• The first week of the trading game



    The market continued to slip last week, so, half of our players in the trading game are yet to enter the market – a predictable strategy commonly followed in risk management of investment in the stock market, namely capital preservation.

    At the end of trading on Friday the benchmark Philippine Stock Exchange index (PSEi) closed at 8,372.51 points to end the week with a loss of 86.06 points or 1.02 percent. The All Shares index was down 12.55 percent for the week as it closed at 5,052.

    The sell-offs in the market’s four subsections, namely the financial, industrial, holding firms and mining-and-oil sectors were mainly responsible for the market’s pullback. They undermined the gains made in the property and services sectors, because value turnovers in these sectors were down by as much as 43.41 percent and 3.57 percent, respectively.

    The drop in the value turnovers in both sectors was not entirely bad as prices still went up. This could be a sign that supply in the property and services sectors are drying up. We may expect market prices, especially in the property sector, to soon reverse on the upside.

    During the week, too, foreign investors continued to be net sellers. Their trading activities also remained low against historical records at 41.25 percent of overall market transactions. This was possibly why total value turnover of the market dropped by 18.57 percent, too.

    To recall, the market a week earlier ended with a weekly loss of only 8.99 points or 0.11 percent. This may have prompted Small Time trader to add more stocks in his investment portfolio for execution the following Monday, March 5.

    He had no other transactions since then. Below is how he performed in the first week:

    If you will notice, Small Time Trader has a similar rate of risk exposure as Play Hard’s investment portfolio. His stock picks, however, were concentrated on first-line and second-line stocks, more often referred to in the market as “blue chips or high cap stocks.” This was why – unlike Play Hard who controlled his risk exposure to not more than 12 percent to any one stock held – Small Time Trader had as much as 24.04 percent exposure in SMPH and 14.92 percent and 13.60 percent in URC and JGS, respectively.

    He attempted to buy Double Dragon Properties Corp. (DD) for its perceived growth potential. He must not have read the recent comment of one popular analyst who declared DD will become one of the market’s big disappointments for 2018.

    Holcim Philippines, Inc (HLCM) and Max’s Group, Inc. (MAXS) were picked up for their respective potential to benefit from the government’s “Build Build Build” program and anticipated growth in individual spending that may find their way into food consumption.

    By the way, since all trading orders are submitted not later than midnight before the day of execution, the trading orders are theoretically posted before the bourse’s opening time for the day. This worked to the advantage of Small Time Trader. His bid price for SMPH at P42.20 per share was “Done” at the opening price of P35.50. The same happened to his bid for RLC and JGS. He had higher “bid prices” but they were “Done” at P19.38 and P68.00, respectively, owing to the rule that the higher price of bidders gets the priority to transact at the opening “ask price” over all other bidders with lower bid prices.

    Swing Trader attempted to make several transactions within the first week that reflected his brand of stock trading and investing strategy.

    However, there was some mix-up in the posted trading orders. After things were sorted out and after his trading orders for March 7 were cancelled, below were his final transactions in the first week:

    Notice that even in his first trading order he already used up 40.14 percent of his virtual capital to buy one stock, CEI at P0.29 per share, which he described as “consolidating at P0.285 – P0.30 level.

    It may interest you to know that at the transacted price of P0.30 apiece on March 9, Friday, CEI was reportedly trading at the adjusted price earnings ratio (P/E ratio) of 393.18X.

    Again, he heavily invested in TUGS with 42.29 percent of capital. Logistics is now-a-days the market’s flavor of the month type of stocks, so to speak.

    Said not to be among the ideal stocks to be in one’s investment portfolio, Swing Trader picked up ANI for one technical reason: It just made a “breakout;” it established a new 52-week high.

    Also, CEI, TUGS and ANI are stocks that are presently experiencing high volume and value turnover that Swing Trader wants to capture them profitably through chart reading and technical analysis.

    Well,Swing Trader is apparently “trading for a living while trying to trade for financial freedom at the same time.” His hunt through speculative stocks plays is one such way. Whether this is a wise move or not, let’s watch his game in the coming days.

    Dud67 finally decided to enter the market before the week ended on Thursday, March 8. He submitted a trading “Buy Order” for NOW Corporation (NOW) equivalent to 61.52 percent of his virtual capital.

    NOW is “a telecommunications, media, and technology” company also rumored as a strong contender for the third telco company the present administration wanted to put up in order to break up the duopoly that is blamed for the poor internet service the country is experiencing, among other things.


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