Gus Cosio says so

Ideas on the Philippine Stock Market

On the road again

10:00 pm  Wednesday  22 September 2010

I must apologize for not sharing my opinions in the past few days.  It is because I am on the road again.  I had to speak before the retirement council of an educators group that is having their annual convention in Cebu.  Tomorrow, I have to give a presentation in a plenary session of the conference.  Unlike yesterday when I spoke to 300 people, I will be addressing 2,500 delegates so I have to prepare and psyche myself for such a crowd.

We can say that I am half blind in the market since I can only log into the market for a few minutes when I find a wi-fi connection.  Also, having to network with hundreds of people takes a lot of time off my hands.

I took a look at price actions, and instinctively I am looking for a correction.  I think if the market goes down or even moves softly sideways fora couple of weeks, we could have a solid base for further advances.  It would also be good for cash management discipline to be sure to have some when cheap stocks appear.

For example, I sold some AP at 21.60 simply because among the stocks I owned it was one that had surged so much.  I halved my DMC position at 26.70 because I wanted to position some DGTL and SLI.  I also wanted to have some cash when Cebu Pacific goes IPO.  I also sold all my PNB at 50 because I wanted to establish a mining position.  I put some PX and ORE so I can have exposure on the sector.  Unfortunately, I was not able to take advantage of the big move in LC.  I don’t mind because I do not flatter myself that I can spot every stock that moves.

Right now, I am sipping some Merlot and listening to soft music in the lobby lounge of the Cebu Marco Polo.  Fortunately, they have wi-fi here so I can enjoy myself while updating this blog.  I think there should always be time for some relaxation in order to keep our minds open.  When we are too hyped up with stock prices, we fail to enjoy life already.  In my mind, it is great to trade stocks.  It is also wonderful not to worry about squeezing out every drop of profit from it.  The point is to enjoy making the money and having a life as well.

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September 22, 2010 - Posted by | Financial markets in Asia

37 Comments »

  1. Hi Sir Gus,
    Thanks for all your previous insights on PNB. I have just recently sold a good portion and gained almost 50%. Reading your blog has become a daily routine for me. I hope that you won’t cease in sharing your wisdom. I do hope you’re enjoying your stay here in sunny Cebu. Good luck on your presentation tomorrow!

    Comment by finch | September 22, 2010 | Reply

  2. Hi sir Gus, I think one stock will start going up its a defensive stock they own purefoods…Im planning to sell all my mining stocks and transfer to this stock its only trading @ around 68-72 pesos range….

    Comment by butch | September 22, 2010 | Reply

  3. Hi, Sir Gus.

    Why Cebu Pacific IPO? If I’m not mistaken most of the stocks that have gone IPO in the last 5 years like VLL, SPH, GMAP/GMA7 and FOOD/TUNA are still down today. (Current Price vis-a-vis IPO price) Their fundamental seems sound yet they are still down. Only EDC is above its IPO price.

    And those that have gone LBI last year like EG, ANI, CPM and IMI remains unattractive (except maybe for ANI) even if this Bull has been around before stocks mentioned has been listed.

    Regards.

    Comment by oliver mia | September 22, 2010 | Reply

    • thanks for bringing this up, i hope sir gus will address this issue..

      Comment by cliffhanger | September 22, 2010 | Reply

      • I think timing is a factor. GMA7/GMAP, et al had their IPOs months before the US financial trouble. You also forgot to mention AP which started P5.50 at the same time with GMA7 and others, and currently flying at 400% of its IPO price. CEBU postponed its IPO many times to find that right timing, and I guess (and hope) they really found it. But then again, I’m also hoping Sir Gus here could shed us more light.

        Comment by herecomesthebaby | September 23, 2010

      • I never knew AP was a newbie to the Stock Market. Thanks for the info herecomesthebaby.

        Comment by oliver mia | September 23, 2010

  4. Well said Sir Gus. I too believe in disciplined cash management. Thank you for your blog. I may not comment a lot but do follow you as often as I can. Enjoy Cebu.

    Comment by thewingedpalate | September 22, 2010 | Reply

  5. Hi there! What’s your take on ACR?
    Enjoy and have fun!

    Comment by Mark | September 23, 2010 | Reply

  6. i think SMC is worth 120/sh……..cheapest div. yielding stock…if Meralco trades @ 200+/sh….Why SMC only trades @70…

    Comment by Green | September 23, 2010 | Reply

  7. Hi Sir Gus,

    The last paragraph is especially well said! We met before while I was with 25by8 (one of Vea’s companies). We were consulting you for our banking solutions. I’ve been following your blog the past few weeks and, as back then, I’m glad I’m learning quite a few things from a knowledgeable and insightful mentor. Thanks!

    Jay

    Comment by Jay | September 23, 2010 | Reply

  8. Sir Gus,
    Regarding Cebu Pac IPO, I read that they were offering stocks for Local Small Investor and the offer price is “up to 150 php,” with the final offer price to be announced on October 8.

    I noticed in IPOs that the price easily goes up in the first few days and it is hard to enter at the offer price.

    My question sir is would it be better to avail of the offer to Local Small Investor (and that way I would be able to get shares at the final offer price)? In contrast with buying shares online where the price might go up fast and where it would be hard to buy at the final offer price.

    Do I understand these correctly sir gus? Thanks for you help.

    Comment by jovy | September 23, 2010 | Reply

  9. Regarding cebu pacific, has anyone taken a look at its fundamentals? Is it really worth 150?

    I think the actions of the management of this company speaks volumes. I mean, why didn’t do the IPO early this year or even last year? I’ll tell you why, because they want to get the highest price they can get.

    Its only logical, if your a businessman, and you own a successful money-making business, would you sell it cheap or would you sell it as dear as you can?

    The issue for us investors is if their valuation is wrong or right. If you think they are right and the price they can get is already the highest, then any profit would be hard to come by. But if you think they are wrong and they are selling themselves short, then buy.

    just my opinion

    Comment by jasper | September 23, 2010 | Reply

    • yes i agree jasper, i think we should look at the fundamentals to see if 150/share is cheap, fair, or expensive

      Comment by cliffhanger | September 23, 2010 | Reply

    • IPO noun \ˌī-(ˌ)pē-ˈō\

      1 : most commonly known as an initial public offering of a company’s stock
      2 : most accurate meaning is “it’s probably overpriced”

      Comment by BG | September 24, 2010 | Reply

    • Jasper,

      I would also like to know what Mr. Cosio thinks about this because based on my research, if it sold at P150/share, its Price to Earnings Ratio (PER) will be at 17.5X, much higher compared to regional average in the Asian airline sector at 11.5 PER.

      Comment by BJ Evangelista | September 24, 2010 | Reply

    • If your unsure if the IPO price is justified for Cebu Pac but would like to have exposure on that story, I recommend you buy JGS. JGS will definitely benefit from Cebu Pac IPO. Plus you got good fundamentals in URC, RLC and DGTL (which is bound to sky rocket soon) Also CEB when it goes on sale next month. Plus, Christmas is around the corner. Consumer Spending will be up, meaning more ppl buying food & drinks (URC), more ppl at the malls (RLC), DGTL just hiting 1M post paid subscribers thus jumping from 1.56 – 1.68)and PEAK season for Cebu Pac. I hope to see JGS at 27 next month and 30 by Dec. But this is just my opinion =D

      Comment by Gordon Gekko | September 24, 2010 | Reply

  10. What are these people doing!! stop buying pnb!! I can’t buy into the stock if a lot of people are buying also!! arrrghhhh!!! I’d have to agree with the comment in the previous post which stated that PNB has a FV of 115… back in the day, that was PNB’s normal price, and it wasn’t properly run even back then.. So I think 66 to 100 is just conservative looking at PNB’s normal P/E level for the past ten years.

    Comment by Pinoy Na Bigbrother | September 23, 2010 | Reply

    • I hope it corrects to 35 😛

      Comment by Miguel | September 23, 2010 | Reply

    • But in real-life terms, if someone wants a good bank to deal with – Metrobank, BPI and BDO would be the first choice. Particularly in BDO’s case. They seem to be very strong in retail banking..

      Although as Gus said before, a PNB branch is located on the remotest corner of the phils, and usually sits in prime locations (in the middle of the plaza)

      Comment by jasper | September 23, 2010 | Reply

    • PNB is still climbing due to new rumors about Ramon Ang of SMB wanting to buy it thus creating rumors and demand…seems like a reply of Meralco (MVP vs. SMB raising the price)

      Comment by jerryc | September 23, 2010 | Reply

      • I heard SMB is planing to buy it for 75-85 / share. Also, CLSA Asia Pacific has placed a BUY recommendation on their report with a FV of 85 / share. I’m also skeptical on these reports and rumors. However, I still have some PNB and just letting my profits ride for the mean time.

        Comment by Gordon Gekko | September 24, 2010

  11. Ey Gus,

    I’m from Cebu and would really wish to attend your Talks when your here. How can I get to attend? do i have to register or something?
    I just want to share something, I’m new to the stock market: I started Oct. 15, 09 and today officially, 11 months and 8 days after. I have achieved 100% gain =)(i know some ppl here go more that that :D) I have been following your blog since I started and its where I learned bout PNB, AP , DMC and so many other picks. I couldn’t have achieved my goal if without the help of your Blog and the people who discuss here. For that, i say…Thank you! Enjoy Cebu Gus! eat our famous lechon while your here!

    Comment by Gordon Gekko | September 23, 2010 | Reply

  12. Dear Mr. Cosio,
    Just before I read your blog today, I was feeling dried up already with the emotional turmoil that trading brings. I try to be a momentum trader so I feel terrible when I miss out on a play because I sold too early (today it was LC and AT). Indeed , I started trading because I wanted to enjoy life and make my money work for me but it had not worked out that way ….your words are a good reminder….

    Comment by charmagne | September 23, 2010 | Reply

    • hi, honest question – what is the strategy of momentum trading? or in other words, how do you propose to make money out of it?

      I honestly don’t know alright. This is not a sarcastic question or anything..

      Comment by jasper | September 24, 2010 | Reply

  13. I just sold my PX today with 67% gain in 6 weeks time…..and bought SMC and DGTL….i think PX will Peaked @ 17-18 then move sideways….

    Comment by Green | September 23, 2010 | Reply

  14. you are an inspiration to us. thanks. you are right, not everything boils down to making money. there are some things money just can’t buy, like good friends and a wonderful family. and a blogsite like what you have here. simply priceless!!

    Comment by ed | September 23, 2010 | Reply

  15. “When we are too hyped up with stock prices, we fail to enjoy life already. In my mind, it is great to trade stocks. It is also wonderful not to worry about squeezing out every drop of profit from it. The point is to enjoy making the money and having a life as well.” Spoken like a true Capital Market Warrior. Thanks for your insight Mr. Cosio

    Comment by BJ Evangelista | September 23, 2010 | Reply

  16. hello sir gus,

    Do you agree that the true valuation of ORE is around P10? And it’s time to accumulate at these prices? Appreciate your view sir. Thank you and enjoy your stay..

    Comment by richie lim | September 23, 2010 | Reply

    • I actually valued it at 8 but when its shipment starts later this year and when they resume mining ops next year, thats when we’ll know its approx value…

      Comment by John | September 23, 2010 | Reply

    • Very nice question Richie…I was also having a same type of question since ORE corrected from a high of 3.35 to 2.95 in just a few days. It would be great to hear from Sir Gus

      Comment by Foreign Investor | September 23, 2010 | Reply

  17. Hi Sir Gus.

    Very nice blog. Do you think it’s about time you write a book about stock market investing? I can see a lot of imported books about this topic but Filipinos can relate more if the author is a local one and the focus is on the Philippine stock market.
    Co-bloggers, what do you think? More power Sir Gus!

    Comment by Tubski | September 23, 2010 | Reply

    • i agree..

      we need books for even the ordinary Filipino to learn about investing in the PSE..

      Comment by cliffhanger | September 23, 2010 | Reply

    • I agree also on this…

      Comment by jopard | September 24, 2010 | Reply

  18. I’m Taking PROFIT on PX transfer it to MPI next week…….

    Comment by Francis | September 24, 2010 | Reply

  19. Hi Sir Gus, good thing you’re taking some time to enjoy the simple luxuries in life… I was actually one of those people who were so psyched up by the stock market’s surge! thanks for your reminder, i’ll give myself a breather… 🙂

    AiDz

    P.S. i also love Merlot 😀

    Comment by AiDz | September 24, 2010 | Reply

  20. i have some digitel and mpi still holding on to it. but the biggest move im making is putting my money on pldt. is this the right time to buy tel still? wats ur target price for tel? it seems to be lagging behind, against with everything going up

    Comment by gerald | September 24, 2010 | Reply

    • Gerald,
      TEL is still cheap. It is also a very safe stock. I bought mine at 2475 a few months ago. The stock fell to as low as 2300 but I was not worried because I believe that this stock should be worth at least 2800. It pays good dividends so it is like keeping money in the bank. Even if it goes to 2800, I think I will hold it for as long as the market is bullish.

      Comment by Gus Cosio | September 27, 2010 | Reply


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