Gus Cosio says so

Ideas on the Philippine Stock Market

Fear is good!

9:25  Thursday  12 August 2010   Philippine Stock Exchange Index  3522.72 (yesterday’s close)

The U.S.market took a terrible beating overnight sparked by a larger-than-anticipated trade gap of $49.9 billion in June.  Usually, when the U.S. trade deficit widens, it is because consumers are spending a lot.  The dilemma arises when consumers are not spending, yet the drag on production intensifies due to greater spending on goods produced abroad.  What has exacerbated the negative sentiment were corresponding weak economic figures reported in China and Japan.

These reports come at a time when the mindset of most people in Asia is that stock prices should be coming off for seasonality reason – notably the ghost month.  Surely, the impact will be negative for the next few days.  Some traders have been selling into the recent strength of selected stocks.  For example, strong issues like AEV and AP recently lost momentum as profit takers chose to sell and raise cash.  I think that is good because as these two stocks decline further, we can expect support building up.  AP has very good earnings momentum and the prospects for the rest of the year are excellent.  AEV may not be as brilliant as UBP’s earnings are not as formidable based on their 1st half disclosures.

Some good news for followers of PNB.  We observed a lot of buying of the stock at prices ranging from 43.25 to 44.30 by foreign brokers.  Although it closed at 43.50, during the run-off, a large foreign broker cleaned up th board.  This tells me that there is strong institutional buying at this level which is a sign that the stock has more upside.  An analyst pointed out a decline in the bank’s net worth by around Php 2 billion for the second quarter.  I reckon that this was part of the balance sheet clean up which banks usually do prior to a merger.  The good news is that buyers with real money are looking possibly at another 20 to 30 percent move on the issue.

I am anticipating that the slide in prices for the ghost month has started and will likely intensify.  This downturn should be a welcome development for those who are watching stocks like DGTL but not for those who hold GLO.  My view is that GLO will move towards 600 while DGTL, if it gets past this fearful month, will likely head towards 2.00 and perhaps a few centavos beyond.

As sentiment turns negative in the coming days, I think opportunities will start to emerge.  I would not be in a hurry to buy though for fear of catching a falling knife.  If fear heightens in around two weeks time, then that would be the signal that stocks have reached their cheapest level for this cycle.  I think the smart money anticipated this downturn anyway.  I read a n item that in the U.S., the hedge fund community believes the fundamentals for the S&P remain in tact.  US companies have a lot of cash on their books and management teams that have become impressively more efficient. “I don’t think we’re looking at a long-term train wreck,” says a hedge fund manager.

That looks to be the case for those companies in the PSE that we follow.  MPI for instance raised a lot of cash from both the equity and debt capital markets.  Remember that they are an infrastructure company and debt loads are normal for businesses such as these.  Do not forget, however, that the businesses have very strong cash flows – Meralco, Maynilad and the tollways.  Cash is always king.  The Gokongwei group is another cash producing cow.  We can go down the corporate list and discover that the PLDTs, the Jollibees, the Meralcos, the GMA7s, even the Splashes and the Tunas in this country are all running very good cash levels.  That is why widespread fear of a market meltdown may be quite unwarranted.

In the 1986 movie “Wall Street,” Gordon Gekko (played by Michael Douglas) had a famous line – “greed is good”! In today’s market, given my outlook, I would say “fear is good.”

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August 12, 2010 - Posted by | Financial markets in Asia

68 Comments »

  1. Yes, Greed is not good in today’s market. But might be after a huge sell-off in the coming weeks to come.

    Comment by Foreign Investor | August 12, 2010 | Reply

  2. hi sir Gus, would you like to share your opinion on the article “$10B offered for Pagcor…Tycoon Ramon Ang bids for gambling firm” : http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20100809-285698/10B-offered-for-Pagcor

    Comment by Jack B. Nimble | August 12, 2010 | Reply

    • Jack,

      There was a subsequent bloomberg article related to that to the effect that the Malaysians refered in that report is not interested in gaming and have not spoken to SMC on that.

      Thanks

      Comment by alex | August 12, 2010 | Reply

      • i read that too but assuming it pushed through 🙂 …my interest is more on the economic effects (pros/cons) of the PHP in a 30 to 35 range vs. the USD. RSA argues that it will benefit the economy by ‘saving between P440 billion and P640 billion in principal and interest payments on our debt’… Alex, would you agree? 🙂

        Comment by Jack B. Nimble | August 12, 2010

      • I cannot believe that Former Pres Ramos mentality of selling Productive Govt Properties spread so widely among Filipinos that makes it acceptable. Where is the math here? Only Ramos benefited on this kind of mentality so his predecessors followed the trend so they can gain also on remaining Gov’t productive Cows….Our country is being exploited by our own leaders (like GMA) and we let it happen. Hope selling of PAGCOR(nor the idea) will not push thru.

        Comment by francis | August 13, 2010

    • It certainly is revolutionary thinking Jack, but the strengthening of the peso should better happen over time. Otherwise OFW and exports will take a beating, and those had assisted our country tremendously past years.

      Thanks

      Comment by alex | August 12, 2010 | Reply

      • I also agree that it should be done gradually, enough for the exports industry to adjust. i’ve never been too fond of OFW remittances ‘propping up’ the economy because i believe we’ve lost a lot more in terms of talent and highly-skilled workers being shipped out since our wages cannot compete with foreign countries –examples that come to mind recently are the PAL pilots that resigned and the backlog of IT jobs that can’t be filled because our best IT students choose to work overseas…the entrepreneurial in spirit among them then start their ‘Microsofts’ and/or ‘Google’s’ in foreign lands as opposed to our own. i believe the stronger PHP vs. the USD will be good for PHP wage-earners as it will increase purchasing power on imported goods hopefully allowing local wages to look a tiny bit more competitive. with (hopefully) an eventual balanced budget, our politicians will no longer have an excuse to come up with more and more annoying taxes (i’m not holding my breath though) to pay for their inefficient programs. i’d be in favor for the sale of Pagcor if it allowed the government to balance the budget and bring them closer to tax-cuts across the board to foster business growth and employment just to name a few 🙂

        Comment by Jack B. Nimble | August 12, 2010

    • Jack,
      i am actually indifferent to who owns Pagcor, be it government or private. I do not want to speculate on anything about the issue. If it comes to the market as an IPO, I’ll have a deeper look at it.

      Comment by Gus Cosio | August 15, 2010 | Reply

  3. wait and see mode for this week sir gus?thanks.

    Comment by Raymond | August 12, 2010 | Reply

  4. Hi Sir,

    I am tempted to avg down on MPI or DMC. Which do you think is the better choice?

    Thanks

    Comment by joseph | August 12, 2010 | Reply

    • DMC in the short term is better, this stock consolidate at 18.25 to 19.75 for long. I am expecting a second break-out once they declare their 2nd half earnings. After, the break-out in DMC, you can shift to MPI as the room for upside is bigger.

      Comment by Cliff | August 12, 2010 | Reply

    • Joseph,
      I like DMC but I think MPI may outperform in the short term.

      Comment by Gus Cosio | August 15, 2010 | Reply

  5. sir gus,

    we have same forecast on dgtl, 1.9-2.10 range is really possible in the weeks or months to come, looking at glo, even they are now offering great deals on their subscribers, the decline from july 31 up to now is really significant. is this another indicator that dgtl is on its way to fly?

    thanks sir gus.

    Comment by draco23 | August 12, 2010 | Reply

    • Draco,
      What I like about DGTL is that the support appears to be firmly established at 1.40. It makes it easy to buy at these levels.

      Comment by Gus Cosio | August 15, 2010 | Reply

  6. The market has been brutal to GLO. I lost a lot of money today. GLO really taught me some painful lessons though. Even now, there is this knife in my heart.. arrrgghhhh..

    Well, anyway the good news is I’ve been able to add a small position to some of my other current favorites. Hey, I even bought a small stake on DGTL. I mean at this point, whats the worst that could happen eh.. but if even this doesn’t work out, I’m gonna avoid telecom stocks for the rest of the decade. 0_x

    Comment by jrebong | August 12, 2010 | Reply

    • Jrebong,

      Ghost month has just started and a lot of things could still go wrong. It all depends on your investment horizon. If you’re a long-term investor then the probable short-term correction could be viewed as an accumulation window. If you’re a short term trader, it might be good to lighten up as early as now before further selling comes. But personally, I don’t think the strong performers will correct that much. The stock I’ve been closely monitoring as of late is DMC, a lot of foreign fundies have been buying relentlessly indicating their optimism. Same goes for PNB, it would usually go south for the first half of the trading day then a number of brokerages would buy it up creating bullish candlestick patterns. These are the reasons why I would rather hold than sell any of my current holdings. If any, I would buy the dips, but not as early as now. Probably as August winds down.

      Comment by richard | August 12, 2010 | Reply

      • Hi Richard, Sir Gus,

        What your take on JGS? While I have sold earlier, Ive been an admirer of this stock. Are there formal research on this? From a technical point of view how is it at the moment?

        Thanks

        Comment by alex | August 12, 2010

    • Same here. Let go of GLO today as well at 789. Wish we had sold at 885 or even at 865. My only consolation is I will be getting the full 80 cash div (less tax) for the year. Hopefully, you got it too. For now, I will be sitting on the sidelines and see what happens. It seems prices may still go lower as everyone seems to think so. Lesson learned after that debacle with GLO. As a good friend of mine said, charge the loss to tuition fee expense.

      Comment by gp | August 12, 2010 | Reply

      • You managed to sell it at 789?I sold mine at 784.50!! arrrggghh.. — but hey, what did you mean you’ll be getting the full div. The rec-date is Aug 17. err.. is it the ex-date or the rec-date that determines who gets the div?(btw:Even now my hands are shaking. How do i tell the wife I just lost 15k.. meep)

        But here are some lessons I ‘relearned’. On hindsight, I should have trusted what I read from the gurus. But noooo, I had to do it my way.. meh.

        1. Diversify – I’m not a good enough stock picker yet to bet on a single stock. I’m not the second coming of gus.

        2. Look for a company with a durable competitive advantage(Or something with a niche) – Right now, I like MPI(and its ilk) because its unassailable. The ayala’s, the tan’s, the gokongweis will not be able to take market share from MER or TOL even if they wanted to.

        3. Most of all – be patient: Be patient for my price to come and it if does not come, just accept that some will get away. I just failed this today actually. I wanted to buy MPI at 2.8 or so. But I got tempted and bought at 2.92.

        Oh well, I’ll try again tomorrow.. :/

        Comment by jrebong | August 12, 2010

      • Yes sir, it actually opened at 799.50. When I saw it selling at 790, I immediately posted it at 789 to ensure I had a match. Btw, here’s an explanation from Investopedia. That would probably explain the 40 peso drop from the previous day’s closing price. I hope I’m right on this!

        Investopedia explains Ex-Dividend
        A stock trades ex-dividend on or after the ex-dividend date (ex-date). At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend.

        OR

        Investopedia explains Ex-Date
        This is the date on which the seller, and not the buyer, of a stock will be entitled to a recently announced dividend. The ex-date is usually two business days before the record date. It is indicated in newspaper listings with an x.

        I have to agree with what you said regarding diversification, durable competitive advantage/monopoly/inflation resistance (the likes of MWC, MER, TOL, AP) and patience and don’t forget discipline. Buy only when the price is right and not force the issue. There will be lost opportunities for sure but we will be better off in the long run. I like to think that investing is a marathon and not a sprint.

        Comment by gp | August 12, 2010

  7. Hi sir Gus,i have been looking at FOOD since they change name from tuna.and its nice to see their ads promoting their company to the readers.The company as u said is running with a good cash level.Is it a good buy at these price level even liquidity is so small.Any thoughts or recommendation.Thank you very much.

    Comment by kelly | August 12, 2010 | Reply

    • Kelly,
      FOOD is a fundamentally GOOD stock. I know the owners personally and they are really trying to make an excellent business out of it. I learned of their capacity build-up in Indonesia and New Zealand and the expansion further into Vietnam. It may take some time but this company will pay off. The horizon to take is about a year. Your buying should then be an accumulating process, buying on dips such as nowadays.

      Comment by Gus Cosio | August 13, 2010 | Reply

  8. HI Sir Gus what’s your take on DMC? is it good to buy or wait for consolidation?

    Comment by Jude | August 12, 2010 | Reply

    • Jude,
      I checked out my charts and I noticed over the past year, when DMC consolidated, it had not been too deep. My buying level in this consolidation would probably be at 20.

      Comment by Gus Cosio | August 13, 2010 | Reply

      • DMC just reported 1.57 EPS for the 6 months ended 6/30. Assuming this is annualized, this will translate to 3.14 2010 EPS and at PE of 10, I may be looking at the maximum price of 30 in the next 2 years.

        Note: I have DMC.

        Comment by alexis | August 13, 2010

      • alexis,
        We think EPS in the 2nd half could be a bit higher than the first. Full year EPS will be closer to 3.50, I think.

        Comment by Gus Cosio | August 14, 2010

  9. Sir Gus ok nba to BUY EDC? or wait for consoladation…still holding LPZ………

    Comment by jay | August 13, 2010 | Reply

    • I think the time to buy EDC, if you wanted this stock, was last week. It was trading for 4.43 back then.

      but we are on the same boat. I haven’t yet accumulated enough EDC to satisfy my portfolio requirements. I’m waiting for it to go down to 4.4xx before I buy though.

      Comment by jrebong | August 13, 2010 | Reply

  10. “DIGITEL’s consolidated service and nonservice revenues for the six months ended June 30, 2010
    amounted to P7,975.3 million, up by 19.1% from last year’s P6,693.5 million driven mainly by the 30.6%
    growth in the wireless segment.

    Consolidated cost and operating expenses likewise grew by 14.6% to P5,228.0 million from last year’s
    consolidated figure of P4,562.4 million due to higher cost of sales, network-related expenses and general
    expenses.

    Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) for the period is
    P2,747.2 million, higher by 28.9% against P2,131.1 million during the same period in 2009 due primarily to the
    higher service and non-service revenues generated by the wireless business.

    After considering depreciation and amortization and other income (charges), net income for the period
    amounted to P145.4 million, a turnaround from last year’s net loss of P638.0 million.”

    http://www.pse.com.ph/html/ListedCompanies/pdf/2010/DGTL_17Q_Jun2010.pdf

    Is this higher or lower than expected? Thanks!

    Comment by Anthony | August 13, 2010 | Reply

    • That is a good news to DGTL holders, the question now is can they sustain the rise in its revenue and the increase of its subscriber base considering competition is very stiff in the telecom industry. Hope it will declare dividend as well same with GLO and TEL, with this its price will gonna rise more.

      Comment by Cliff | August 13, 2010 | Reply

      • I’m not sure if this has a really big impact considering that the profit of GLOBE is around 5.1 Billion(down 30%) and TEL at 10.3 Billion(up 1%). But noting that it is a big turnaround from a loss of PhP 638 million to a gain of PhP 145 million from last year. And if this trend remains intact DGTL will continue to rake in more profits at the expense of globe. Anyways, I’m planning to hold it for a long, long time until its price reaches that of Globe and if we get really lucky that of TEL (just kidding!).

        Comment by Anthony | August 13, 2010

      • Nice..and nice on Anthony…that might take decades and if they can sustain their momentum and the downturn of GLO

        Comment by Foreign Investor | August 13, 2010

    • DGTL is gaining for five straight quarters (compare using http://www.digitel.ph/financial.asp#quarterly_highlights)! The last time it posted a decrease was in the third quarter of 2008 (3Q 2008 vs 3Q 2007). Note that meaningful and standard comparisons of quarterly results are best done by looking at two similar quarters to factor in seasonality (Q1 2010 must be compared with Q1 2009). Five straight quarters of gain clearly means momentum is on the side of this stock.

      UBS (333) again appeared today but it was flooded with willing buyers. Let me point two positive observations: 1) The huge cross trade at the opening (that happens when two clients of the same broker agrees to buy-sell stocks, possible only with prior approval of SEC), implies that UBS clients need not be against the idea of holding the stock. 2) The significant volume today and the price action in the run-off minutes yesterday are strong indication that 1.4 is a very strong support for DGTL. Personally I think DGTL shares now are in stronger hands, like Sir Gus i expect very good price action in the coming weeks especially if the market sentiment becomes positive.

      Comment by Chris M. | August 13, 2010 | Reply

      • Good if we can post here in Sir Gus blog the a table or comparisons among GLO, DGTL and TEL. in earnings, and asset ratios as of 2H 2010. Will it be possible guys if you have, I only have DGTL for now.

        Comment by Cliff | August 13, 2010

      • 1) http://www.reuters.com/finance/stocks
        2) http://investing.businessweek.com/

        reuters will give you the ratios while businessweek has better financials with slight commentary on the bs, is and cf. the businessweek site will always prefix the stock price with $ even if its in php take note.

        for those interested, in reuters you use the regular pse ticker symbol and append “.PS” while in businessweek you append “:PM”.

        Comment by ed | August 13, 2010

    • Thanks, Anthony.
      I find these numbers useful.

      Comment by Gus Cosio | August 15, 2010 | Reply

  11. Hi Sir Gus,

    I just noticed for DGTL, Q2 net income is negative compared to Q1 after considering the other charges (I don’t know what is this). How will this affect the price of DGTL? EBIT in Q2is higher than Q1 but there is a big other charges which eats up its income.

    Comment by Cliff | August 13, 2010 | Reply

    • Loss in the 2nd qtr for DGTL may mean higher expenses via new cell sites etc. They seem to have more than 6,000 cellsites at the moment.

      Yes it may take years before globe can be overtaken, hopefully globe revenues do not decrease at the rate it is going now.

      tks

      Comment by alex | August 13, 2010 | Reply

      • I think it’s more meaningful to compare the 2ndQ2010 income of DGTL with 2ndQ2009 (net loss of 351 million) mainly because of the seasonality of earnings.

        Comment by Anthony | August 13, 2010

  12. Thank you very much sir Gus for a nice advice even it needs a longer time horizon to realize any gain at least i know my investment will be in the hands of a GOOD company.

    Comment by kelly | August 13, 2010 | Reply

  13. Sir,
    with all of these data about digitel, what is your take?
    Appreciate your wisdom here.

    Comment by Mark | August 13, 2010 | Reply

  14. The firstmetro analysis pegs DMC’s intrinsic value to 26p. Its current price is 20.35. Looks like its still a bargain. I’m deciding between buying a little of DMC or just loading up on MPI and calling it a year.

    Comment by jrebong | August 14, 2010 | Reply

  15. Sir Gus,

    What do you think of SMPH and PX? As regards, GLO, I intend to buy at 600 to 650. I have MAB, MPI, DMC LOTO, DGTL, MEG and FGEN. I just sold all my LPZ at 22% gain although it may not be a good move as it might still have some upward move. Currently 80% invested. Hope you can comment also on my stocks. Thank you.

    Comment by Nel | August 14, 2010 | Reply

    • Hi Nel Just like u waiting for GLO to go down further waiting @ 600 to buy …Sold also half of my LPZ planning to buy back next week @ 4.35…….

      Comment by jenny | August 14, 2010 | Reply

      • Jenny,
        Not because GLO goes down to 600 means that it will go back up. There is always a relationship with what’s going on to the business and the demand for its shares. I would also be cautious about LPZ. Rather I suggest you wait for further weakness in the market in general to buy the stocks with stronger fundamentals. Rathher tha LPZ, may I suggest you look at MPI. If you analyze it, MPI is now succeeding where LPZ failed, i.e. Maynilad and Meralco and the Manila North Tollways.

        Comment by Gus Cosio | August 15, 2010

    • Nel,
      Forget GLO for the time being. You may be just wasting your time. Focus on DGTL instead and try to get the rhythm of the stock. While MEG is very active, I would suggest going for AGI instead since it is MEG’s parent and it has a good gaming and consumer story. Congrats on LPZ. I got out too soon because my view on the Lopezes is a bit jaded by their credit history. I would take it easy and not go fully invested yet. Wait until the 2Q GDP figure before going all out.

      Comment by Gus Cosio | August 15, 2010 | Reply

      • Sir Gus thank you. The wisdom in your comments is always evident and easy to follow. More power.

        Comment by Nel | August 15, 2010

  16. assuming i can only choose one, what has the better fundamentals – DMC or AP?

    btw, Gus do you limit that amount of stocks you buy in a single sector? Like if you already have VLL, you won’t buy anymore RLC, or if you have EDC you wont buy AP – and instead seek out another sector you don’t have a presence in?
    Or you just buy whats attractive without regards to the sector, hence if would be possible (though improbable) that you will have an a portfolio composing of all bank stocks for example?

    thanks

    Comment by jrebong | August 14, 2010 | Reply

    • JR,
      I have a core portfolio. These are stocks that I intend to hold until their fundamentals change. These are DMC, TEL, PX and PNB. There are stocks that I will buy for short or intermediate term trades: AP, MBT, VLL, EDC, DGTL etc. I would really avoid buying an entire sector. I would choose the one I like the most. I could also drop a core holding in favor of a story that I get convinced with. For example, I’ve been holding PNB for a year now for both core and marginal trading. Right now, I may start taking profits on my marginal PNB position and reallocate it into MPI because MPI is a potential core. I am also evaluating if DGTL might work for a long term (core and marginal) candidate. The rule of thumb is diversification meaning not to concentrate on just one stock and long-term perspective meaning the inclination to trade a stock over the period of time that it’s value is emerging.

      Comment by Gus Cosio | August 15, 2010 | Reply

      • fellow investor,
        take note of this very important teaching of our guru..the ideas he shared on this comment is far more important than the the particular stocks he mentioned. for me, it is one of the fundamental conerstone of strategic investment and trading having a core. intermediate and marginal position as well as the rule of diversification. proper application of these concepts will lead us to a consistent and progressive success on investment and trading. again sir gus thank you so much for sharing this very important strategy.

        Comment by richard | August 15, 2010

  17. Hi Gus,

    As a first timer, I’m planning to buy ALI, PX, SMDC and SMPH this week then look at it again after 8-12 months, hope for your suggestions. Thanks

    Comment by James | August 14, 2010 | Reply

    • James,
      Your selection is good except, I would recommend DMC rather than ALI. DMC has property in it through DMCI homes, but more than that, they have infrastructure – Water (Maynilad), Energy (Semirara and Calaca), construction (their orderbook is so long with all the skyscrapers coming up in NCR and Metro Cebu). They also have the MRT-7 project which is a combination of property development, construction and infra. They will likely build the toll road from Novaliches to Cabanatuan called the Northern Luzon East Expressway. Having said that, you could consider MPI instead of SMPH. Or you could wait for a dip in SM which is the holding company which owns most of the group’s consumer business.

      Comment by Gus Cosio | August 15, 2010 | Reply

      • Thank you very much!

        Comment by James | August 15, 2010

  18. I think Mining Stocks will led us to 3650 in the coming months SCC,AT,PX and NI will led the way….

    Comment by Butch | August 15, 2010 | Reply

    • Time to BUY Mining Stocks….

      Comment by wenna | August 15, 2010 | Reply

      • Wenna,
        Mining or resource stock normally precede a strong rebound in the world economy. You may be right. i think all portfolios should have an allocation to mining.

        Comment by Gus Cosio | August 15, 2010

    • Butch,
      If you like mining, I would suggest ORE instead of NI. Our analyst went to see them and they are in a position to make their first nickel shipment in November. When that happens, this stock could do much more in spite of the fact that so far it had been jockeyed by some players. The jockeying seems to have paid off since what they were really doing was holding the fort until value was created. The shipment confirms it.

      Comment by Gus Cosio | August 15, 2010 | Reply

    • It might be too soon to say that, Butch.

      AT has gone better because it has started to ship its production. It will not be across the mining board that this will happen yet. It is when many are anticipating a bottoming out of the current economic cycle or its strong rebound that will drive mining stock into the stratosphere. Having said that, one should always have a small allocation in his favorite mining stock.

      Comment by Gus Cosio | August 15, 2010 | Reply

  19. Sir Gus,
    Is it good to have ORE for long term hold? if you were to choose 5 stocks for you to hold for let’s say 10 years, what would those be and why? thank you so much in advance for sharing.

    Comment by Ghie | August 15, 2010 | Reply

    • Ghie,
      I think evaluating stocks to own happens year to year. Of course stocks like JFC, TEL, MER, AC, BPI, MBT and similar issues which have more than 10 years of track record are candidates for long term hold. Remember that a portfolio should also be diversified among stocks with strong and sustainable cash flows and profits as well as those with strong and steady growth prospects. Sometimes you have recovery stories like PNB and perhaps RCB or LPZ from time to time. Portfolio management is both a science and an art – a science because one should not ignore observable financial measure and an art because one must develop that market sense which rewards or punishes stocks depending on how it totally manages its business.
      As for ORE, it is a mining stock which investors look into for strong profitability and in anticipation of cyclical strength in the global economy.

      Comment by Gus Cosio | August 15, 2010 | Reply

      • What do you think of JFC? It has nearly doubled its value in the past year.

        Comment by Mal | August 15, 2010

      • Mal,
        JFC is a great stock. It preserves value and is a good play on the consumer. It is also very difficult to trade. If you like it, keep it as core holdings in your portfolio.

        Comment by Gus Cosio | August 15, 2010

      • Thank you so much Sir. i really appreciate your very nice insights. More power to you

        Comment by Ghie | August 15, 2010

  20. hello gus,

    thank you for the explanation about the core holding vs the trading stocks. But one follow-up question – What determines what will be the core? I mean, you might think that all of these stocks have potential thats why you bought all of it. PNB and MBT for example. But one is promoted to core, and the other to trading position. I’m sure there is a fundamental reason why a stock is placed in one category rather than the other.

    Comment by jrebong | August 15, 2010 | Reply

  21. btw, I have COAT and SHNG in my portfolio. COAT i like because I’m thinking when biodiesel law takes into effect, b3 later this year and untimately b20 in 2020, chemrez might benefit. SHNG I liked because they managed to increase bottom line for 3 years now. It also doesn’t hurt that both of them gives about 5% dividend yield.

    But I sure wish I waited. I still like both of them, but I’m starting to think there are stocks with much greater potential down the road.

    Comment by jrebong | August 15, 2010 | Reply

    • JR,
      COAT is definitely a good stock, but unfortunately it does not have much of a following in spite of the fact that a major broker tried to promote it 2 years ago. The same goes for SHNG. These are niche players so they will probably move in spurts. They are good for dividend plays, but you know what – TEL pays almost 9% annual dividend.

      Comment by Gus Cosio | August 15, 2010 | Reply

  22. I started to like Mining Stocks………They are moving sideways for the past 8-10 months……AT started the UP trend last week:) maybe PX and other mining stocks will also move in the coming days/weeks…

    Comment by Cindy | August 15, 2010 | Reply

  23. Hi Sir Gus, I think Mining is overbought already i bought px more than 1 month ago @ 9.++ planning to sell this week or nxt week…i think it will move like lpz….

    Comment by butch | September 20, 2010 | Reply


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