The Best Ten Pesos Ever! Happy Value-Investors
December 23, 2012
Value-investors are the happiest people in the world because it doesn’t take much to make them smile. They can spend as little as USD1 to ride a roller-coaster, play virtual tennis, race laps and enjoy an ice-cream cone afterwards. They can because they find and know where these bang for the buck places are. When riding the roller-coaster, just before the climax of whipping you 90 degrees to the side, it cracks us up to yell, “This is the Best Ten Pesos Ever!!! Whooo!!!” It goes seven rounds.
No wonder value-investors live long too. Warren Buffett and Charlie Munger are still enjoying their work. Walter Schloss passed away this year at the age of 96.
It doesn’t take much to invest in the Philippine Stock Market. The board lot here allows you to buy shares of stock for as little as around USD50. This encourages us to regularly plough our savings into value-stocks and leave enough buffer for our daily lives. The general rule is 70% stocks, 30% cash. Buffett once said he envies value-investors who are still small because they can buy anything. Unlike him, he’s now in a position of “Where will I put all this money?” You see, the choices and returns are still boundless when you start small. I spoke to a fund manager. She said they’re limited to blue-chips and high market-cap stocks. She wishes they can also buy the third-liners that we recommend because their returns have been explosive this year. Maybe personally, she can.
It makes you frugal as well. After realizing gains, you want to get more of that feeling. You save your money to be able to buy more. It makes you diligent as well searching and searching for more value-stocks to invest in.
Most of the time, we talk about buying, but we also sell when our stocks’ prices reach ridiculously high levels. Currently at 46x blended multiplier, a Philippine stock is more expensive than Apple, Inc., the biggest company in the world in terms of market cap. Now that is ridiculous. We sell then we plough back those returns into undervalued stocks. Even the cash dividends we make are ploughed back. By doing this, our fund achieves exponential growth. That is big money in little time. We don’t like people saying life is hard, prices go up and everything is expensive nowadays because it has been proven that you can make your money work for you.
Right now, we’re building a healthier and bigger buffer. Everyone’s feeling invincible now, patting themselves at the back, giving high fives and wishing for a PSEi of 6,000 soon. 6,500 has likewise been forecasted in 2013 by a big foreign house one of our clients say. Wow. Amazing.
Times like this, and seeing the market this high now, we think there will be a “Great Sale” in 2013. For us, that’s when bargains and choices will be plentiful. Mostly for others, it’s a market meltdown. That is when the high fives disappear and everybody is in fear and chaos. Philippines is already expensive in the region, interest rates are said to remain unchanged by the BSP and 2013 company earnings may be good but not that great and has been discounted already. We just saw about negative real yields in Bloomberg for the US economy to alleviate Debt to GDP. It worked in the 40s. If this happens, PSEi still goes up. Whether they do it or not, the hunt for value continues, and there’s always the Best Ten Pesos Ever to alleviate any stress from value-hunting.
Corpecon Research Wishes Everyone a Happy Christmas
Happy Christmas from the Philippines!!!
Enjoy and Keep on Building Your Portfolios!!!
The Philippine Stock Market Research report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report.