Qatar. This will
surely encourage more Filipinos to invest in The Philippine Stock Market, especially those
overseas Filipinos who had limited access to this user-oriented information that wants to
gain learning and start their stock investing.”
Julius Labastida
Founding President of Overseas Filipino Investors & Entrepreneurs Movement
==================================================================
“Julius is a passionate person of what he does. The love for a family that made him
navigate the different pathways to financial freedom. With his Journey to financial
success, he desires to share his knowledge in wealth building. After reading this book,
you will surely have the deepest understanding of Stock Market Investing in simplest
way.”
Mark Oria
Investor & Entrepreneur
Table of Contents
Introduction ................................................................................................................ 1
Chapter 1 ..................................................................................................................... 2
Common Myths about Investing in the Stock Market
Chapter 2 ..................................................................................................................... 8
Understanding the Game in the Stock Market
Chapter 3 ................................................................................................................... 11
Why Invest in the Stock Market
Chapter 4 ................................................................................................................... 18
Structure of the Stock Market
Chapter 5 ................................................................................................................... 21
What is a Stock Broker
Chapter 6 ................................................................................................................... 28
How to Open an Online Account
Chapter 7 ................................................................................................................... 32
How to Earn in the Stock Market
Chapter 8 ................................................................................................................... 38
The Basics – Buying and Selling Stocks
Chapter 9 ................................................................................................................... 45
How to Pick the Right Stocks
Chapter 10................................................................................................................. 50
Methods and Strategy in Stock Market Investing
Conclusion ............................................................................................................... 57
FOREWORD
I first met Julius on a training we conducted to equip Filipino advocates in Qatar with the
proper knowledge of investment planning and stock investing way back in 2013. What
struck me was his desire to learn on his own, admit his own trading mistakes, modify it
and also use that new knowledge to serve other kababayans in Qatar who were lost in
their finances. I saw the excitement in his eyes each time he would learn something new
whether it be from personal finance to business and even in the stock market. It’s just
nice to see more and more kababayans like Julius hungry for information and have the
heart to be willing to share it to others. I really believe there is a need for more and more
Filipinos to learn the right way of saving and investing.
Fast forward 4 years after, with his heart and passion to educate more Filipinos, Julius
has written a basic book about stock investing to serve the needs of more and more
Filipinos hungry to learn how to begin investing in the market. The book carries the basic
ideology that every Filipino should give the stock market a chance. In a country where the
economy is growing at a rate like we have never seen before, it’s just time for more local
books like this to surface. It’s just time for more Filipinos to be educated by Filipinos so
they can take the first step towards financial freedom.
As you read this book, I hope this book not only equips you with the knowledge but it also
pushes you to start strong that you eventually move from consumer to investor and you
be part of the growing number of Filipinos who will take our amazing economy forward. I
really believe that the greatest days of our nation have yet to come and we are all a part
of it.
Keep on learning and never stop striving for excellence!
Marvin Germo
CEO of Stock Smarts
Stock Analyst and Best Selling Author
Introduction
Investing in the stock market is one of the first ways to start you in a secure financial
foundation for your retirement. However, if you are new to investing, the stock market can
be overwhelming and confusing. Investing in stocks can be tricky business, before you
buy your first stock, you should know the basics of stock investing. This won't make you
a great investor overnight, but only when you do understand the fundamentals of investing
can you learn how to invest in stocks with confidence.
When I started to invest in the stock market, I was still hesitant and have fear because no
one mentored me personally. Unlike today, there are lots of financial advocates/advisors
who can teach and guide you. Before I relied solely on the materials and guide of the club
which I was a member and a mentor which I have not met personally, for a start-up it
helps me a lot. As my knowledge expanded after attending seminars, courses and
reading more books about the stock market, I gradually had gained the confidence into
investing in the stock market. That’s the time I apply my own strategy. I mentioned here
some strategy which you can apply as a beginner and try to work on it, gain some
experience and knowledge and later on, you can decide what strategy to use that fits your
personality with regards to your risk profile.
With this eBook you will get a solid background information about the Stock Market, a
clear picture of what the stock market is and all the players involved. It will cover the
basics and by understanding core investment principles and key strategies you will be
able to make better investment decisions. It will also dispel myths about stock market
investing. Find out how to get started and how to become a confident investor. No matter
what your goal in entering the stock market, investing in stocks is one of the easiest and
most profitable ways to build wealth over the long term.
It is time for you to build your portfolio and create your financial success!
“The best time to plant a tree was 20 years ago, the second best time is now”
Chinese Proverb
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Chapter 1
Common Myths about Investing in the Stock Market

Before the concept of science and technology arrived, places in the Philippines
particularly in rural areas have a lot of myths. A common example of a myth that we know
is about the black cat. If you are on your way and suddenly a plain black cat crosses along
your path, you should not continue traveling. If you’ll persist, you’ll encounter bad luck.
But how come this kind of myth pervades in our culture? It’s likely that there might be
someone who encountered the same situation with the others. But still, they ignored the
presence of the black cat. Then they continued towards their journey and something
unfortunate happened to them. Boom! A story evolves and you have the beginnings of an
urban legend – which ultimately attains mythic proportions.
This kind of situation becomes a myth because of a series of coincidental events that
happen similarly to others.
Why am I telling you this story? If you are going to consider the present we all know this
is not real – it is a myth. Since the black cats don't have any connections to your troubles
or misfortunes.
Similar goes about investing in the stock market. There’s a lot of advice and stories that
you hear – invest in this, invest in that, these are sure investments. But some of these
stories that you are going to hear could either be true or just a myth. In order for you to
know whether what you heard is fact or a myth, I encourage you to get to know all about
the stock market. Find out what it is, how it works and how you can conquer it and make
yourself a financially knowledgeable (so to speak).
Is No Different from Gambling
Investing in the stock market is just like playing in the casino. This is commonly what you
will hear from other people. In some ways, it is true, since gambling and the stock market
both involve in taking risks and playing the odds. But let’s take a look because there is a
massive difference between gambling and investing in the stock market.
Gambling can be simply defined as winning by chance. In gambling, the moment you start
to play you don’t have any data or the recent result history of the game. There are times
that you can have the result of the previous game. But is there any concrete explanation
how the game arrived in such kind of result?
The answer is “No.” In the stock market, once the price goes down, there is a reason
behind it. You can get the information on how did it end in such kind of result. There are
no secrets in the stock market, just facts.
The only reliable information you can get in gambling is the instruction on how to play the
game. You don’t have any idea when to place or not to place your bet. Gambling is only
for short-term basis, contradictory to investing in the stock market, which can be done on
a long-term basis.
Investing in the stock market allows you to let your money work for you. Your money
expands and grows through dividends, capital appreciation and compounding interest
gains.
In addition, in gambling, where do the winners get its prize money? Obviously, in gambling
the winner takes the losers’ money – and in some way it is tainted. That’s how the money
revolves in gambling - it is only between the loser and the winner. Unlike in stock market,
the earnings of the successful investors come from the profit made by the company.
Is only for the Rich
Claiming that investing in the stock market is only for the rich is a myth. If until now this is
what you are thinking, I want you to expel this idea from your mindset. This is simply not
true. This thinking has got to stop.
You believe in this myth because you are thinking that you don’t have the money to invest,
which is definitely wrong. Don’t make a conclusion. Not because many rich people are
investing their money in the stock market doesn’t necessarily mean that the stock market
is only for them. The stock market is for everyone. It accepts infusion of investment from
all walks of life. It is only the rich who get noticed because of the financial volume of their
stocks but there are thousands of small players in the stock market.
The stock market is for the public. It doesn’t discriminate, regardless of your economic
status. YOU can invest in the stock market. YOU can start for as low as P5,000, which as
we all know, is attainable. YOU can become an investor and be on your way to financial
freedom. And with the proper guidance and a fair amount of risk, you’ll soon be making
money from it, like you were born for it.
It Needs Financial Knowledge and Experience
Is this one of your reasons why you can’t or won’t start investing in the stock market? Is
it because you don’t have the financial knowledge and experience? Or you simply
perceive that you don’t have it?
Before you entered your first job, you didn’t have any experience either. The same is true
with investing. At first, you will learn from the experience of others – you’ll learn from their
positives and their negatives.
If you are inexperienced and you don’t have financial knowledge, as long you understand
the basics and the most important part of the investment, you can start investing.
Having “No” or limited financial knowledge and experience is not an excuse for anybody
so, he or she couldn’t start investing in the stock market.
The best way to start your investment in the stock market is to do it indirectly by investing
in mutual funds. Let the experts manage your investment while you are still in the process
of learning.
The Mutual Fund is another vehicular investment that pools the money from different
investors which is managed by a fund manager (a trained and experienced professional
in the field of investment) to be invested in different securities and in the stock market.
Investing in the mutual fund is like boarding a plane. Before the plane takes off, all the
fares (investments) have already been collected from different passengers (investors).
After this, you need to trust your pilot (fund manager) who flies the plane because they
are the one who has the experience and expertise in doing such kind of job. They are the
one who will bring you to your destination (financial freedom).
Mutual funds are different from investing in the stock market. Mutual funds have a little bit
of risk but it is managed by a fund manager. In the stock market, you need to be the pilot
of your investment. Both of these have their inherent risks involved.
It’s Complicated and Risky
Investing in the stock market becomes complicated when you start immediately without
completely grasping the basic concepts. Learning the basic concepts is not complicated
because there is a lot of free and cheap learning materials that can equip you before you
start.
The impression of investing as a complicated process comes to your mind when you see
that people who invest in the stock market are reading and interpreting difficult charts.
By telling yourself that you also need to do such things, you are jumping immediately into
the role of a trader. This is the time it becomes complicated because you are moving to
advanced level without taking the beginners level.
In starting to invest in the stock market, you don’t actually need to learn how to read and
interpret those charts. This statement might sound confusing for you but when you read
the entire content of this eBook, you will find out that what I’m talking about is possible
even if you’re busy with your current job.
Investing only becomes complicated when you are taking the wrong action at the
beginning. You have to start small and take bigger risks with higher financial rewards as
you begin to grow into the investing sphere. You never start big when you do not
understand, because it is exposing yourself to a lot of factors that will contribute to failing.
It’s Risky
In life, regardless of your profession, there is always a risk. This can be about your health,
your profession or about your finances.
Entering the military profession is risky. But not all who joins the profession lose their life
in their duties
How come this thing happens?
Is it because they outsmarted their opponents?
That’s entirely possible. But there’s the reason why they’re able to survive the war. This
is because of their training. However, you must have to understand that no matter what
training you’ve finished, your enemy can still disarm you.
This is how investments work. There’s always a risk of the market not behaving according
to your predictions – this is the time when you begin to start dodging bullets. There’s a
time when you have to infuse more and more because the market is, in trading terms,
bullish and you’ve got to hitch your cart to it. Still, there is the risk of overextending or
overestimating your circumstances.
Always keep in mind, whatever kind of investment you choose, there is always the
existence of risk. You can never remove it, but you can minimize or manage it thru
knowledge and experience.
Investment can’t be likened to gambling. In investment, you don’t earn by luck. Instead,
you earn depending on what kind of strategy you are going to implement. You don’t
stumble upon a pot of gold, you get there because you started with a journey to get there!
Rare is the opportunity when Lady Luck gives you something to cheer about.
The strategies you use are the ones that will minimize the risk of your investment. YOU
will be the one who will determine if you will profit or lose money. YOU alone hold the key
to your success or failure in the stock market.
Don’t Play and Invest with Your Emotions
Commonly, those who lost their money in the stock market played and invested with their
emotions. If you were involved in sports you can receive some advice which says that
play with all your heart. In some games or sports, playing with all your heart could be the
key to winning a string of games. However, that’s not the case in investing in the stock
market. If you invest following your emotions, sooner or later you would make irrational
decisions and you’ll fail.
Allowing your emotion to rule your head is simply ensuring that you will fail. Remember,
investing is based on cold hard facts, not emotions. You will need to study numbers and
past performance indicators to grasp where your investment is headed. You cannot factor
in your emotions in as you don’t have any proven data to use it for.
Chapter 2
Understanding the Game in the Stock Market

In the stock market, the words “stocks” and “shares” are regularly used and bandied
about. When should use each of this word when you are talking about the stock market?
What is Stock?
A stock is simply the number of shares being sold to the public. This word is more useful
as a general term representing your ownership into one or more companies.
When you say, “I am buying stocks,” this means that you are buying shares of certain
companies listed in the stock market.
What is Share?
A share is the number of units where a stock is divided. Compared to the word stock this
is more specific. As share represents your ownership into a specific company.
Technically, how should you use this word?
I bought 100 (stocks, shares) of BDO. Which word should you use in your sentence?
Since you are pertaining to a specific company, you should use the word “shares.”
Aside from the myths mentioned in the previous chapters. One reason why you are not
convinced to invest in the stock market is you don’t understand it.
Recall the time when you were still in the school. Let’s say you already develop your
confidence during those times. When the teacher asks you to explain something, you only
have two options. If you know what your teacher is asking, you confidently provide the
answer. But if you don’t have any idea or you are not certain about your answer, you will
be in the mode of hesitation. You might say, pass or just give a wild guess.
This concept is also applicable in investing. Even when you know that investing is
financially rewarding, if you don’t have the proper knowledge about it, you will say later.
Having knowledge leads you to finish strong at end of the game. This goes the same with
investment. When you invest in the stock market you became a part owner of a certain
company where you invest your money. But what does thing actually mean?
What is Part Owner?
A part owner is simply the person who buys and holds some shares of a specific company
and he is also known as a shareholder. Becoming a part owner of a certain company
entitles you the benefit to receive some portion from the profit made by the company.
The moment you decide to sell all the shares you bought in a specific company, it means
you are divesting your ownership stake in that company. You are no longer part-owner of
the company once you decide to sell your shares and stocks
What is Bull Market?
Upward market trend, a general rising in the stock market over a period of time.
Bear Bull
What is Bear Market?
Downward market trend, a general falloff in the stock market over a period of time.
What is PSEI?
Philippine Stock Exchange Index. Was also known as Philippine Stock

Exchange Composite Index and referred as Phisix before.
It is composed of the Top 30 companies listed in the PSE and selected to represent and
analyze the general movement and used as benchmark to measure and scale the
performance of the Philippine stock market.
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Chapter 3
Why Invest in the Stock Market

Many of us Filipinos are satisfied with our situation while we are still at the peak of our
working age. But once we reach our retirement age, many of us tend to be regretful. We
have so many questions, so many what ifs.
During the first year of retirement maybe it is a happy ending. But sooner or later, you will
realize that it’s not. It is because most people who reach their retirement age can no
longer provide for themselves like they used to. Even if you are receiving a pension from
the government, this doesn’t approximate your previous earning capacity. Still is not the
same as when you were earning much more. You are productive citizens, now you sit on
your favorite chair waiting for things to happen.
The story of Joy and Fer
Let’s examine a common situation that happens around us. You might be able to relate
to it because you know of people who are like them. You might relate to them because
you see yourself in them. Read on and find out.
Joy and Fer have a close relationship from their childhood until their retirement age. The
two have a lot of similarities. They both came from a poor family. They believed that
education is the key to get out from poverty. They studied hard and they were able to
have their own degrees.
During their accumulation period (the stage when they are already earning), the two
practiced their professions. On their first pay day, Joy believes that it’s important to reward
herself after a long time of working in their job. Joy went to a posh coffee shop to have a
cup of premium coffee and she invited her friend, but Fer declined the invitation.
On the next pay day, the same scenario happens. Thus, Joy speaks to her friend. “Why
are you stingy on yourself?” We’ve been working hard. We support our siblings and we
also give some of our earnings to our parents. Why not allow yourself also to have some
enjoyment?” But still, Fer chose not to go with her friend.
Joy keeps on inviting her friend, but Fer keeps on declining it. This time Joy began to
wonder. I keep on inviting you several times, but none of this invitation convinces you?
“What’s the matter with you?”
Fer just gives a sweet smile followed by her statement “I’m just saving and investing for
the future. Why not do it too?”
Joy says I’ll do it when I’m already married.
The two continue to follow with their financial habits even the time when they were already
married. When the holidays come Joy and her family spend the time traveling to places,
spending their bonuses. While Fer remains to be the same. She treats her family but to
only an extent. She sets limits on how much they will spend.
This is how they spent their working and earning years.
The Senior Age
When the two reached their retirement age, they met again, out of the blue.
“How are you?”
“I’m great.”
“How about you?”
“I’m fine too.”
This is how their conversation starts.
Joy asks her friend what’s your plan, now that we’re retired?
Fer says I’ll spend my days traveling and relaxing with my family and with my
grandchildren.
Really? Curiosity was plastered in the face of Joy.
Fer takes the floor, “How about you what’s your plan after retirement?”
“I received an invitation in a private university, so I’m going to continue my teaching

profession,” Joy replies. “You mentioned you are going to travel? Does it mean you’re
going to spend your pension for that?”
“No, I won’t touch anything in my pension for traveling. Since I will use it for my
grandchildren. How about you?” (Joy is becoming more curious.)
“Do you remember the days when you keep on inviting every time we receive our salary?”
Joy asks.
“I don’t regret declining one of that invitation of yours. Because right now, I can see the
fruit. After more than 40 years of saving and investing, I now have millions which are
almost near to our retirement age,” as Fer shows her portfolio.
Upon seeing it, Joy was shocked, unable to move. She began to realize all her mistakes.
She worked to move out from poverty and now she is getting back to her previous way of
life.
Fer remembered the statement of Joy before, “I thought you did the same when you’re
already married?”
“No, I was not able to do it. Every time I want to do it, new expenses arose. I thought to
do it several times when I’m already ready to go for it. But the red light keeps turning on.
My child needs to pay for his tuition fee, the house must be repaired and there were a lot
of emergencies,” countered Joy.
What’s the moral lesson of the story? “Sacrifice Now, Enjoy Later.”
Make your choice, who do you want to be, Joy or Fer?
The Benefits of Investing in the Stock Market
It can become your Pension Fund
It’s not just because it’s required by the government that employers and employees
should pay their SSS (Social Security System). You also want to receive something after
working for several years.
There is a story of one Filipino worker who has been in the corporate world for more than
20 years. While working, he decided to prepare himself for his retirement. He doesn’t
want to become a burden to his children during his retirement age. (Imagine how this
father loves his children.)
In that case, he voluntarily increased his contribution above the minimum, hoping that he
may have a prosperous retirement. Several years passed, and the day that you can never
avoid comes already.
It’s the retirement day. Goodbye Stress! Welcome Pension!
Here it comes, the mail man handed an envelope to the man. He already knows that this
is from SSS. With excitement and happiness, he carefully opens the envelope. He didn’t
read the details. Instead, he immediately finds the number in the content of the letter.
After seeing the numbers, he decided to read the content because he can’t believe it.
When he finished reading all the content, tears began to fall from his eyes. How painful it
is, bitterness starts to form in his emotions. He even increased his contribution, but after
working for more than 20 years, his pension fund is only P4,000 per month.
This story happened not less than 5 years ago. So, that amount is not really enough to fill
the basic need of a person who is already in a retirement age.
You have been working for several years, your pension fund must be more than your
monthly salary. However, this is impossible if the only source of your pension fund is from
the SSS or any of government pension.
But if you are the one who build your pension fund with proper guidance you can receive
more than your monthly salary. Government pension is not enough for your retirement
plan that’s why investing in the stock market become your additional pension plan.
You can Beat Inflation
How much do the banks give you, if you put your money in them?
The surprising answer is this - it’s less than 1% annually. Maybe some could give a little
higher than 1% annually depending upon the amount you put in them. But would that be
enough for you? Remember, if you save your money in the bank there will be a 20%
withholding tax on your earnings. Sometimes, it would eat into your dividends and you’ll
receive less.
Well, I can’t blame people who save their money in the banks. Because banks are
friendlier to their clients. Aside from giving a guaranteed interest rate for individuals they
also allow them to borrow through their credit cards. The inconvenient truth is that people
tend to think that banks are the only place where their money would be safe. They have
no idea that other financial institutions such as the stock market exist.
I am not against the banks because I also avail of some of their services. Like paying
bills, sending money to my family and I also place some of my emergency fund on them.
Banks are great in such kind of transactions, but for savings, I would rather invest in other
investment vehicles that would beat the inflation rate.
Inflation is defined as the continuous rise of prices of goods and services over a period of
time. Let’s say the average price of a one kilo rice last year is P40 and the average price
for one kilo of rice this year is P42, therefore there is an increase price of P2 so the
inflation rate will be at 5%.
The inflation rate of our country ranges from 3% to 5% annually. Now are you able to get
the logic why I don’t save my money in the banks no matter how loyal am I in their
services.
I guess you got it. Instead of letting my money grow, I’m letting my money lose its value
because of inflation.
I mentioned that we can beat inflation. Yes! We can.
By investing our money in the stock market, we can do it. If you do it wisely and with
proper guidance. Historical data shows the Earnings Per Share (EPS) growth rate for the
past five years average is around 12% in the stock market. If the inflation rate is at 5%
you still have a buffer of 7% to count towards your profit.
You can Start Small
Would you believe it, if I’m going to say that by just starting with only P5,000 as an initial
investment? While consistently investing P1,000 or P2,000 a month you can become a
millionaire, 10 years from now? 20 years from now?
Last July 2016, one of Bo Sanchez maids has reached already P1 million in her portfolio
after 6 years of investing in the stock market. She just started P5,000 and she consistently
invested P2,000 a month in her portfolio. With proper guidance, that’s the result of her
investment. Imagine a housemaid with a million pesos to her name! And it all started with
a meager P5,000! If she can do it, YOU should think YOU can do it also!
If you are asking who is Bo Sanchez? Is he a financial wizard? Is he a gambler? Is he an

insider? Is he a sure thing?
Well for those of you who don’t know him. Bo Sanchez is a preacher, a bestselling author,
an entrepreneur and an investor who helps people in their spiritual and financial life.
In the previous pages, we discussed that it’s a myth to say that investing in the stock
market is only for the rich. The maid of Bro. Bo should be more than enough evidence to
support our claim that it is for everybody!
It’s Legitimate
PSE (Philippine Stock Exchange) has a "Self-Regulatory Organization" (SRO) status, an

authority granted by the Securities and Exchange Commission (SEC) since 1998.
The SEC only oversees the operations of the PSE and its members and ensures
compliance with the provisions of the Securities Act.
With SRO status, the PSE serves to be the “police” of the stock market. It formulates and
implements its rules and sanctions those who will not abide with it. It simply means that
they have the authority to discipline erring trading houses who resort to illicit means to
profit from the industry. They have the authority to levy fines, suspensions and enforce
other penalties on such occasions.
It also means that the PSE is a safe haven for investors, big or small, young or old, newbie
or veteran.
It's Time Friendly
Investing in the stock market doesn’t require you to spend so much time on it. It’s not
complicated as what you are thinking. Since your method of earning is through investing
not actual daily trading, you don’t need a lot of time in front of the computer analyzing the
market trends. You don’t need to be always on your toes, sweating when the stock price
goes down and you need to unload your shares of stock. You only need to sit back and
decide when to place your move.
You don’t need to study deeper the market. What you will only need to do is to open your
portfolio when you are going to invest or it’s time for you to sell your stocks so you only
need a basic knowledge. But you can only do this if you are surrounded by the right people
around you.
Later there will be a part, where I am going to teach how to make this possible.
Chapter 4
Structure of the Stock Market
Simply speaking, there are three major participating groups in the stock market. These
are the Investors or Traders, the Brokerage Company and the Stock Exchange.
Investors or Traders
The investors or the traders are those people who buy and sell their stock in the stock
market. This the group where we belong. However, we can’t directly have an interaction
with the stock market as we are small investors. We need to have a Brokerage Company.
Brokerage Company
The Brokerage Company is the one who takes direct charge with the traders and the
investors. But why do we need to have a broker?
If you are going to take a look at the list of companies in the PSE, there are more than
300 companies listed. These companies will only deal with established brokerage
companies who have been vetted by the PSE. Brokerage companies pool investors’
funds to make legitimate movements such as buying and selling shares of stocks in
different companies. They have the direct interaction with the stock market. Of course,
they charge a small fee for their services depending on the volume of the stocks moving.
Policing the ranks of investors is tricky so the PSE would rather have brokerage firms to
patrol rather than the thousands who make their investments. It’s impossible for the PSE
to manage or give attention to all of them at the same time. The purpose of establishing
a Brokerage is to maintain the good flow of the system.
The PSE is the one who is in charge in monitoring the companies. While the Brokerage
Companies are the one who takes in charge for the traders and investors.
Stock Exchange
Stock Exchange is simply where Traders and Investors (through their brokers) buy and
sell their shares. Only the companies who were listed on the stock exchange are the ones
who are authorized to offer stocks to the public. These are the businesses who were able
to comply with all the requirements of required the Securities and Exchange Commission
(SEC) and the PSE.
Philippine Stock Exchange (PSE)
The Philippine Stock Exchange was established as a private nonprofit and a non-stock
corporation. Non-stock means the members of this corporation doesn’t represent a stock
company. The main function of PSE is to maintain and facilitate the smooth and
transparent transactions among the buyers and sellers who buy and sell securities in the
market.
PSE ensures that the companies listed are complying with their policies. Companies listed
are being monitored by the PSE if they are providing accurate, truthful and timely
information to the public to avoid misleading them. Any information provided by a
company in private way which should be for the public is considered to be illegal.
To make it simpler, the PSE serves as the law enforcers in the stock market. It assures
that no one among the parties (investors, traders, and companies) should take advantage
of each other.
Chapter 5
What is a Stock Broker
Stock Brokers are simply your representatives or a financial adviser, who is the one in
charge of placing your order and selling your shares in the stock market. This group of
people is equipped with the knowledge you need in investing in the stock market. In
simpler terms, they are your mentors. This is why it’s a myth to say that you can’t start
investing in the stock market without knowledge and experience.
Types of Brokerage Firms
Traditional Stock Brokers
Traditional Brokers are also called as Full-Service Brokers. For those people who started
their investment earlier and feel that they are still not at ease with the current technology
maybe they would prefer to stay with the traditional brokers.
Before a person becomes a stock broker, it requires number of years of training and
experience. When we are speaking with the traditional brokers the primary concept that
you should take into consideration to is the cost of their service.
The cost of availing the services of stock brokers plays a significant role. Compared to
online brokers, traditional brokers charge higher for their service fee. What you are paying
for the traditional broker is the broker-client relationship. They are the ones who conduct
their own research and be the one to recommend as to what stock should you buy or sell.
In placing your order, you must call your broker, or sometimes you need to meet them
personally in their office. These are some of the downside of investing through traditional
stock brokers. It can be inconvenient for some to do this especially if you are a small
investor and working abroad. This reinforced the myth and misconception of the rich
having all the access to investing circles.
Online Stock Brokers
Due to the continued development of technology, changes and innovations occurred. The
advantage of investing using an online broker is the convenience it provides to its users.
Wherever you are, as long as you have access to the internet, you can place your order
or you can sell your shares at your preferred time when the market is open.
If you are going to ask me what type of brokerage am I going to recommend expect that
I will become biased. Since I’m using an online type of brokerage it’s what I’m going to
recommend. It is proven effective, so I would recommend it!
Using an online broker, you can monitor your portfolio anytime you want to do it. You also
have access to the latest news in the companies where you placed your investment
together with other companies. With only minimal amount of initial investment, these
things will be provided by your online broker.
Online brokers are already offering as low as a minimum of P5,000 to everyone who
wishes to start their investment. In simple words, as long as you have P5,000 in your
pocket you can open an investment account. Then you can already start investing in the
stock market using the initial amount.
There is also no minimum succeeding investment. Provided that your succeeding

investment can buy some stocks within the board Lot.
Board Lot is the standard or the minimum number of shares that you can buy in a specific
company and the minimum number of shares that you can sell.
What’s the purpose of Board Lot?
Board Lot aims to prevent Odd Lot (Buying or selling of shares below the standard) for
easy trading transactions.
When choosing a broker, there is no right or wrong, it depends on your preference and
convenience. But nowadays, especially those who are working abroad, majority of them
prefer online stock brokers because of the accessibility and lower commission rates.
Best Online Stock Brokers in the Philippines
Choosing your online broker must not be taken for granted. Here are some of the best
online brokers in the Philippines. As of the year 2017, there are only 22 online brokers
accredited by the Philippine Stock Exchange (PSE).
Stock Broker Initial Investment Broker’s Website

Company in Php Commission
COL Financial 5,000 – Entry Level 0.25% www.colfinancial.com

No initial
BPI Securities investment if you www.bpitrade.com
Corporation have direct BPI 0.25%
account
No initial
BDO Nomura investment if you
Securities, Inc. have online BDO 0.25% https://www.bdo.com.ph/bdonomura/
account
Accord Capital
Equities Corporation 5,000 0.25% www.accordcapital.ph
AP Securities Inc. 5,000 0.25% www.angpingonline.com

First Metro Securities
Brokerage 5,000 0.25% www.firstmetrosec.com.ph
Corporation
Philstocks Financial,
Inc. (formerly Accord
Capital Equities 5,000 0.25% www.philstocks.ph
Corp.)
AB Capital Securities, 10,000 0.25% www.abcapitalonline.com
Inc.
Abacus Securities
Corporation 10,000 0.25% www.abacusonline.com.ph
Unicapital Securities,
Inc. 10,000 0.25% www.utradeph.com
Sources: https://philpad.com/list-of-accredited-online-trading-brokers-in-the-philippines/
https://www.thinkpesos.com/list-of-online-stock-broker-in-the-philippines/
How to Choose Your Online Stock Broker?
Your investing wheel starts to roll at the time you buy your first stock. But how would you
start to roll your investment wheel?
If you are far away from your work place, before you reach your destination you must take
a ride. In investing in the stock market, your broker will serve as your vehicle and you will
be the driver.
How would you choose a right vehicle to drive in reaching your destination? Here are
some of the most important considerations that you must think about in choosing your
online stock broker:
Fees
Before you can open an investing account you must consider the minimum amount that
you can afford. If it takes you P5,000 to open an account, how much would be the
minimum balance of your portfolio? How much would the broker require you to invest
every month?
Make sure that you are able to meet the minimum amounts required by the broker before
opening your account with them. On the table above, brokers have commissions on every
purchase or sale you make. So, you must take into consideration if this fee is reasonable
and within your budget.
Later I’m going to show you the step-by-step on how to purchase your stock in COL
Financial. On this part, you can see how much their fees are in actuality.
Convenience on Flow of Funds
This is how fast your money would reflect in your account. If you deposited your money
over the counter, how long would it take you to wait before you can do use your fund in
your account?
The banks that offer online trading platforms will surely be the one who will get a marked
edge on this. When it comes to the withdrawal of funds also, these trading platforms won’t
require you to fill up all sorts of forms.
Other online stock brokers don’t have a banking industry leader to finance it solely. But it
has different bank partners. So, when depositing your fund expect that there are some
charges that will be deducted from your fund. In short, if you deposited P10,000, don’t
expect that this amount will be reflected in your account. It’s basically deposited less their
usual fees.
In withdrawing your funds into cash, how many days would the clearing period be needed
before your fund will be deposited to your bank account?
Mostly, the clearing period is within 3 business days before your fund will be deposited
and cleared in your bank account. But if you will also use the fund you get from selling
your shares to buy another stock, there’s no need for clearing period. It will appear
immediately in your account’s fund.
Online Platform Features
Whether you are an investor or a trader, the online platform features play a crucial part in
your investment. The market changes rapidly and changes in technology must be
considered.
How accurate are the prices of the stocks?
In COL Financial, changes in the price of stocks are displayed quickly. In my opinion, this
helps a lot since it would give you an idea of the movement of stocks and a general feel
of the stock market every few seconds or so. You can strategize depending on the
changes.
Make some research if the platform of your chosen broker is newbie-friendly. As a starter,
it’s best for you to open your account in COL Financial. Their platform has tools that guide
their newbie investors like their Easy Investment Program which is totally designed for
long-term investors who don’t really have time to monitor their investments on a regular
basis.
Find out what fits to your investment style. If you are planning to become a trader in the
long-run, consider what tools are being offered by the broker’s platform, does the broker
offer tools that guide you in making your decision.
Customer Service
You would absolutely hate it, when you are in the zone in buying or selling your stocks
and suddenly your brokers’ website displays this message “server error” or “page can’t
be displayed.” A reliable online broker provides you excellent customer service if you
contacted them. They should reply to your inquiry whether this is online or through phone
calls. If your chosen broker has these characteristics, then you got a great broker on tap.
I am neither a representative of COL Financial nor I will earn something from them. But
personally, I recommend them to be your online broker because they are one of the best
in the Philippines. I am suggesting them based on my experience with them. You can
open and maintain an account with multiple brokers, I have also an account in different
online broker. But I suggest that you should start first with one. Then you may use other
brokers’ services if you are confident enough that you can manage your portfolio.
However, since you are just starting out, try to master as much as possible with this one
first.
If you are not yet confident about COL Financial to be your broker, you can open an online
free trial that lasts for 7 days. So you can get familiar with the concept of buying and
selling in the stock market and build confidence for yourself.
Chapter 6
How to Open an Online Account
Assuming that you choose COL Financial to be your online broker, this is the procedure
on how to open an account.
Access their website www.colfinancial.com on your browser. Click “Open an

Account.” You can find it either in the main menu or the one near the social media logos.
Source: https://www.colfinancial.com/ape/Final2/home/HOME_NL_MAIN.asp?p=0
Choose your account type. There are three types of account that COL Financial offers.
These are the COL Starter, COL Plus, and COL Premium accounts. The minimum
investment for the starter account type is P5,000. I recommend that you start with the
starter account which has minimal amount of P5,000 for opening.
Download and fill up all the application forms.
You are going to notice that there will be 7 pages in the application form. However, you
only need to fill up the first three pages. This includes the Customer Account Information
Form (CAIF) and the Foreign Account Tax Compliance Act (FATCA). The remaining copy
which is the Online Securities Trading Agreement (OSTA) would be your personal copy.
Please read and understand it.
Note: A Tax Identification Number (TIN) is mandatory for opening an account. If you
don’t have a TIN number please apply to your respective BIR branches nationwide.
The common question that you may be asking when you are filling up the CAIF
(Customer Account Information Form) would be the Account Number. Don’t fill in the
Account Number because that will be filled up by the COL Representative. The account
number will be supplied through your email account.
If you plan to open an account for your child who is still a minor, check the In-Trust-For
(ITF) Accounts.
In the primary account, you are going to fill in your name. It is in the secondary account
where you are going to fill in the information of your child.
There is also a part of the Application for where it asks your Bank Account number. If you
don’t have a bank account as of now you can still submit your application forms. Provided
that you are going to update or submit your bank account information through email or
through their customer service. All bank accounts must be Philippine-based. The purpose
of the bank account is for withdrawal of funds.
Enter this link https://www.colfinancial.com/ape/Final2/home/open_an_account.asp

to access the following:
For Personal Accounts

 To Download Application Form
 Requirements
 Submitting Forms & Requirements
 Funding Your Account
Once you funded your account, you will receive an acknowledgment of deposit. You will
be receiving information including an email that informs you of your password, together
with the details that your account is already activated and other further instructions.
How to Withdraw Your Funds?
If you desire to withdraw your funds, simply log in into your account. Navigate to “Home”
and select “Forms.”
Source: https://ph17.colfinancial.com/ape/FINAL2_STARTER/HOME/HOME.asp
Under Forms, select “FORM NEEDED FOR WITHDRAWAL OF FUNDS”, download the
withdrawal form and fill it up. The procedure is in the form, where to send and the number
of days the withdrawn fund will appear into your account.
Trading Hours
The trading hours of COL Financial is scheduled from Monday to Friday, with the following
time frames.
Philippine Time Action Period
9:00 AM Pre-open Period
9:15 AM - 9:30 AM Pre-Open No-Cancel Period
9:30 AM Opening Period
9:30 AM - 12:00 NN Continuous Trading
12:00 NN - 1:30 PM Market Recess
1:30 PM Market Resumes
3:15 PM - 3:20 PM Pre-Close Auction Period
3:20 PM - 3:30 PM Run-Off/Trading-At-Last
3:30 PM
Market’s Closing Time
Source: https://www.colfinancial.com/ape/Final2/home/faqs_main.asp#
Chapter 7
How to Earn in the Stock Market
How do you generate profit in the stock market? There are actually two ways on how to
earn in the stock market. This could either be through Capital Appreciation (buy low,
sell high) or through Dividends.
Capital Appreciation
Capital appreciation is a rise in the price of a stock from the original price you bought it
from.
Example of capital appreciation
Let’s say you buy 100 shares at P10 per share from company XYZ. After holding it for
three years the price jumped to P15 per share. The value of your 100 shares at P10 is
P1,000. If you compute it at P15 per share, the value of your 100 shares is P1,500. There
is a recorded increase of P500 for your original acquisition cost.
Capital Appreciation is simply waiting for the price of the stock to increase. The P500 is
what you will call as your Paper Gain. This happens when the price of your stock
increases. Why paper gain? Because you haven’t taken out yet your profit. You still do
not have the money in your account. What you are holding is the potential profit you will
get once you sell the shares.
Going back to the example, if you decided to sell your stock at P15 per share and
someone buys it from you that is the time you would realize your profit, that is Actual
Gain since the amount of your earning is already at your hands.
Paper Loss and Actual Loss
Let’s go back to the previous example. Let us say, you buy 100 shares at P10 per share
from company XYZ. After holding it for a year, the price of the stock goes down to P8 per
share. This is below the P10 investment you placed on it. You have lost P2 per share on
your original investment. However, you are a long-term investor. You still decided to hold
the stock for 5 years.
The P2 loss is what we call as Paper Loss. This is just a loss of your investment on paper
– you still haven’t realized it because you are waiting for it to rebound. If you decided to
sell your shares at P8 per share because you panicked, it will become an Actual Loss.
Because you didn’t wait for the stock to rebound and you feared that you would not get
your investment back, you took the paper loss and turned it to an actual loss.
To easily remember this concept, when you say paper gain, it means the price of the
stock increases. On the other hand, if you say paper loss, the price of your share drops
down but you decided not to sell your share.
In my experience, whenever I experience a paper loss, I do not fear that much because I
see a trend to rebound. When it does rebound and gains, I also gain from my investment.
Dividends
Through the Dividends is the second way of earning in the stock market. These are the
shares you received from the profits of the company where you invested your money.
They allocate some part of the earnings to shareholders in the form of dividends. The
amount of the dividends you received depends on the number of shares you currently
holds. Dividends are usually given annually but sometimes less than a year.
A company that is expanding typically won't pay dividends, because it needs to invest into
further growth. Some of the established company that thinks it will do a better job of
enlarging its value by reinvesting its earning will prefer not to give dividends
As a new investor, receiving dividends is heartwarming because the company recognized
you as one of their part owners. This is also shows that the company is generating profits
and is being upfront with its operations.
The companies that offer higher dividends are usually the Blue Chips companies. This
one advantage that you get when you decide to invest in Blue Chips companies. The
bigger the risk, the higher the reward and also the higher the risk of losing.
But how would you know when the company will offer dividends? To answer this
question, you must be familiar with these terms: Declaration Date, Record Date, Ex-Date
and Payment Date.
Here are some reminders on how to understand the aforementioned terms:
Declaration Date
Declaration Date is the day when the board of directors of the company where you bought
your stocks will determine how much dividends every shareholder shall receive. It will
also be the date when the board would decide on the day when it will be released or paid.
Record Date
Record date is the day when the company reviews who were listed as shareholders. If
you are registered as a shareholder on the record date of the company, you will be entitled
to receive dividends. Otherwise, you are not entitled to the dividends.
Ex-Date
Ex-Date means Ex-Dividend Date. This is the cut-off for those who will be receiving
dividends. To avail dividends of a particular stock, you must be a shareholder of that
company a day before the Ex-Date. Buying stocks during the Ex-Date won’t entitle you to
receive dividends.
What if I’m going to sell my shares on the Ex-Date, can I still receive dividends? Yes! As
long as you don’t do the selling before the Ex-Date.
Payment Date
This is simply the day when you are going to receive your dividends.
There are two kinds of dividends that a company can offer to their investors. This could
be in the form of Cash Dividend or Stock Dividend.
Cash Dividend
Cash Dividend is the amount of money paid to the shareholders from the earnings or
profit of the company. The total amount of dividends that will be released is based on
what the board of directors is going to declare.
Here is an example of companies that have released cash dividends to their

shareholders.
Stock Code Dividend Value in Php Ex-Div Date Record Date Payable Date
Type
BPI Cash P0.90 per 2/23/2016 12/29/2016 1/20/2017
share
COSCO Cash P0.08 per 1/9/2017 1/12/2017 1/20/2017
share
GLO Cash P22.75 per 2/16/2017 2/21/2017 3/8/2017
share
ALI Cash P0.24 per 3/1/2017 3/6/2017 3/22/2017
share
BDO Cash P0.30 per 3/9/2017 3/14/2017 3/31/2017
share
Source: https://dailypik.com/dividends-earnings-from-our-stocks-investments/
If you are going to take a look the data above, almost all the dividends displayed are less
than a peso. But don’t be discouraged by these. Instead, feel blessed because you earn
such kind of amount by just letting your money work for you. It depends also upon the
price per share of a certain stock.
Let’s make some computations. For example your investment in BPI is qualified to receive
dividends. You bought 1,000 shares from BPI, how much dividend are you going to
receive?
(The information provided in the table below have nothing to do with the companies being
mentioned. The purpose of this data is for example only.)
Account Number XXX
Stock Code BPI
Cash Dividend (Php) P0.90 per share
Ex-Date February 23, 2016
No. of Shares Entitled to Cash 1,000
Dividend
Gross Amount (Php) 900
Less 10% Withholding Tax (Php) 90
Net Amount (Php) 810
Your cash dividends will reflect on your account few days after the payment date.
Stock Dividend
Stock Dividend is another form of payment received by shareholders which are in the
form of stocks. Stock Dividends are usually distributed to shareholders when the company
happens to be short on cash.
Dividends come in the form of a percentage. Companies distribute additional shares to

their investors in the form of a percentage. When the board of directors declared that they
are going to issue stock dividends to their investors at 10%, this means that every investor
will receive a 10% additional share based on their current share on the Ex-Date.
Here is an example on how stock dividend is being distributed.
Stock Code Dividend Percentage Ex-Div Date Record Date Payable Date
Type Value
SMPH Stock 25% 5/21/2012 5/24/2012 6/20/2012
The total number of your shares in SMPH recorded on the Ex-Date is 1,000. The
percentage of stock dividends declared by the board of directors is at a rate of 25% based
on the current number of shares recorded on the Ex-Date.
Account Number XXX

Stock Code SMPH
Stock Dividend Rate 25%
Ex-Date May 21, 2012
No. of Shares Entitled to Stock 1,000
Dividend
No. of Shares Credited to the 250
Account
If you have a stock dividend you get higher shares which could translate to higher
earnings when the company decides to offer cash dividends. Or you can dispose of your
additional shares at the prevailing market rate if you so choose to liquidate.
Chapter 8
The Basics – Buying and Selling Stocks
It’s time to get started. You are already equipped with the basics and some of the
important knowledge about investing in the stock market. So, in order for that knowledge
not to get rusty, let’s take action.
Before deciding to buy your first stock from the market, what you need to do is to check
your time, refer to the table on previous page for the trading hours. Make sure that you
are in the Market Hours. Otherwise your action will not be valid and you can’t place an
order when the market is closed.
How to Buy Stocks in COL Financial

Log in into your COL Financial Account. Point your mouse cursor on the “Trade” Menu
and choose “Enter Order” on its sub menu. Upon login, you can also directly click the
“Buy” button on the right side of the page beside the “Quote” button.
Source: COL Financial
Let’s start by placing your order.
Under the Order Details choose “BUY” and “MAIN” which means for Normal Market.
“ODDLOT” is used for purchasing stocks below the defined board lot.
On the “Term” I’ve chosen “DAY.” It means that my order will be submitted immediately
and it will be valid for a day. If the price I’ve chosen doesn’t match any prices of the sellers,
my order will be cancelled at the end of the day. Good Till Cancelled (GTC), means that
your order will be valid for 60 calendar days until your order matches a sellers’ price. At
The Close (ATC), when you’ve chosen this, your order will be sent during RUN-OFF time
at a price equivalent to the closing price of the stock.
In this account, I chose to buy Metro Retail Stores Group Inc. (MRSGI). In the stock
code, I’m going to place MRSGI or you can simply click the “Quote”. The Board lot of
MRSGI is 1000. This is the minimum number of shares that I can buy in MRSGI. If you
placed less than 1000, there will be a notification that will appear in your monitor stating
that “Number of shares must not be less than 1000.” If I click the ODDLOT then that’s
the time I can buy below 1000 shares.
Be aware of the Board Lot. Stocks have different board lot depending on the price
of a certain stock and corresponding tick sizes.
Price Range Tick Size Board Lot
0.0001 0.0099 0.0001 1,000,000
0.01 0.049 0.001 100,000
0.05 0.249 0.001 10,000
0.25 0.495 0.005 10,000
0.5 4.99 0.01 1,000
5 9.99 0.01 100
10 19.98 0.02 100
20 49.95 0.05 100
50 99.95 0.05 10
100 199.9 0.10 10
200 499.8 0.20 10
500 999.5 0.50 10
1000 1999 1.00 5
2000 4998 2.00 5
5000 Up 5.00 5
Source: https://www.colfinancial.com/ape/Final2/home/faqs_main.asp#
For the price, choose from the Bid Column or in the Ask Column. In terms of choosing
your price, try to pick the price in the middle. The one which is not too high but not too
cheap. As this gives you the higher chance for your order to be executed immediately.
But if you want your order to buy immediately, then you may match the first asking price
on top of the Ask Column.
Bid Column are the Buyers and the Ask Column are the Sellers.
Once you’ve already picked your price click “Preview Order.”
You noticed that the Gross Amount is different from the total order. In placing and buying
your order there are some additional charges executed by your broker, but this is just
minimal. The additional charges appear under the column of “Order Charges.” This
makes the Total Order different from the “Gross Amount.”
To place your order, enter your password and click “Place Buy Order.”
After clicking the “Place Buy Order Button,” an order confirmation will be displayed on
your screen. If you want to place another order, simply click the “Place another order”
button.
When you want to know the status of your order click “View Order Status.”
Then click “Show Orders.”
The order in this account was already accepted by COL Financial. As you can see the
status of the order is posted. This means that your order is waiting for sellers who will
match your price.
Once there is a seller who matches your price, the status will become executed as shown
above. If not, it will be canceled and the fund will be returned.
At end of the day, if your order has been executed, you are going to receive an
Acknowledge Transaction Confirmation. Acknowledge it by simply typing your password
and clicking the “Type Your Password” button.
How to Sell Stocks in COL Financial
If you want to sell your stocks click the same “Trade” Menu and choose “Enter Order”
on its sub menu on your COL Account or you may select the “Sell” button on the right
side of the window.
After clicking the “Sell” button you will be directed to this page. The process of Buying is
almost the same also in Selling your stocks.
On the Order Details, choose “Sell.” ODDLOT refers to the shares that you want to sell
the defined board lot. The disadvantage of selling in ODDLOT is, it usually requires you
to place a discount on your price. If you want your order to sell immediately, then you may
match the first bidding price on top of the Bid Column. In setting your price, be aware of
the Floor Price and the Ceiling Price.
The “Ceiling Price” is the maximum price you can use in selling your shares. While
“Floor Price” is the minimum price that you can use in selling your shares. Once done,
click “Preview Order.”
Enter your password then click the “Place Order” button. Then you will be directed to
the order confirmation. Once your sell is executed, your profit will reflect on your account
balance. Then at the end of the day you will receive an Acknowledge Confirmation
Transaction. There is also minimal charges when selling shares of stock but slightly
bigger than when you are buying.
Chapter 9
How to Pick the Right Stocks

Even you are investing in Blue Chips companies, never pick a stock based on your own
instincts, without factual basis. Don’t rush, there are ways on how to pick the right stocks
and this is through technical and non-technical ways.
Pick the Blue Chip Stocks
There are a lot of companies in the stock market. What stocks should I buy?
In choosing your stocks, don’t always take their published prices as your basis. Your goal
for investing is long-term. So, it’s is important that you must also invest your money in the
companies that can last for many generations. You must look for stable enterprises with
a proven track record. Or you can gamble on start-ups that show promise.
The companies that can last for how many generations are the giant companies. This is
what is known as the Blue Chip stocks. Why are they called as Blue Chips?
In poker, there are several colors of chips. Each chip has its own value. Among these
chips used in poker, the Blue Chips have the highest value. While no longer frequently
used in poker, the term is now common place in the stock market. Blue Chip stocks are
well-established and financially stable companies which have a proven track record of
performance.
Slowly but Surely
Mostly the price of the Blue Chip companies grows slowly. There will be times that their
prices will drop down and rebound to its previous level. Some of them are like turtles, they
take the race slowly. But they continuously report gains to their shareholders. This is what
is important.
Brand Awareness
Blue Chip companies are known by the public because they are able to establish a good
reputation. Like the famous Jollibee Food Corporation, because the public continues to
buy their products the company will continue to generate revenues which have an effect
on your investment.
Don’t be distracted from the Penny Stocks
You are already aware of the Blue Chip companies, now it’s also time for you to become
aware about the opposite side of the spectrum: the penny stocks. What are they? Why
are they called penny stocks? Are they a sound investment as well?
Penny stocks are usually companies that offer a cheap price for their shares of stock.
Their prices usually range in single digit and sometimes go for as low as centavos per
share. But why are penny stocks not recommended for long-term investors? If there are
giant companies there are also companies which can be compared to an ant. These are
the Penny Stocks.
These companies have really high returns in a short-term period of time. This what makes
them high risk investments. Once a penny stock collapses, you don’t have an idea if it
has the capability to go back on the winning track. In the real case, most penny stocks
who were out of the race were not able to make it back up again.
Give the penny stocks to the traders. Since this is what they do for their living. They spend
quality time analyzing and studying the performance of the market. So they know when
to sell or hold the penny stocks. But some penny stocks make it to the top, starting small
and suddenly become big, that depends on the performance of the company.
What Companies Does the Public Believe In?
Every person has its own favorite brand from clothes, shoes, food etc. It means that if
these are your favorite, these are the products that you preferred among others. This
goes the same in investing in the stock market. However, let’s twist it a little. Instead of
your preferred company, choose the company that the public believes in.
An example of a company that is favorite by the public is Jollibee Food Corporation (JFC)
which belongs to the Food Industry category. Jollibee has its own branches locally and
internationally. This company doesn’t run out of customers. There are always people who
will eat in this fast food corporation. So this company will not run out of profit.
Since this company holds the trust of the public, Jollibee is a dominating company in the
Food Industry.
It’s likely that you are going to see a stock that offers cheap prices compared to the others.
But having cheap prices doesn’t mean that they are doing good or bad in the company.
In evaluating his stocks, Warren Buffet considers the price of the stock as the last part to
pay attention. What he considers first is the ability of the company to dominate its industry.
If he knows that the company has the ability to do it in the long run, he will consider it.
What Company Makes a Good Impact on the Economy?
Choose the company that makes a good impact on the economy. Basically, these
companies are the ones that offer our necessities. They offer products and services that
we regularly consume.
Companies who have these are surely the one who are close to the public. In this case,
these companies won’t be left behind in their industry. As long as there are people who
continuously avail their services and consume their products regularly, they will be at the
top of their game.
Know their Image Behind their numbers
If pictures are deceiving, this also goes with the numbers in the stock market. Don’t make
their current numbers as your only basis for making a decision on what stocks to buy.
Always consider knowing their past performances. Were they losers most of the time or
were they winners most of the time? If the history of their performance gives you a good
result, then you can consider buying their stocks.
The only best way for you to find the right stocks is to do your own research. What was
presented is the non-technical way of picking stocks. The technical side of picking stocks
is called as Fundamental and Technical Analysis. As a newbie, you don’t need to have
these before starting your investment. But later on, as you expand your knowledge you
have to learn the basic fundamental and technical analysis if you will do it on your own. I
will just give you an overview of what the two analysis do.
Fundamental Analysis
Fundamental Analysis is what you learn in your economic class. Investors who use
Fundamental Analysis determine the factors that affect the performance of the company.
It is a technique that estimates the potential value of a stock by analyzing on basic factors
that affect a company’s business and its future growth. These may include political,
geographical, economic and any other factors that will make an impact in the company’s
future.
When analyzing, it is usually done from broad to specific. Here are some of the following
approach. This is on a global spectrum.
 Which countries have a booming economy?

 In that country which industries propelled the growth?
 In those industries which are the top companies?
 Do these companies will continue to maintain as the top in their industries?
 And so on….
Technical Analysis
Technical Analysis is choosing a stock based on their price movements. Investors who
use this analysis believe that everything you need to know in the company is dictated by
their price movements. In this kind of analysis, the basis of the investor is the price chart
or price graph of the company. It is a technique which estimates the future value of a
stock by reviewing historical price charts and patterns.
But it’s not that simple to learn Technical Analysis by just reading some articles on the
internet. You have to study, attend seminars or even find mentors to have a deep
knowledge of technical analysis. I attended many seminars and courses regarding this
topic before I have the confidence to make my own trade on the stock market. For now, I
don’t want to encourage you to try it without proper training. As long as you know at this
point that Technical Analysis exists.
Practical investors, use both of these analysis in choosing their stocks. They use
Fundamental analysis to sort out their preferred companies. They use technical analysis
to determine when to come in or comes out from the market.
When I just started out in the stock market, I have just read some of these analysis so
don’t worry because when you are just a beginner you just need the basic strategy. Later
on, when you develop your skills and gain experience, you can use your own technique
by using these analysis.
Chapter 10
Methods and Strategy in Stock Market Investing
Just like what I mentioned earlier, as a beginner you don’t need to know those technical
and non-technical ways to know what stock you should pick. If you are using COL
Financial as your broker, they’ll do that analysis for you. Here are some of the methods
and strategies in stock market investing.
Buy and Hold Strategy
Since you are a long-term investor, this kind of strategy is beneficial for you because you
are going to invest your money in the Blue Chip companies.
The process of this method is buying the stocks and holding it for the rest of the period
until you need the money. This is a form of stress-free strategy because you are not going
to pay attention to the trends of the market.
Stock Price as of Number of Price as of Total Value

Stock Name
Code 2011 (Php) shares 2017 (Php) (Php)
BDO,
BDO 51 3000 128 384,00
Unibank, Inc.
Jollibee
Foods JFC 84 2000 240 480,000
Corporation
Ayala Land,
ALI 7 5000 42 210,000
Inc.
In the sample taken from the above table, let’s say on 2011 you bought 3,000 shares of
BDO with the price of P51 per share.
The one-time amount you invest approximately,

P51 X 3,000 shares = P153,000
The total value for the year 2017 will be

P128 X 3,000 = P384,000
Therefore, you have a gain of approximately 150% in 6 years duration. It’s not bad
considering that its way better than putting your money in the bank. If you invest more,
then your gain will be more.
This is the price of waiting. Usually what you do in this kind of strategy is to invest your
money in one term and wait until you need it. You will need to invest it for 10 years or
more, possibly to get higher returns.
Peso Cost Averaging
The only key for this method to work is discipline. Unlike Buy and Hold, Peso Cost
Averaging method requires you to invest a fixed amount of money in a good company on
a regular basis regardless of the price of the stock. When the market is down it is in your
favor as it allows you to accumulate more shares. As the market is up it means that you
are buying shares at a higher price, thus you are accumulating lesser shares with the
same amount of money. Using this method, you can minimize the risk of the expensive
prices of the stock by taking advantage of its cheap prices. This is a good way to save
because this pushes you to invest regularly every month with a certain amount of money.
For example, within 1 year, say you are buying shares of Jollibee Foods Corp. (JFC)
every month worth P5,000
Stock Price
Date Number of shares bought
(Php)
28 – Jan – 2011 76 65
28 – Feb – 2011 68 73
17 – Mar – 2011 80 62
25 – Apr – 2011 93 53
19 – May – 2011 86 58
21 – Jun – 2011 84 59
26 – Jul – 2011 86 58
22 – Aug – 2011 84 59
29 – Sep – 2011 81 61
24 – Oct – 2011 86 58
29 – Nov – 2011 88 56
27 – Dec – 2011 91 54
716
In the table above you have accumulated 716 shares of JFC stock for the past 12
months.
The total amount you invest for 1 year is,
P5,000 X 12 months = P60,000
.
As of Dec. 27, 2011, the current price of your total shares is,
P91 X 716 shares = P65,156
You have already gain of approximately 8.5% within 1 year, regardless whether the
market is up or down, as long as you invest regularly every month. Notice when the price
of the stock is down you have bought more shares and bought fewer shares when the
stock price is up.
The two methods mentioned earlier have their own blind spots. Buy and Hold Method
doesn’t work if you don’t know what company to select. The same is true with Peso Cost
Averaging Method.
Online Stock brokers provides their recommended stocks to their investors. But there is
a question, with those number of stocks, how can you know the stocks you are looking
for are the right stocks? If you are going to follow their recommended stocks you are not
aware when to sell them. So, you might end up checking your account every time.
In Buy and Hold Method and Peso Cost Averaging, if you pick the wrong stock without
proper guidance, you might end up with negative earnings after 5 years. How could this
happen? Simply recall the story of David and Goliath, even giants have their own time to
fall. Although, there is a big possibility that it will rise again, you don’t have an idea when
it would happen.
Timing the Market
Timing the market is also known as stock trading.
Watching the stock market for opportunities to buy when price of stock at low, and sell
when the price of stock at high. It requires more skill when making the trading, it needs
also time, dedication and also a lot more exciting. If you want excitement and willing to
check the stock market on a daily basis, maybe this is for you. With timing the market,
sometimes you can double your money in matter of week! But at the same time, you can
also lose half of your money in a week. That is why it requires enough knowledge using
Technical Analysis when timing the market. And you have to have enough time when you
do the trading to watch the market movement.
Strategic Averaging Method (SAM)
This method is only used by the people who are members of the Truly Rich Club of Bo
Sanchez. Strategic Averaging Method has similarities with Buy and Hold and Peso Cost
Averaging. However, the difference is there is a time when you are going to sell your
stocks. How would you know this? If the stock price is near its target price.
Once you are a member of the Truly Rich Club you are going to receive emails, on what
actions you need to take in your stocks, should you sell, continue or stop buying, or hold
and wait for further instructions.
Source: Truly Rich Club
In SAM table there are also the Current Price, Buy Below Price, Target Price,
Recommendation and the Maximum Expected Growth in percentage. You are going
to see all the recommended stocks. Thus the stocks were properly selected by his expert
team.
Is it okay to just keep on relying on the SAM table? If you are a newbie, I will recommend
it. Since this is how I started while learning how to play the game of the stock market. And
lots of beginner in the stock market has been a member of the Truly Rich Club. You will
receive a monthly stock market update to be your guide. You don’t need to actually
monitor your stocks frequently and I say it works. When you gain more knowledge and
experience, if you can already manage to have your own research and analysis, you are
on your own.
Start Small
Think big but start small. What do these words actually mean?
In the stock market, the prices of the stock changes during the time you least expect it.
There are no sure things in the stock market. You must be prepared to move at the most
opportune time.
You must also be willing to take necessary risks. Say for example, the amount that you
are willing to invest is P60,000, divide it into six. Then invest it in six terms. Why do you
need to do this? To reduce the exposure to risk!
Remember the prices of the stocks can’t be predicted. If you invest your P60,000 in one
term and the following days the prices of the stock where you invested suddenly drops
down, what would you feel? You will be disappointed and might disavow the stock market
altogether!
As an advice, invest only the money that you can afford to lose. But be very patient as
well because the market could turn up at any time! Don’t let a paper loss affect your
appetite to invest! As you developed your skill then you will have the confident to invest
more.
Conclusion
Investing in the Stock Market is not a difficult process. It is risky yes, but what is life without
any risk involved? You will only manage risk when you continue to learn and gain
experience. You can start investing small amounts just to get the feel of the stock market.
Once you get more experience under your belt, you’ll soon get restless if you can’t make
a good trade everyday. Investing grows on you and you’ll soon learn to love it.
You can master the nuances of the stock market by taking risks and learning the ropes.
You cannot master it in one day. You cannot master it in one fell swoop. You need time,
you need failures, you need losses to tell you which traps to avoid and which to exploit. It
will be a learning process but it will be a rewarding process. It would take time for you to
master it but once you do, it will be as easy as 1-2-3.
Those who are not yet confident of their abilities to invest should start with mutual funds
or other pooled funds which are managed by professionals. It is still exposed to risk but it
does have its strengths. Once you get to handle the mutual funds, you can move on to a
more active trading life in the stock market.
There are several techniques which can help you master the process of the stock market.
You can let your money grow passively or you can aggressively make your funds expand
within a few days. Again, the risks involved may be huge but it would be financially
rewarding once you get to master it. The important thing is, whatever you do, do not
involve your emotions in the equation. Otherwise, you’ll be liable to lose all your hard-
earned cash.
You would grow as an investor. From a neophyte, you’ll soon become a veteran investor
who can deal with the best of them. You’ll soon be a master of analyzing past
performances and would be able to project the performance based on the cold, hard facts.
You’ll make a windfall once you get to know the nuances of the stock market. Again, our
caveat (caution) is simple – do not bet using your emotions. Hedge if you must, but do
not fully invest on your emotions. You would be irrational in your process.
The stock market is a fickle thing to master. You cannot accurately predict when exactly
a stock price would fall nor can you accurately point out which stocks would gain on a
single day. You just roll with the punches and react accordingly. Do not be unnerved with
paper losses as you can still turn them into paper profits. As long as you keep on
becoming patient, your investment would be seeing profits rather than losses when the
time comes to sell them.
It’s much better if you invest early, regularly and long term, but it doesn’t mean it’s too
late if you invest later because some people knows this information late already. Some
have information but they just procrastinate and over analyze that leads to paralyze. So
if you invest later at your age, just increase your investment every month in order to attain
your investments goals.
Do not be afraid to invest. If you can, invest early, regularly and long term, you can reap
the rewards sooner. Become a discipline Investor. While there is no ideal age to start
investing, you should have a personal nest egg to tide you over when the time comes to
liquidate. Dispel the myths and wrong notions that abound about investing. What you
should know is that investing is for everyone and everyone must be able to grab the
opportunity to invest!
References:
1. COL Financial - https://www.colfinancial.com/

2. Philippine Stock Exchange - http://www.pse.com.ph/
3. Investopedia - http://www.investopedia.com/
Disclaimer: This book was prepared or accomplished by the author's personal capacity.
The views and opinions expressed in this book are the author's own and do not
necessarily reflect the views and opinions of COL Financial Group, Inc.
The author is not an employee or agent of COL Financial. For details on COL Financial’s
products and services as well as information on how to open a COL account, please go
to www.colfinancial.com.
Disclosure: The author is an affiliate member of the Truly Rich Club and earn affiliate
commission when someone will join under his link. The author highly values his integrity.
In this regard, he only recommends clubs/products that he personally joined/used and/or
thoroughly researched.

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How to Invest in the

Philippine Stock Market

Copyright © 2017 by JULIUS ESPINA

Keep on learning and never stop striving for excellence!

Common Myths about Investing in the Stock Market

It Needs Financial Knowledge and Experience

It’s Complicated and Risky

How come this thing happens?

Is it because they outsmarted their opponents?

Don’t Play and Invest with Your Emotions

Understanding the Game in the Stock Market

Technically, how should you use this word?

What is Part Owner?

What is Bull Market?

What is Bear Market?

Philippine Stock Exchange Index. Was also known as Philippine Stock

Why Invest in the Stock Market

The story of Joy and Fer

Joy says I’ll do it when I’m already married.

This is how they spent their working and earning years.

The Senior Age

“I received an invitation in a private university, so I’m going to continue my teaching

Make your choice, who do you want to be, Joy or Fer?

It can become your Pension Fund

It’s the retirement day. Goodbye Stress! Welcome Pension!

You can Beat Inflation

I mentioned that we can beat inflation. Yes! We can.

You can Start Small

If you are asking who is Bo Sanchez? Is he a financial wizard? Is he a gambler? Is he an

PSE (Philippine Stock Exchange) has a "Self-Regulatory Organization" (SRO) status, an

It's Time Friendly

Structure of the Stock Market

Types of Brokerage Firms

Traditional Stock Brokers

There is also no minimum succeeding investment. Provided that your succeeding

What’s the purpose of Board Lot?

Best Online Stock Brokers in the Philippines

Stock Broker Initial Investment Broker’s Website

COL Financial 5,000 – Entry Level 0.25% www.colfinancial.com

AP Securities Inc. 5,000 0.25% www.angpingonline.com

How to Choose Your Online Stock Broker?

Convenience on Flow of Funds

How accurate are the prices of the stocks?

Access their website www.colfinancial.com on your browser. Click “Open an

Download and fill up all the application forms.

Enter this link https://www.colfinancial.com/ape/Final2/home/open_an_account.asp

For Personal Accounts

Philippine Time Action Period

9:00 AM Pre-open Period

9:15 AM - 9:30 AM Pre-Open No-Cancel Period

9:30 AM Opening Period

9:30 AM - 12:00 NN Continuous Trading

12:00 NN - 1:30 PM Market Recess

1:30 PM Market Resumes

3:15 PM - 3:20 PM Pre-Close Auction Period

3:20 PM - 3:30 PM Run-Off/Trading-At-Last

Example of capital appreciation

Paper Loss and Actual Loss