Investing in Dollars

I'm just going to share what I did this January: As the stock and bond market are going sideways, I bought Dollars and put it in BDO Dollar money market fund. I do not encourage just following what I did, please do your research too until you are convinced with the risk you are taking.

Why did I invest in USD?
I am betting that the U.S. Dollar will appreciate in the next 2-3 years.

How can I say that the Dollar will appreciate?
- U.S. economy is starting to pick-up.
- Hot money in the Philippines is flowing out.
- BSP's low interest rate is not attractive to foreign investors.
- U.S. Gov't starts tapering its Quantitative Easing policy which means less USD will flow to emerging markets.

The above reasons do not guarantee that the Peso will continue to depreciate. There are many factors affecting forex and many strategies that BSP can employ to reverse the process of Peso depreciation; one of which is increasing the interest rate, in which in my opinion it will happen soon, probably this year. There's already a pressure to increase the interest rate because a lot of $ is flowing out of the country in the recent months.

I bought the Dollar then placed it in BDO's Dollar money market fund. Money market is a low risk type of fund thus the return is minimal, earning around ~1.5% in one year. Still, this is better than just putting it in a savings deposit.

Even if my bet is wrong, I'll just treat it as part of my savings. Unlike stocks, betting in a foreign currency is usually not as volatile.

Another All-Time High for PSE, passing beyond the 5,800 mark

In my previous post, I said that a healthy correction happened yesterday. A correction or retracement or reversal describes when the market goes down after it has gone up for a period of time.  It seems like a good retracement indeed, the Philippine Stock Market index today breached the 5,800 mark.

Even foreign investors are putting money in the Philippines except for Nomura. Though he's right in saying that the stock prices are becoming expensive, I believe the options are not yet exhausted though. There are still undervalued blue chips in the market. Probably a good time to invest in these because investors are now eyeing them.

For the month of December, my fearless forecast is it will continue to go up probably up to 5900+ by end of the year. Though I find it worrisome that the stock market is rising up too fast. Come January, we may see some large corrections until the market can breathe again.

PSE reaches a new all-time high

For the first time, the Philippine stock market advanced beyond 5600 points. Exciting times! I wonder how long will this growth be sustained. Still need to be vigilant on the looming US fiscal cliff issue and EU's never-ending financial problem.

Seems our economy is booming. Philippine economy grew by 7.1%, beyond the 5.5% expectation and GDP is up 6.5%, already beyond the government's target of 5-6% by year-end. The Philippines was recently  included in the Newly Industrialized Country (NIC) category, which is a term for a country that is beyond a developing one but does not yet satisfy the signs of a developed country; it's like a 2nd-world country lol. So far, inflation is under control at 3.1% last October. These are good signs; more reasons to invest and believe in our country!

I'm happy today because two of my stocks are on the positive side: Manila Water (MWC) and SM Prime Holdings (SMPH). The golden question is when should I sell to realize my profit?

Getting started with Stocks Trading (Philippine Market)

My trading account in First Metro has been approved! I can start trading as soon as I fund my account. It requires a minimum of P25,000 to start a First Metro account. If you want to know if investing in stocks is for you, then read on. But before anything else, be sure you're ready to start investing in any kind; you may want to read the "before getting started" entry if you haven't done so.

In my previous post, I talked about Mutual Funds where your money belongs to a bigger collection of fund managed by an expert. Now, if for some reason you feel like you can beat the best fund manager out there, AND you have the TIME to do it then this is for you. You really need to have time to do this, and preferably a reliable internet connection during trading hours (more on this later). It is strongly suggested that you attend seminars before you jump into trading stocks. As for me, I'll take my chances and jump into it right away. Experience is the best teacher anyway; I want to experience it first-hand. I'll also seek guidance from my finance mentor.

Only put money that you are willing to lose, especially when you're just starting (like me).  You need to be financially and emotionally prepared to lose big or in worst case lose it all, and I mean from P25,000 to P0. It is said that trading stocks is like gambling, but it is only gambling to people who don't do research or consume knowledge. As always, you can mitigate risks when you equip yourself with knowledge. On the bright side, the risk is high because the potential to gain is also high.

Let's first define what is a stock. From Investopedia, a stock is a type of security that signifies ownership in a corporation and represents a claim on part of  the corporation's assets and earnings. So in a basic sense, you're buying a part of the company and you become "part owner" of that company. "Part owner" is in quotes because it takes a lot of money to have a major role in a company that you bought stocks from.