IN PERSPECTIVE
December 30, 2007
Philippine Stock Market: How To
Each time I log on to my YM, I always get a couple of invitations from random people. Most of them ask about the stock market. It's a bit strange since I haven't actively been updating my site. It turns out I still get top billing when searching Google for "investing in the Philippine stock market". Fair enough. I'll be the nice guy and I'll put this information out. I'm fairly sure some other site has this, but hey.
I will start with the assumption that you've all seen some stock market movie or television show. If this piqued your interest, then you probably want to get rich quick. That won't happen unless you're Erap and you were offered BW shares when it was still called GRC resources. Nonetheless, prudent investing can provide you with good returns over a long period of time.
If you're checking this out, I'm assuming you're fairly young and that this will be your first investing venture. Let me give you an unsolicited tip. If you buy something, be prepared to hold it for years and years. You'll probably say yes, but you won't follow me. Why? There is something very addictive about checking stock prices, reading the stock market news and frantically calling your broker to buy or sell. It is. I promise. It's fun and it's cool to tell your friends that you're buying and selling, but it's probably not a very profitable way to go about this. Trust me on that.
Honestly, I don't think it's the best time to buy. Let me warn you that I haven't been reading the news all that much, but I do know the economy's still riding on some pretty good times. And if you're excited to invest, then it's really not the time. When you're scared about tomorrow and you see bankruptcy news and some really enticing interest rates, that's the best time. If there seems to be a mass exodus of folks to the US or Canada, that's the time. It sounds simple enough, but it's harder to execute than you think. When we were right smack in the middle of the Asian financial crisis in 1998, it didn't seem clear when the economy was going to bottom. So please give that some thought.
With the proper mindset in place, the rest is mostly administrative. Go to a broker. Most of them are just in Ayala Tower. You may also check the PSE website and find the list of member brokers. Go call them up and tell them you want to open an account. It's just like opening a savings account in the bank. Bring IDs and probably the money you want to invest. It's not hard at all. The difficult part is finding the right broker for you. I'd say go the referral route. Find a friend who has a broker. Is broker selection important? Of course it is. You'll have a fiduciary relationship with this person. Trust is important. I wish I could recommend one but I've been out of the market for a while now.
With the account in place, all you have to do is call your broker if you want to buy or sell something. If you need more details than that (like how to pick stocks) or how to ignore the bullshit stock market reports you read on the papers, let me know.
BTW, it's usually faster if you contact me through my blog.
Sunday, December 30, 2007
The Wal-Mart-SM-China Connection
I've been on a book spree as of late. Apart from the fantasy types that I read, I've been enamored with corporate stories too. I've read the corporate biographies of Netscape, Google, Amazon, a little Microsoft (it bored me)and I've also finished books about Warren Buffet and Steven Jobs.
The last one I finished was about Wal-Mart called "The Wal-Mart Effect". Since I'm not American, I wasn't aware of how dominant the company was. I just know it's one of the major retailers in the US because of an old, old stock market game I used to play. Apart from that, I couldn't differentiate it from K-Mart or Target. My old MBA teacher used to say that companies position either by cost or by differentiation. Wal-Mart used the former.
And boy did it do so well.
I knew for a fact that the manufacturing trend was towards outsourcing (like in China) and that normal business dynamics were at work (namely competition). What I didn't realize and found very enlightening from the book was that retailers can have the power to force outsourcing. How?
Well, Wal-Mart is so "dedicated" to its "everyday low prices" creed that it forces its suppliers to lower prices every year. I have to admit, that's the first time I've heard of a corporate-induced deflation. How is it forced? If the suppliers to accede to the "request", Wal-Mart walks away not just from the product, but from the supplier. For example, if P&G doesn't want to lower the price of Tide (no I didn't check if they actually manufactured that), Wal-Mart will stop doing business with P&G, not just with the product line. If you can imagine that there's like a Wal-Mart every 15 KMs (or something) for about 70% of the US population, that tells you the extent of the company's distribution system. If Wal-Mart turns its back on you, that's a disaster. However, if you keep doing business with the company, it will erode your profit margin until there's nothing left. Spell dilemma baby.
To be fair though, Wal-Mart is reportedly not just ruthless with suppliers; it is with its employees as well. The book said that there's a class suit against the company by its former employees because the company used to lock them up inside the stores so they couldn't go anywhere. Furthermore, employees were routinely asked to log out and keep working (there's nothing cheaper than free labor).
For some weird reason, these descriptions reminded me of SM. I could be wrong, but hey.
The book also made me think about the commercial that says, "When the buying stops, the killing does too" which is a reference to buying products from near-extinct animals. As a consumer, it really is hard. We all know that there's child labor out there and that factories in other countries don't really factor in externalities in the price. And yet, when you go to a store, how can you say no to the cheaper goods (of equal quality)? For example, in our country, how can you weigh the morality of the act of buying? Do you patronize the inhumane conditions in other country or do you let your family starve? I sure don't want to make that call.
But that's theory. The fact remains that Wal-Marts are sprouting like mushrooms in the US. That means that every day, consumers are voting with their wallets, giving Wal-Mart the thumbs up. Like I said, it's hard to blame them.
I'm guessing this is one of those things that are best left to governments. I don't really want to discuss that now so I'll end this post here.
I've been on a book spree as of late. Apart from the fantasy types that I read, I've been enamored with corporate stories too. I've read the corporate biographies of Netscape, Google, Amazon, a little Microsoft (it bored me)and I've also finished books about Warren Buffet and Steven Jobs.
The last one I finished was about Wal-Mart called "The Wal-Mart Effect". Since I'm not American, I wasn't aware of how dominant the company was. I just know it's one of the major retailers in the US because of an old, old stock market game I used to play. Apart from that, I couldn't differentiate it from K-Mart or Target. My old MBA teacher used to say that companies position either by cost or by differentiation. Wal-Mart used the former.
And boy did it do so well.
I knew for a fact that the manufacturing trend was towards outsourcing (like in China) and that normal business dynamics were at work (namely competition). What I didn't realize and found very enlightening from the book was that retailers can have the power to force outsourcing. How?
Well, Wal-Mart is so "dedicated" to its "everyday low prices" creed that it forces its suppliers to lower prices every year. I have to admit, that's the first time I've heard of a corporate-induced deflation. How is it forced? If the suppliers to accede to the "request", Wal-Mart walks away not just from the product, but from the supplier. For example, if P&G doesn't want to lower the price of Tide (no I didn't check if they actually manufactured that), Wal-Mart will stop doing business with P&G, not just with the product line. If you can imagine that there's like a Wal-Mart every 15 KMs (or something) for about 70% of the US population, that tells you the extent of the company's distribution system. If Wal-Mart turns its back on you, that's a disaster. However, if you keep doing business with the company, it will erode your profit margin until there's nothing left. Spell dilemma baby.
To be fair though, Wal-Mart is reportedly not just ruthless with suppliers; it is with its employees as well. The book said that there's a class suit against the company by its former employees because the company used to lock them up inside the stores so they couldn't go anywhere. Furthermore, employees were routinely asked to log out and keep working (there's nothing cheaper than free labor).
For some weird reason, these descriptions reminded me of SM. I could be wrong, but hey.
The book also made me think about the commercial that says, "When the buying stops, the killing does too" which is a reference to buying products from near-extinct animals. As a consumer, it really is hard. We all know that there's child labor out there and that factories in other countries don't really factor in externalities in the price. And yet, when you go to a store, how can you say no to the cheaper goods (of equal quality)? For example, in our country, how can you weigh the morality of the act of buying? Do you patronize the inhumane conditions in other country or do you let your family starve? I sure don't want to make that call.
But that's theory. The fact remains that Wal-Marts are sprouting like mushrooms in the US. That means that every day, consumers are voting with their wallets, giving Wal-Mart the thumbs up. Like I said, it's hard to blame them.
I'm guessing this is one of those things that are best left to governments. I don't really want to discuss that now so I'll end this post here.
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