[Finances] Adventures In Peso Cost Averaging

Being the geek that I am, I've wanted to make sure that I make the right financial decisions for the long term. We always go back to the cliche that we're never growing any younger and thus it becomes all the more important to plan ahead for the future.

Of course being in a third world country where corruption is rampant, the business sector is often unpredictable and government oversight is a statistical wild card, it's hard to figure out where to put your money. Quite frankly, there are people who argue in favor of just holding on to your money and keeping out of the system entirely. Plus with typical savings accounts only offering about 0.5% interest per year, simply banking your money is gong to get you anywhere. While there are special deposit products like BPI's Maxi-Saver accounts that offer better rates, it's still not enough to secure you in the long term.

Enter the scary world of the local stock market. This legalized gambling den remains to be your best bet to long term financial stability, provided you keep your wealth-building options sufficiently diverse. So apart from my bank funds, my life insurance polices and associated variable income components, I've recently started to explore the local stock market via Citisec Online.





No, this doesn't mean I've become an active stock trader like you see in the movies. I really don't have the kind of constitution for short-term investing given how volatile the local stock market can be. Instead, I'd like to think that I'm more of a value-driven investor, mainly relying on the principle of Peso Cost Averaging (and thus the point of this entry). Let's face it, geeks like me a very skittish when it comes to high risk and high pressure situations like trying to figure out the stock market. One will always have that general advice in mind about the need to buy low and sell high, but your average guy doesn't have the time to fully analyze and theoretically understand the local market. Worse as a geek, I'd probably obsess about trying to figure out the market and would probably end up doing nothing due to analysis paralysis.

But Peso Cost Averaging makes sense to me, and maybe it'll work for you as well. Let's face it, if you're not a regular reader of this blog, then some investment-related web search brought you here. Given that, I hope this proves helpful to all of you on one level or another.

[Movies] Wall Street (1987)

Your "average Joe" has a pretty warped view of the stock market. Most people base their understanding of the market on what little once can glean from the movies and snippets from news segments about stocks rising and falling. To be fair, it's not exactly high school arithmetic when you get down to it. The stock market is a pretty complex arena where risk takers can win big and conservatives can hopefully bide their time and hope that their patience pays off in the end.

Ironically enough, I recently got into the stock market as a long-term investor. So my writing about this particular movie seems timely enough with my growing understanding of the market and the potential it holds for a lot of hopeful investors such as myself. I have a long ways to go, but you can surely expect me to apply all my geeky abilities in my efforts to come out a winner in the end.

Let's face it - the stock market feels like the ultimate form of legalized gambling in the world today. Traders buy and sell stocks from different companies and all compete to somehow outwit the others. It's a pretty cutthroat world with a lot of potential for the bold trader / investor. And so it's no surprise the industry was celebrated by a movie as unique as this one.

[Call Centers] PeopleSupport Sold!

Don't make me say, "I told you so."

Image via WikipediaSometime early last year, I first wrote about PeopleSupport's stock concerns given how they just weren't doing all that well. I discussed some of the drivers at the time and initially speculated about the possibility of a buy-out. In the months that followed they did their best to stay afloat and fended off a rather weak buying offer in the latter part of the year.

Last Monday as they announced their 2Q financial results, they also chose to announce the potential "merger" between PSPT and Essar Services, a wholly-owned subsidiary of Aegis BPO, a BPO company based in India. Of course in reality this is a buy-out / acquisition given (1) PSPT will no longer be traded independently, (2) they're paying $12.50 per share, which is above their current market value and (3) the will be renamed as Aegis PeopleSupport (and definitely not the other way around).

Mergers are always a bit sticky, especially in the call center industry given there are bound to be redundant positions, the need to streamline processes and of course the inevitable lay-offs and added levels of management.

Another day in the aggressive call center industry. Thankfully I'm still working for a privately-traded company. That doesn't guarantee protection from changes like this, but it does leverage things a bit.

[Finances] Getting Into Investing

Image via WikipediaMost financial advisers, ranging from your contacts at your local bank to Oprah's latest guest, always talk about the need to diversify your assets. You need to have a good mix of equity / cash, property and investments. Try as I like, my equity / cash side of things has never been all that great, but at least I pay my bills and stay out of credit card debt. I don't have property since I don't have enough cash to start payments on land, unless you consider my very large collection of books to have significant property value. Now that leaves investments to consider.

I've started slowly with two different insurance policies - one is a life insurance policy with an alternative revenue stream in the form of dividends that I'll start to receive after, well, 14 years of paying my premiums. Ugh. The other one is also a life insurance policy, but it's bundled with an investment component that is really what drives income. I need to continue to pour in cash for ten years and will eventually get my dividends and a lifetime insurance policy as well. I get to choose the investment method between their Bond, Balanced and Equity funds, which are pretty much standard choices.

That still doesn't answer the investment side, and so I've started looking into how to really get into the infamous stock market. Insert sound of thunder right around here. What's worse, this is not America, so we're dealing primarily with the Philippine Stock Exchange. Insert whinny of horse here.

A lot of people talk about how playing the stock market is a promising way to get a lot of money in a short amount of time, or to lose a lot of money in a short amount of time. Yes, essentially it's gambling but just somehow more legal, LOL. The stakes are pretty high, but so are the rewards.

In my mind, there are two general avenues to consider when getting into stocks.

First, you can try it on your own. Whether you hire your own stock broker and have him make the deals based on your sole decisions or play around with online facilities for stock trading or whatever. This allows you greater control but at the same time demands more research time on your part and greater vigilance. Depending on what industries you decide to invest in and how many stocks / companies you plan on dealing with, this could take a lot of time that you may not have given your day job.

I suppose that if you take this route, then you'll need to practice. Whether this consists of just reading the paper every day and playing with imaginary stocks or using stock trading games / simulators like this one provided by the PSE. If you choose to remain online (like most geeks), then your options for the local stock market are somewhat limited. Thus far, the most decent site I've found that trades on the PSE is CitisecOnline, but I'm not ready to try this myself so I can't speak around how well this works. Have any of you tried this site out?

In going on your own, you need to make sure you have a healthy understanding of how comfortable you are with risk and looking at things in the long term. It's not all about big wins in just one day and cashing in your chips after. Really playing the market means a lot of time and money, losing for months on end only to win big much later on. Most folks seem blinded by how the likes of Hollywood have painted the picture of trading and how everyone wins it big sooner or later, when that isn't necessarily the case.

The other side of things is to have someone else manage your funds, whether in the form of a mutual fund portfolio that you choose to buy into or an assets management company / broker that you decide to pay in order to make the buying and selling decisions for you.

As a consumer, it's hard to find accessible brokerage firms - at least this is how I feel, and thus the more conventional route is to go through other institutions that have chosen to offer such services like my insurance company or of course banks.

In choosing someone to manage your assets, you'll want to consider the track record of the company, the amount of capital they have to play around with and how transparent they are and how accessible their reports are. Taking things up another geek notch, you also may want to consider how usable their online venues are and how you can coordinate / communicate with them.

At this point in my explorations, I'm a bit more amenable to this route since I'm not at all confident in my ability to make informed decisions when it comes to trading and given my graveyard working schedule, I won't be awake most of the time when the stocks are actually trading. For now I'm considering the investment services offered by BPI and by HSBC, both seeming to have pretty good track records, naturally a lot of capital and lastly their web portals are really friendly and all the reports from their funds managers are pretty good. With banks like these, you buy "units" of their investment funds and each of these funds have a market-determined unit price that becomes the basis for determining the performance of the fund. I'm still looking further into my options and will eventually set up over-the-phone conversations with them to get a better idea of how they work and what to expect and will keep you financially-keen geeks posted in terms of my progress.

How about you guys and gals - what are your Philippine stock experiences and adventures thus far? Or have you not yet considered thinking about your finances on this level? Why or why not?

[Call Centers] PeopleSupport's Stock Woes

PeopleSupport, Inc., an LA-based contact center with majority of its operations in the Philippines has been taking a beating in the US stock market in recent weeks. Things started off on the wrong foot when their 4Q revenues, while higher than 4Q of 2005, were still lower than Wall Street expectations. This triggered a massive drop in stock price for the company from a high of about $22 per share before the announcement to a staggering low of around $13 per share.

Things go worse when it was announced last Friday that Vonage Holdings Corp. decided not to renew their long-standing contract with the business outsourcer, which accounts for a fair amount of their current business in the Philippines. This triggered a re-evaluation by financial analysts. Cowen & Co. downgraded PSPT shares to "Neutral" from "Outperform" that has lead to another drop in stock value to a low of approximately $11 per share. While the loss of revenue from the termination of the Vonage contact in May isn't that significant, it still caps expectations of their growth this year while the full impact of the pull-out is determined.

Now their stock price is on the rise as a lot of investors and analysts are seeing PSPT as a prime acquisition opportunity for some should anyone want to buy into call center operations in the Philippines.

You can monitor the rise (or fall) of PSPT stocks and others by using Google Finance, which offers interactive charts, correlations between critical price changes and news events, information about the company and comments from Google users also interested in this stock.

[Google] Not So Good a Week

This hasn't been one of the best weeks for Google given everything that's happened. Admittedly, I'm focusing on two major events for the week.

First off, after getting past the $500 share value mark, Google's stock came back down to earth after Barron's had projected the stock would go down. At the time of this entry Google stock is valued at 484.80 USD per share.



Also this week, the news came out that Google was retiring Google Answers as was confirmed by an Official Google Blog entry. Answers was one of Google's earliest services that allowed people to place a price on subjects they needed help researching. It'll be a shame to see it go and already people have started petitions to bring the service back like the Save Google Answers initiative.

It's unlikely that it'll work since clearly retiring Answers is more of a business decision that one out of whim.

[Google] Past the 500 Mark

Today Google's stock value climbed past the $500 mark for the first time ever and continues to climb with a high of 508.08 dollars!

Way to go Google!