Building Wealth through Stock Market Investing

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

CitisecOnline.com who we are

CitisecOnline is a leading and fastestgrowing online stockbrokerage firm in the Philippine Stock Exchange. CitisecOnline is the largest capitalized stockbroker with over half a Billion Pesos in resources, COL is publicly listed in Philippine Stock Exchange & is also member of the Hong Kong Exchange CitisecOnline is committed to empowering the Filipino investor to achieve financial independence by providing online access, research information, and educational seminars about stock investing

WHY invest?
Investing is the most effective way to build your personal wealth and reach your financial goals!

Retirement Children/ Education Cost of Living/ Housing

WHY invest?
1

Allow money to grow faster than interest rates!

Interest Rates (91-day T-Bill)

Safeguard capital against the effects of Inflation!

Purchasing power of Php100 stashed away in 1970* (not invested)

22.00 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00

Year

1970
1980 1990

100
59.87 35.85

2000
2009
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

21.46
12.85

* Assuming a 5% annual Inflation (currently at 4%)

Investing in the Stock Market

What is the Stock Market?
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)

Companies sell part of themselves to new shareholders at future valuations to raise more money thereby funding their growth faster
The faster and more durable a company's growth the more attractive its becomes

Investing in the Stock Market

How do we make money in stocks?
You invest into a company to participate in its growth through:
Price Appreciation - the ability for a stocks price to increase in value as driven by investors demand to buy into a prospective or already growing business

Dividends - profitable companies may return some wealth back to shareholders by distributing some of its profits back to them Cash dividends Stock dividends

Stock Market Superior Track Record

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

Stock Market and Investment Funds

Mutual Funds:
Investing through a fund that pools investor money to have access to broad investments and is run by a fund manager

Direct Investment:
You invest directly into companies you like you become your fund manager You directly control your risk Good stock picking can open up gains

Risk can be spread out thru diversification

Gains may be moderated due to diversity

You must spend some time to learn / review / rebalance Poses no time concern for busy your investments picks folk / no control over fund

Stock Market and Investment Funds

PSEi Performance

YTD 1-YR 1-YR High 1-YR Low

3-YR 5-YR

33%* 35%* 47% -7%

12%* 91%*

* No cash dividends added

http://business.inquirer.net/mutualfund/mutualfund.pdf

Stock Market 101

Remember some guidelines:
Invest for the long term Pick good quality stocks

Diversification and Money Management

Use a methodology Also take advantage of technology online trading facilities can support a wider scope of research and stock information gathering

#1: Invest for the Long Term

4000

PSE index
Marcos: People Power 1986 Asian Financial Crisis

3500

3000

Edsa II Revolution
2500

Jan-85

Jan-86

Jan-87

Jan-88

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Long term investing solves the problem of volatility. Allows a company time to grow and workout faults and profit from compounded investments.

2000

Aquino: Coup De Etats

1500

1000

Global Financial Crisis

500

Ramos: Power Crisis

#2: Pick Good Quality Stocks

Look for companies that: Grow their Earnings/Income = Look for strong, lasting, and increasing profitability Are Cheap in Value = Look for good stocks whose Market Price is preferably lower than what it is expected to be worth (Fair Value)
PROFITS

Good Story = Look for companies with a buzz, great products/services or a catalyst for growth

#2: Pick Good Quality Stocks

Investment Guide

Prices and Fair Values (or price targets) are shown

Projected Earnings also shown for coverage list

Assess their dividends

#2: Pick Good Quality Stocks

Company Reports

#3: Diversify & Money Management

Investment Mix Allocate Cash

Rule 1: Spread Out Do not put all your eggs in one basket; spread out to different investment classes (i.e. different stocks/industries)

Rule 2: Be comfy with your investment size Compute 100-Age = Max % of Savings that can be invested in Stocks*
Ex. A 35 year old can invest up to 65% of savings into the Stock Market

*These are only suggested percentages based on investors capacity to take on risk; as a rule of thumb, younger investors can take more risk given that they may have a longer period to withstand volatility

#3: Diversify & Money Management

Your Portfolio Page track your cash and stock positions anytime Access your account ledger Get your Balances and Positions anytime

#4: Use a Methodology

Market Timing or Cost Averaging
Trend Trading Strategy Time market swings to provide short term entry and exit strategies

Market Timing

Peso Cost Averaging

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

Method A: Market Timing

Trend Trading is the technique of taking advantage of short to medium term swings in market action
Try COLs Java Charts!

Ayala Land Inc (2001-2009)

Aim: Identify and follow market direction

Technique: Buy into Up Trends; Sell into Down Trends thereby limiting downside risk

Method B: 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 Designed to reduce market risk by stretching out the purchase of stocks over time, buying more when prices are low and buying less when it is high, effectively keeping your average cost down

Month 1
Buy Php5,000 worth of stock ABC at market price

5 Month 2
Buy Php5,000 worth of stock ABC at market price

4
Ave Cost per Share

Month 3
Buy Php5,000 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

Peso Cost Averaging

A viable long term plan
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

Introducing COLs EIP

The COL Easy Investment Program is the latest service from CitisecOnline which makes it easier for our customers to apply the method of peso-cost-averaging.

Features
Premium Stock List have access to our research and premium growth stock recommendations EIP Portfolio have access to your EIP positions anytime and track their performance Schedule Calendar plan out your purchases over time by building a continuing calendar of orders that will prompt you through Email reminders

Trading Online: 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 at of 1% (or 0.25%)

COLs Web Features

Getting Started with COL

Open an Account Fill up application form (downloadable) Provide a photocopy of a valid govt issued ID Provide any copy of your latest billing statement*
* For non face-to-face meetings with account holders

Funding your Account

Choose account type: COL EIP - P5,000 Trading - P25,000 Deposits at our Business Center (PSE Centre Tektite Pasig) Merchant slip or Online deposits thru our partner banks: BDO BPI MetroBank

THANK YOU!
To learn more about our COL Easy Investment Program or know more about our services and free seminars Please visit our website at www.citiseconline.com Call our customer hotline: 6-333-777 (Mon-Fri 9am-5pm) Email: helpdesk@citiseconline.com