Presents Investing in the Stock Market Today

Presented by: Juan G. Barredo Vice President CitisecOnline.com Inc.

Introduction
Outline COL: About us
Established in 1999, CitisecOnline (COL) is the leading innovator in online stock trading in the Philippines Management team is composed of professionals in the financial and IT industries Driven by our core competency in research, investor education and technology Capitalized at over half a Billion Pesos and a Member of PSE & HKE COL publicly listed in the PSE in 06

Wealth Building through Stock Market Investment How to Pick Good Stocks
Fundamental Analysis

Methods of Investing
Peso Cost Averaging Technical Analysis

Getting Started with Online Trading

Part One
Wealth Building through Stock Market Investment

I need to secure my future!

I start working for money to build my nest egg However my goal is for money to one day work for me

Retirement
Children/ Education Dream House

Why Invest?
Savings
Is the gradual acquisition and safekeeping of wealth Rewards: Low Risk: Very Low (only Inflation)
Interest Rates (91-day T-Bill) 22.00 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Investments
Provides the avenue for wealth to grow more meaningfully Rewards: High Risks: Low to Very High

The Stock Market

What is it?

The stock market is the place where you can invest in other peoples publicly listed companies. A company sells shares of stock through an Initial Public Offering (IPO) to raise capital to grow their business You invest into a company to participate in its growth through: a) Price Appreciation b)Dividends

What Stock Markets Offer

Capital Appreciation the ability for a stocks price to increase in value as driven by business prospects Dividends company returns wealth back to shareholders (distributes some profits either through cash or added shares)
Cash Dividend
Money given back to the investor as his share of distributed profits Ex. A Cash div of 20/share: if I had 1000 shares, I would get P200. Stock price will adjust by dividend value This is taxed at 10%

Stock Dividend
Additional shares given to the shareholder Ex. Stock div of 20%: if I had 1000 shares, I would get an 200 additional shares Share price will adjust down by: price / 1.2 Choice to cash in is yours

Dividend Dates
Ex-Date the cut off point for dividend entitlement is a day before this date (you must be a shareholder as of the day previous to this date) Date Payable the day when the dividend is given to shareholder (usually a month after the Ex-date)

What Stock Markets Offer

History has proven that investing in quality stocks can provide greater returns than most instruments; giving a good run over inflation

Part Two
How to Pick Good Stocks

Task # 1: Know Prices

Actual Value
the real value to which a stock can be said to be worth, it is commonly stated as Fair Value or Target Price studied through Fundamental Analysis

Market Value
that value determined by market forces (demand and supply), and is also commonly known as the Market Price reviewed through Technical Analysis
Ticker Tape

Task # 2: Know some Fundamentals

Fundamental Analysis Is a technique that attempts to determine a securitys value by focusing on underlying factors that affect a companys actual business and its future prospects. We buy quality stocks today for what we believe it will be worth tomorrow!

Remember: What you dont know you dont touch!

Task # 3: Do a Top Down Review

Is the Economy growing?

A technique that attempts to determine a companys value by focusing on underlying factors that affect its business, earnings and prospects
What Industry seems attractive?

Are there enough investments and potential moving in on these sectors? Money must be moving in, not out
What are the best Stocks in that industry ?

Pick out the top performing stocks in terms of valuation, earnings growth, prospects and market participation

Task # 3: Do a Top Down Review

Economic View
2005 GDP T-Bills (IRates) Inflation Forex (P-$) 5.10% 6.4% 6.9% 53.06 2006 5.50% 4.89% 5.0% 49.13 2007 7.10% 3.4% 2.8% 41.40 2008 3.80% 5.40% 9.3% 47.50 2009 0.9% 4.2% 3.4% 46.40

Industry View
Turnaround Earnings and performance stabilizes Growth Profits and business opportunity rise attractively Maturing Profits and business opportunity slow or are capped Consolidating Profits and business opportunity deteriorate or lose

Invest Here

Task # 3: Do a Top Down Review

Industry : Property Industry : Banks
Banks Non-Performing Loans % (NPL)

20 15 10 5 0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Task # 4: Know a Companys Prospects

Company Analysis

Look for companies that show: The Ability to Grow Earnings = Look for strong or increasing profitability; watch earnings per share (EPS= income / # of shares)
Good or Cheap Valuations = Look for good stocks whose Market Value is notably lower or discounted to its Actual (Fair) Value Good Story = Look for new buzz, solid products/services or catalysts for growth

PROFITS

Task # 5: Choose the Best

Company Analysis

Stock ABC P5.25

2005 Recurring Earnings (Bil) (Growth) EPS 3.00 7% 0.28 2006 3.45 15% 0.32 2007 4.24 23% 0.39

Stock XYZ P1.16

2005 1.15 43% 0.11 2006 1.60 39% 0.124* 2007 1.84 15% 0.125*

(EPS Growth)

21%

14%

22%

22.2%

13%

0.5%

Proj. Fair Value 07

* Sold new shares (dilution)

P16.50 (214%)

P2.10 (81%)

Task # 5: Choose the Best

Company Analysis
8.54 (37%)

A B C
5.25

6.23 (19%)

SUMMARY Positive impact to price: 1. Growth in Income/Value 2. Prospective Story for business expansion 3. Potential Buyout 4. Worthy Dividends
Negative impact to price: 1. Slowing Growth or a loss 2. No Story, no dividends, no nothing 3. Too much debt 4. Inefficiency / poor relative performance

X Y Z

1.27 (9.0%)

1.53 (20%)

1.16

Part Three
Methods of Investing

How to Invest in Stocks

Popular Techniques

Peso Cost Averaging

A Gradual Buy and Hold Strategy Make steady and fixed Peso investments through time on good companies

Market Timing

Trading through Technical Analysis Time market swings to provide short term entry and exit strategies

Method #1: Cost Averaging

What is Peso Cost Averaging?

Peso Cost Averaging is a personal wealth-building strategy that involves investing a fixed amount of money at regular intervals over a long period
Buying stocks over time reduces volatility risk in the market Invest what you can at your own pace

Method #1: Cost Averaging

How it works

Month 1 Buy P5,000 worth of stock ABC at market price Month 2 Buy P5,000 worth of stock ABC at market price

Buy fewer shares when prices are higher

6
P5,000 will buy less shares here

Month 3 Buy P5,000 worth of stock ABC at market price

P5,000 will buy more shares here Ave Cost Buy more shares when prices are lower

Method #1: Cost Averaging

How it works

Month 1 Buy P5,000 worth of stock ABC at market price Month 2 Buy P5,000 worth of stock ABC at market price

4
Ave Cost per Share

Month 3 Buy P5,000 worth of stock ABC at market price

3
1 2 3

You get buy more shares when prices are low, less when prices are high!

5 6 Month

Method #1: Cost Averaging

Peso Cost Averaging down the road
Stock/ Indicator Effective Annual Yield Time Frame

Retire with an Extra 10 Million! Invest Monthly # Years Php5,000 21 16.9% 1,260,000

TEL BPI AC JFC Inflation

18.88% 16.92% 11.16% 10.7% 5.7%

18 yrs 18 yrs 18 yrs 14 yrs 18 yrs

Return Rate Total Investment (P) Will result in a Future Value (P) Investment Gain

Php10M+ 740%

Share price history from 1990 to 2007

Method #2: Market Timing

Technical Analysis Technical Analysis is the study of market action (or market price) by reviewing price charts for the purpose of forecasting future price trends. Aim: Watch and Follow market direction Technique: Buy into Up Trends; Sell into Down Trends thereby limiting risk

Price Action

Study Charts

Spot Trends

Method #2: Market Timing

How to Read Graphs and Trends?
Ayala Land Inc (1990-2008)

Stock: A 3 Trends:

Up Trends higher lows and higher highs tracked by an up trendline Down Trends lower highs and lower lows tracked by a down trendline Consolidations sideways shifts

Method #2: Market Timing

Markets swing in Cycles: BULL and BEAR

Part Four
Getting Started with Online Trading

In the Palm of your Hands

Getting Started CitisecOnline provides:
Direct execution and Off Hours Order Placement Live quotes and market statistics Live portfolio monitoring Research studies and Seminars Charting tools 24/7 online service Customer Service Best commission rates

In the Palm of your Hands

Research COL EIP
Investing made easy For the Busybody, No need to time markets Allow us to help pick good stocks Take advantage of technology
ALI, TEL, SMPH, BPI, JFC, MWC

Open an Account
Fill up application form Provide 1- valid copy of a Govt issued ID Provide copy of billing statement (for nonpersonal appearance) Fund account: COL EIP - P5,000 Trading - P25,000

Summary
What have we Learned?

1. The Building of Wealth 2. The Stock Market Option 3. Understanding Price 4. Choose Fundamentally Good Stocks 5. Cost Averaging or Time Markets through Technical Analysis 6. Power up with Online Trading

Knowledge born from actual experience is the answer to why one profits; lack of it is the reason one loses

- Gerald M. Loeb

Thank you and have great day!

To learn more about our COL Easy Investment Program or know more about our services and seminars please visit our website at www.citiseconline.com For inquiries: call our customer hotline at 6-333-777 or email us at helpdesk@citiseconline.com