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Tonight, we’ll launch the improved version of our Investment Guide for Long-term Investors.
Here’s how it works.
We will provide coverage for all the 30 index stocks of the Philippine Stock Exchange.
- AC – Ayala Corporation
- AEV – Aboitiz Equity Ventures, Inc.
- AGI – Alliance Global Group, Inc.
- ALI – Ayala Land, Inc.
- AP – Aboitiz Power Corp.
- BDO – BDO Unibank, Inc.
- BLOOM – Bloomberry Resors Corporation
- BPI – Bank of the Philippine Islands
- DMC – DMCI Holdings, Inc.
- FGEN – First Gen Corporation
- GLO – Globe Telecom, Inc.
- GTCAP – GT Capital Holdings, Inc.
- ICT – International Container Terminal Services, Inc.
- JFC – Jollibee Foods Corporation
- JGS – JG Summit Holdings, Inc.
- LTG – LT Group, Inc.
- MBT – Metropolitan Bank & Trust Company
- MEG – Megaworld Corporation
- MER – Manila Electric Company
- MPI – Metro Pacific Investments Corporation
- PGOLD – Puregold Price Club, Inc.
- RLC – Robinsons Land Corporation
- RRHI – Robinsons Retail Holdings, Inc.
- SCC – Semirara Mining and Power Corporation
- SECB – Security Bank Corporation
- SM – SM Investments Corporation
- SMC -San Miguel Corporation
- SMPH – SM Prime Holdings, Inc.
- TEL – PLDT Inc.
- URC – Universal Robina Corporation
Why did we choose to expand our coverage from a few select stocks to 30 index stocks?
Long-term investing is a passive method of growing your money. Most financial advisors will tell you to invest in mutual funds or in an equity index fund.
Firstly, some of our clients like that investment strategy. However, they want to have the power to remove a particular stock from the basket for whatever reason they deem necessary.
In short, most of our clients are looking for a stock-picking strategy without going out of the PSE Index universe.
I understand the point. For one, I am an advocate of green renewable energy. I am not going to buy shares of a company whose business is hazardous to the environment no matter how bullish the trend of the stock is. I have better ways of earning money than buying shares of a company that disrespects what I stand for.
Secondly, principles are not the only reasons why we’ve expanded our coverage. Perhaps, many long-term investors have now started to notice that the Philippine stock market is driven by technicals more than fundamentals.
The Philippine stock market is still very vulnerable to market sentiments driven by news and technicals. While technical corrections cannot change the fundamentals of a company overnight, this reasoning is ideally suited in more liquid markets such as the US Exchanges. Did you know that our entire market’s daily total turnover value is not even one fourths of the daily total turnover of one stock listed in NASDAQ?
It’s high time for the long-term Filipino investor to have an adaptive strategy that fits the ecosystem of the market where he invests. Ironic as it may seem, my Chartered Financial Analyst (CFA) friends and colleagues agree with my sentiment on this matter.
Does this mean we’re not going to factor in the fundamental analysis of the 30 stocks in our ratings?
For now, we’ll do pure technical analysis. Should we decide to add extra columns for the fundamental analysis in the future, that could just be an extra flavoring or an icing on the cake.
Price action is an advanced indicator of how the market perceives a financial statement, a company disclosure, or a rebalancing that is yet to be announced publicly.
You don’t believe me? If you’re a keen observer, you know that MSCI stocks with scheduled weight adjustments for the rebalancing react negatively or positively days before the official rebalancing. Institutions and individuals who have access to that information react earlier than most.
In technical analysis, what you currently see is a glimpse of the future. Now that’s tweet-able! Don’t forget to tag me. 🙂
Is there a way to invest better than just following the peso-cost averaging method?
Short answer: YES
Now, get ready for the long answer. 🙂
The peso-cost averaging strategy is the act of buying shares of stocks at regular intervals at any price for a long period of time.
You were told to follow the Buy Below Price system, weren’t you? It’s the brother of the peso-cost averaging method.
The Buy Below Price system suggests that it’s okay to keep on buying the stock at any price below the Buy Below Price.
You were told to apply the peso-cost averaging method and the Buy Below Price system by buying the biggest companies. Usually, these are the 30 stocks that compose the Philippine Stock Exchange Index (PSEi).
It sounds more practical and less risky compared to lump sum investing, isn’t it?
The peso-cost averaging method and Buy Below Price system are good.
Humble bragging: we can do better than that.
We suggest that you continue buying regularly, but you should STOP BUYING AT ANY PRICE BELOW THE BUY BELOW PRICE.
That was intense. Sorry for the all caps. We’re not shouting. We are just so passionate about encouraging our clients to forget the phrase “any price” because buying or selling at “specific prices” will make you earn more than those who buy or sell at “any price.”
There’s a problem with the “buy at any price below the Buy Below Price” advice.
It does not tell you exactly where below the Buy Below Price it is more logical and strategic to buy.
Let’s say the Buy Below Price of Stock XYZ is P100.00. The prevailing price is P79.00. The intraday high is P79.50 while the intraday low is P77.00.
A Buy Below Price follower is taught that it’s okay to buy at any price below the Buy Below Price. So, there’s a high tendency for the Buy Below Price follower to buy at P79.00 per share since that’s the price he immediately sees in the Ask spread. Anyway, P79.00 is below the Buy Below Price of P100.00, isn’t it?
Meanwhile, Equilyst Analytics can do better than that. We will position our buying price within the range that got the biggest volume and the highest number of trades. If the range that got the biggest volume and the highest number of trades is between 78.50 and 78.70, then we will patiently wait for the price to go down and proactively position within that range.
What’s the big deal in knowing the range that got the biggest volume and the number highest number of trades?
Psychology and data science are important, related, and relevant when it comes to investing. Here are some analogies.
What’s the top-of-mind place for anchovies (bagoong) or salted and dried fish (daing)? Pangasinan.
What’s the top-of-mind place for Christmas lanterns? Pampanga.
What’s the top-of-mind place for fireworks? Bulacan.
What’s the common characteristic of the stores of these various products in their respective areas?
They put up their stores in a cluster – almost always close to each other. Therefore, their cluster attracts more customers than similar solo-flight stores from a few miles away.
This is known as the Nash Equilibrium.
In the same way, the in demand price points in trading gather in clusters, too. Big players look for the clusters that got the biggest volume and the highest number of trades.
We do price-volume distribution analysis. Don’t worry about it. We’ll do the hard work. We’ll just serve it on your table.
We say this respectfully: your pocket may not be as deep as the big players’ but that doesn’t mean you cannot be as logical and strategic as they are.
PRO Tip: Be careful. Some “financial teachers” have re-branded the term Peso-Cost Averaging strategy to drive people’s attention away from the fact that their stock recommendations come from their partner brokers. They are using the same old Buy Below Price system. Worst is their stock recommendations are also found on their partner broker’s platform for free. Ouch! (for paying something that’s already free)
Do you now understand why you should start telling everyone you know that you’ve found something better than the Buy Below Price strategy?
Let me be more specific. Here’s exactly how it is done.
1. We will monitor the 30 biggest companies listed in the Philippine Stock Exchange Index (PSEi).
These are the index stocks. We will put them in a table. You will find six columns.
- Stock Code/Company Name – Each stock code is linked to its dedicated thread in our Private Clients Forum. You will be redirected to our Private Clients Forum when you click the stock code. The Private Clients Forum is a discussion board exclusive for our clients.
- Sector – We include the sector so you will know if you’re already overweight in a particular sector. Diversification is key.
- Rating – You will see in this column if we have a Buy, Hold, or Sell sentiment on the stock based on our technical analysis. If we have no rating for the stock, you will read No Rating. No Rating means we do not recommend entering a new position on the stock just yet.
- Support – This is the strong support that we see on the monthly chart.
- Resistance – This is the strong historical resistance that we see on the monthly chart. Sometimes, it’s a psychological and not a historical resistance when the price is already in its all-time high level.
- Year-to-Date (YTD) Change – A positive percentage means the stock’s price has rise from its closing price last year. Meanwhile, a negative percentage means the stock’s price has plummeted.
2. We will update the model portfolio several times in a day.
This is to make sure that you see updated numbers and analysis every time you log in to check or to top up on your portfolio. Try to check the investment guide of your broker and see if it’s updated multiple times in a day. Some brokers update their investment investments once a week. Only here at Equilyst Analytics will you find an investment guide or a model portfolio that is updated multiple times in a day.
3. We will publish a technical analysis update in a video format every Saturday.
You might ask, “Why bother giving us a weekly update when you’re already updating the investment guide table several times a day?”
Please allow us to over-deliver.
Studies show that 65 percent of the world’s population are visual learners. Scientists found out that you will only remember 10 percent of the information from spoken and written lecture but 65 percent when you saw and heard it from a video three days later. We choose the format that is favorable to you.
We could have just delivered our analysis for the 30 stocks in a written format. That’s less tedious compared to putting up a video. It takes 3 to 4 hours just to produce a 1-hour video of technical analysis for 10 stocks (mind you, there are 30 stocks in our investment guide). That includes preparation, editing, and presentation. Here at Equilyst Analytics, our comfort is not our first priority. We always ask ourselves, “What can we do so that our clients will get more than what they have paid for?”
Besides, don’t you like it when you see what our analyst sees while he or she explains?
Here are some of the things that you will hear from us in the weekly video.
- Range with the Biggest Volume and the Highest Number of Trades – We want to show you the range that got the biggest volume and the highest number of trades. The theory is that if a certain price or range of prices got the majority of the volume or trades, it’s more likely that it will be frequently traded all throughout the trading day or by the next trading day.
- Volume Weighted Average Price (VWAP) – The classical belief tells investors that it’s good to position a buying price below or near the VWAP. Also, it’s a common practice of mutual fund managers and institutional brokers to buy below or near the VWAP. We are retail investors. Maybe you’re asking why we should follow the practice of these deep-pocketed investors. It’s because they are the market movers. This is one of their best practices that is worth mirroring. VWAP is the quotient of the total turnover value and total volume.
4. In our weekly technical analysis video, you will know if the direction of the price of the stock is more likely to continue or not based on the current price action and the position of the prevailing volume respective to the stock’s 10-day volume average.
One of the frequently asked questions of our clients is, “Will this stock continue its direction or it’ll bounce away from its prevailing direction by the next trading day?”
Often, the stocks they’re referring to are the stocks that made it in the top gainers and top losers.
Equilyst Analytics is known for being proactive. Since we noticed that you regularly ask that question, we decided to give the answer even before you pop the question.
5. In our weekly technical analysis video, you will see which support and resistance levels you should monitor.
You will know how likely it is for the support or resistance level to be broken down or out, respectively, based on the prevailing price action and volume.
Knowing how to plot the support and resistance levels of a stock is one thing. You can learn it one week if you’re a passionate learner. However, knowing how to interpret and read the psychology of traders, in relation to the historical and psychological support and resistance levels, is a skill that is acquired only through experience.
It is relatively easy to draw two horizontal lines and say, “This is the support. That one is the resistance.” But only the experienced traders can tell the possible catalysts and the percentage of chance that can make the price break down or out from a certain support or resistance level, respectively. We are here to do that for you.
6. In our weekly technical analysis video, you will know if the foreign investors are aggressively buying or selling the stock.
It is important to know this because Net Foreign Trade can be used to confirm the initial sentiment of the analyst. For example, let’s say the stock’s price went down by 1 percent. The foreign investors bought P300 million worth of shares. You can take that as a clue that the foreign investors think that the price is already too cheap to ignore.
After all, the Philippine stock market is still significantly driven and influenced by the actions of the foreign investors. Does it make sense now why you should also consider the Net Foreign Trade when you form an action plan for your trades?
7. In our weekly technical analysis video, you will know if the stock has a low, moderate, high, or extremely high risk level.
It is important for you to align your risk appetite with the risk level of the stocks you are eyeing.
We have our studies on how to measure the risk level of a stock using historical volatility.
We say that newbie traders should start with low- to moderate-risk stocks. The experienced ones may try high- to extremely high-risk stocks.
On the other hand, it’s not advisable to immediately buy a stock just because it has a low risk level. In the same way, it’s not advisable to ignore a stock just because it has an extremely high-risk level.
We know how to mix and match what we see in our analysis so we can give you our overall sentiment and trade setup regardless of the risk level of a stock.
8. In our weekly technical analysis video, you will know if we see a confirmed buying signal brought about by our interpretation of the stock’s volume, 10-day Simple Moving Average (SMA), and Moving Average Convergence Divergence (MACD).
We call this as the “Evergreen Strategy to Spot Buying Signals.”
Jaycee De Guzman, our founder and chief executive officer, is the author of the Evergreen Strategy to Spot Buying Signals. He is regularly invited to speak about this strategy in conferences and seminars.
One sure-fire way to lose money in the stock market is by entering a new position without any basis. You don’t buy at a certain price just because you want to buy. You should only buy at a certain price or range if you have a data-driven reason that explains that action.
This is not about catching the absolute, literal, or perfect bottom price of the stock. We are not dreaming to do the impossible. Our evergreen strategy to spot buying signals is used to reduce the risk and to maximize potential gains.
9. With our investment guide, you have complete control of your portfolio.
You’re still investing in the top companies in the Philippines but you are not being forced to buy all 30 stocks, especially if you do not like select index companies.
For example, we know that some of you are advocates of green renewable energy. You do not like to support companies whose business have a detrimental effect to our environment.
We respect that.
If you’re going to buy an index equity fund or a mutual fund, you cannot tell the fund manager, “Hi, Ms./Mr. Could you please remove stock XYZ from your fund basket?”
Here at Equilyst Analytics, the power and control are yours.
We guide. We don’t dictate. We don’t spoonfeed. You’re the boss of your own money.
Do you need to subscribe to our service just to trade better than those who do peso-cost averaging?
No. Not at all. You don’t need to subscribe to our services if you can take care of yourself.
But if you need our guidance, click here to subscribe.
Latest posts by Jaycee De Guzman (see all)
- Aboitiz Power Technical Analysis: Poised for a Technical Correction? - September 21, 2019
- BDO Technical Analysis: Buy Before or After It Breaks Above 142? - September 20, 2019
- Brokers’ Sentiment and Traders’ Favorite Prices: PHEN, NIKL, APC, CLI, STR, JFC, GREEN, NOW, ALCO, WEB – September 18, 2019 - September 18, 2019
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