Gus Cosio says so

Ideas on the Philippine Stock Market

Solid consolidation

9:55am  Friday  18 September 2009  Philippine Stock Exchange Index  2754.62  (mid- session down 17 points)

If there is anything that looks very compelling for me today, it is that FPH looks like a screaming buy at this level.  It is one stock that has been sold down perhaps due to the decline in the price of MER.  I think that MER is also oversold but I am a bit cautious about buying MER due to the limited float left for the public.  The reason why I think FPH is a good buy at this point because I remember reading sometime in May that with MER at 126, the value to FPH should be around 42.  Today, MER has tanked from above 300 to as low as 163 this morning.  This stock is similarly oversold.  Unfortunately, I have no confidence of its value because, in my opinion, it has been so manipulated over the last 5 months.  Anyway, I am buying FPH and seeing what will happen.

A stock related to FPH which is EDC is also looking oversold.  While it may sound a little risky to be picking up stocks at this point, that is what behavior should be during consolidations or ranging markets.  Of course, that is a personal view that stock like EDC and even FGEN are now trading in a range.

I am also keeping an eye on PNB which broke out of its range yesterday.  For a long time the stock was hitting the ceiling at 24.50.  Thursday, 17 September, it closed at 26 which is convincingly higher.  Today, it is trading at 25.50 but again with good volume.  I remain positive on its intrinsic value since my view is that it is trading around 0.55 times its book value.  That is cheap for a bank that is well on its way to recovery.

As to the rest of the market, I think the consolidation continues, but the involvement in the market has not waned.  It is just that participants are a lot more cautious and would like to bank in some gains.  I think that is the right thing to do.  Investors must always preserve cash for stocks that present opportunities in the next round of movements.

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September 18, 2009 - Posted by | Financial markets in Asia

5 Comments »

  1. Hi Sir Gus! Thanks for sharing your thoughts to the public especially for newbies like me. 🙂 I love reading your blogs. I just opened an account in firstmetrosec and would like to get your advise on which stocks to pick for next week. If your recommendation is FPH then I’ll follow you. Penny stocks though. 🙂 Have done research as well with that company.

    Thanks and more power!

    Comment by chinchin | September 18, 2009 | Reply

    • Hi Chinchin,
      I really wish you all the best in your investing and trading. My soundest advise to you is to learn the fundamentals of every stock you buy. Do not trade a stock simply because someone says that it is going up. Be sure that the stock has value, i.e. earnings or solid assets, before you even trade it. I recommend that you make a spread sheet of around 30 stock you want to follow. Base it on the value turn over of the stocks. That way you will always be in stocks that you can get out of if you need to either take profits or cut loss. My rule also is to limit my portfolio to 5 to 7 stocks. This way, I can focus better on them (usually it’s 5 but it goes up to 7 when the I have better confidence). Also, do not be afraid to buy on weakness when the market goes down or cut your losses when the market turns.
      Have fun trading.
      Gus

      Comment by Gus Cosio | September 20, 2009 | Reply

      • Just another suggestion, you may want to make your spreadsheet format (blank of course) available on this website which would help give an overview of which parameters are important to track. Again only a suggestion =).

        An alternative format which is quite useful is the ValueLine Dow 30 Reports. These are free and they display a wide range of values that you can apply to local stocks or even international issues. Just duplicate it onto a spreadsheet and pencil-in the values periodically. The URL is http://www.valueline.com/dow30/index.aspx although it may be safer to google it instead.

        Comment by ed | September 20, 2009

      • Great suggestions! I appreciate your help. I think it’s the best way to start. I’ll definitely check out the URL you provided. Thanks. I’m excited to start trading. 🙂

        Comment by chichin | September 20, 2009

  2. Just a suggestion, if any of your readers are interested. A good book to read, if you guys haven’t already, is Predictably Irrational by Dan Ariely. It explains how humans make decisions which usually go against logic. It might not fully change a persons approach to a situation but just knowing about it helps immensely.

    Comment by ed | September 20, 2009 | Reply


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