Stock Investment

Stocks
• A.K.A equities, shares
• An investment that represents ownership in a company
or a corporation
• Rate of Return depends on how well the stock market is
doing overall.
 How Do Investors Earn From
buying Stocks?

1. Capital Gain: is an increase in the value of a capital

asset (investment or real estate) that gives it a higher
worth than the purchase price.

• The risk: If the company does not do well, the

shareholder may lose the money he or she invested.
 Capital Gain
• The shareholder gets the hope that the shares will be worth
more in the future.
• If the company does well, the stock will probably increase in
value.
• In other words, buy low, then sell at a higher price.
 How Do Investors Earn From
buying Stocks?
• Dividends: Payment made by a corporation to its
shareholders, usually as a distribution of profits.
• Not all companies pay dividends to their stockholders.
• Reinvest Funds =increases the market value of the stocks
• Supporters of this policy point out that taxation on a dividend is
higher than on a capital gain.
Gain
Dec. 17, 2020

31 days

As of Jan. 18, 2021

Even
Loss
October 24, 2020

As of Jan. 18, 2021

Types of Stocks according to RIGHTS
• a. Common stock – It is a security usually purchased for
participation in the profits and control of ownership
and management of the company. A common
stockholder exercises control through voting rights
during annual or special stockholders’ meetings, but can
only claim rights to the company’s assets and earnings
when preferred shareholders are already paid in full.

Most of the issues traded in the local stock market are

common stocks.

Common stocks are also known as “ordinary shares.”

 Types of Stocks according to RIGHTS
b. Preferred stock – It is a security whereby the holder
has a higher claim on the assets and earnings of the
company.
• In terms of dividend payment and liquidation, preferred
shareholders have priority over common shareholders.
Though preferred stockholders do not have voting
rights, they are entitled to receive dividends before any
dividends are paid to the common stockholders.
• Preferred stocks usually have a specified limited rate of
return or dividend and a specified limited redemption and
liquidation price.

Preferred stocks are also known as “preference shares.”

 Bull vs. Bear
• Bull is good. Bull market means the market is
performing well.
• Bear is bad. Bear market means the market is not
performing well.
 Color Indicators
• Green – Bullish
• Red- Bearish
• Yellow – Neither bullish
nor bearish
 Risk vs. Return
• On the average, stocks have higher rates of return
compared to other investments
• Higher rate of return = greater risks
• Stocks provide portfolio diversification
 Stock Brokers

• People who are licensed to buy and sell stocks, provide

investment advice, and collect a commission on each
transaction.
• If you want to buy stock, tell your broker which stocks to
buy, what price, and how many shares.
 Lot

• Lot or Lot size - number of shares you purchase in one

transaction.
• Board Lot - standardized number of shares defined by a
stock exchange as a trading unit
 Board Lot

• determines the minimum number of shares one can

purchase or sell at a specific price range.
• minimum amount needed to invest in stocks varies and
will depend on the market price of the security as well as
its corresponding board lot.
 Prices

• Stock prices vary per company

• Just think of a company as a product in a market
• Example: One (1) stock of Jollibee (JFC) is worth 200.80
pesos, the minimum number of Jollibee stocks that you
can buy is ten (10) stocks.
• The minimum amount you will need to pay to be a part
owner of Jollibee is 200.80 pesos X 10 = 2008.00 pesos.
 Price Change

• Stock prices change due to Law of Demand and Supply.

• When demand for a certain stock increases, prices for
that stock will increase as well (more buyers will make
stock prices increase)
• When demand for a certain stock decreases, prices for
that stock will decrease as well (more sellers will make
stock prices decrease)
 Price Change

• Likewise, as soon as stocks or shares are becoming less

available in the market (especilly for blue chip stocks),
prices of that stock will increase.

Blue-chip stocks are shares of large, established, and

financially stable companies that have been around for a
long time. The term "blue chip" comes from the game of
poker, where a blue chip holds the highest value.
Diversifying your portfolio
 Stock Exchange

• A market where stocks/equities are bought and sold.

 Philippine Stock Exchange

• The National Stock Exchange of the Philippines

• Started in 1927, making it one of the oldest stock
exchanges in Southeast Asia.
 Selling stocks

• Tell your broker that you will sell your stocks.

• Your money will be credited to your bank account three
working days after you sold your stocks.

*Working days are Monday, Tuesday, Wednesday, Thursday,

Friday
 Stock Investing Tips

• 1. Know your investment goal

• 2. Know what the stock market is
• 3. Know your risk profile
• 4. Set aside money when going into stocks
• 5. Allot time for investing
 Know your investment goal

• How long? Short term (less than 1 year) Medium Term (1-
5 years), Long term (more than 5 years)
• Where will you use the money in the future?
• Do you plan to have an extra source of income? Do you
plan to buy a car or a house in a few years' time? Or are
you saving up for retirement?
 Know What the Stock market Is

• The stock market allows you to buy shares of companies,

under normal circumstances, ordinary people would not
have access to.
• Companies list – that is, they sell portions of the
corporation – on the Philippine Stock Exchange to raise
capital, instead of borrowing from financial institutions.
 Know Your Risk Profile

• Are you conservative investor or a risk-taker?

• Your investment strategy should reflect on the stock/s
you are buying
 Risk
Profile
 Set aside money when going into
stocks

• While trading stocks is one investment that could give

you the highest returns, there are no guarantees that
there will be returns all the time.
• Now that you have the money to invest, it is now time for
you to choose a stockbroker or a trading participant
where you will open an account with.
• According to the PSE, there are over 100 licensed
stockbrokers.
 Allot time for investing

• In the stock market, you can earn more, multiple times

even. But again you have to learn the what your
investment type is.
• An investor has to look at the fundamentals-like earnings,
prospects, downside, managers of a company–as well as
the technicals - such as charts, price performance of a
stock–to know his /her investment strategy.
 Why some investors fail

• Fear
• Lack of emotional self control
• Not researching
• Joining the crowd
• Too much greed
• Not trying