Who says you can’t make money in times of crisis?

Our country has reached a new milestone last Friday when the Philippines Stock Exchange Index (PSEI) closed at 5,016 points. This morning it climbed further to 5,030 points while thousands of miles away from our country, the Dow Jones Industrial Average in US shed 61.72 points and the S&P 500 index declined 6.36 points. What do these correlations tell us is that institutional and retail investors are convinced that better return on their investments await them in the Philippines.

Note that PSEI’s ascension happened in the midst of the Greek crisis which as per recent report the country will eventually succumbed to default, China downgrading their GDP forecast and the crisis in the Middle East.

The strength of our local bourse despite these crises should encourage local investors and especially, would be investors to put a portion of their money in the equities market to take advantage of the great fundamentals of many local companies.

As advised by Philequity (one of the leading investment companies in the Philippines),” STAY THE COURSE.”

“In the same way that you should invest in companies with good business and fundamentals, you should also invest in the Philippines where fundamentals are strong. If you stay with those whose fundamentals are intact, you will not be shaken out. And because companies grow and countries grow, those whose fundamentals are intact will not be derailed. Growth should be achievable in due time even in the face of so much external risks. So stay invested. Stay long and be long Philippines stocks.”

In US, Singapore, Japan and India, more than 50% of their population invests in the stock market. In our country, guess what? It is less than 1%, a meager 500,000 out of 100 million people. This is the reason why I personally believe that the 5,000 point target that was breached last week is still on the very low end. What we are seeing is just the tip of the iceberg. I wouldn’t be surprised if our index hit the 10,000 mark and this could happen in no time.

I would like to end this blog by showing you the performance of one of my favorite companies in 2011. Last year was so volatile where our market gyrated up and down for many times eg. Great rotation, Middle East crisis, Japan earthquake/tsunami/nuclear scare, Eurozone crisis, US credit rating downgrade and currently, tension at the Strait of Hormuz between US and Iran, but because of its strong fundamentals, it emerged as a winner.

Case study: Investing 10,000 pesos every month buying Ayala Land shares in 2011

 

Date	Opening price	Investment	Number of shares	Remarks
3-Jan-11	16.44	10,000	608	Middle East crisis
1-Feb-11	14.70	10,000	680	Great rotation (global stocks declined 15%)
1-Mar-11	14.36	10,000	696	Japan earthquake
1-Apr-11	15.50	10,000	645
2-May-11	16.42	10,000	609
1-Jun-11	15.46	10,000	647
1-Jul-11	15.64	10,000	639
1-Aug-11	16.80	10,000	595	US credit rating downgrade
1-Sep-11	16.00	10,000	625
3-Oct-11	14.54	10,000	688
2-Nov-11	16.00	10,000	625
1-Dec-11	16.00	10,000	625

Results:

Total amount invested = 120,000 PhP

Total number of shares bought = 7,683

Closing price of Ayala Land as of March 5, 2012 = 22.10 PhP/share

Investment value as of March 5, 2012 = 169,801 PhP

Profit = 49,801 PhP

% Return on Investment = 41.50%

The above is a proof that one can profit investing in a solid company even when there is a crisis.

Happy investing!

Anselm Reyes

PS. For financial and investment advice, you may email me at anselmreyes@yahoo.com.