Investing in the Stock Market

A presentation prepared by the

Market Education Department
Capital
Markets Development Division

website: www.pse.com.ph
e-mail: marketeducation@pse.com.ph
tel.no: (632) 688-7536
www.facebook.com/pages/The-Philippine-Stock-Exchange
http://twitter.com/PhStockExchange
http://thephilstockexchange.multiply.com

Table of Contents
Stocks
Stock Market
Stocks: Types, classes, and forms
Investment Instruments
Concept of Risks and Rewards

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Table of Contents
Primary and Secondary Markets
Opening a Trading Account
Trading Schedule
Understanding Stock Market
Quotes
Sources of Market Information

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STOCK
Definition and concept

STOCKS are shares of ownership in

a corporation.
When you buy
stocks of a publicly listed company,
you become a stockholder or
shareholder of that company. In
other words, you become a part
owner.
Thus, you participate in the
companys growth and future
profits.
Conversely, you may also lose if the
company suffers a loss or performs
below market expectations.

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STOCK MARKET
Definition and concept

STOCK MARKET is a place where

stocks are bought and sold. The
Philippine stock market is the place
where people can invest in publicly
listed corporations.

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STOCKS
According to types

PREFERRED STOCK is a security

whereby the holder has a higher
claim on the assets and earnings of
the company.
Preferred shareholders have priority
over common shareholders in the
event of liquidation and they have a
fixed dividend.
Unlike
common
shareholders,
preferred shareholders do not have
voting rights.

COMMON
STOCK is security
whereby the holder exercise control
by electing board of directors and
voting on corporate policies or
matters.
In the event of liquidation, common
stockholders have rights to the
companys
assets
only
after
preferred stockholders have been
paid in full.

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STOCKS
According to class

CLASS A STOCKS are shares that

can be bought or sold solely by
Filipino investors.

CLASS B STOCKS are shares that

can be bought or sold by both
Filipinos and foreign investors.

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STOCKS
Other types

BLUE CHIPS are the share of

stable, profitable, and well-known
public companies.
They have a long history of steady
revenues and dividend payments.
They exhibit more modest
dependable
returns
and
relatively of lower risk.

but
are

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STOCKS
Other types

INCOME
STOCKS
are equity
security that pays regular, often
steadily increasing dividends, and
offers a high yield that may
generate the majority of overall
returns.
It has a lower level of volatility than
the overall stock market.

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STOCKS
Other types

GROWTH STOCKS are shares of

corporations whose earnings are
expected to grow at an aboveaverage rate relative to the market.
A growth stock does not usually pay
dividend.
Rather, earnings are
reinvested in capital projects.

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STOCKS
Other types

DEFENSIVE STOCKS are shares

that provide constant dividend and
stable earnings, regardless of the
overall condition of the stock
market.
They remain stable during the
various stages of the business
cycle.

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STOCKS
Other types

CYCLICAL STOCKS are those that

rise quickly when economic growth
is strong and falls rapidly when
growth is slowing down.

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STOCKS
Other types

SPECULATIVE STOCKS are those

that rise quickly when economic
growth is strong and falls rapidly
when growth is slowing down.

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INVESTMENT INSTRUMENTS
Fixed Income vs. Variable
Income
FIXED INCOME INSTRUMENTS
are those that provide a return in
the form of fixed period payments
and the eventual return of principal
at maturity.

VARIABLE
INCOME
INSTRUMENTS are those that
provide a return based on an
underlying measure such as shortterm interest rates.

Examples are savings, Treasury

bills, and government bonds.

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RISK AND REWARD

Investment Pyramid

RISK
PROFILE

The RISK-REWARD Concept:

The higher the risk of an investment
instrument, the higher returns you
should receive in the future.

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TYPES OF MARKETS
Primary and Secondary
Markets

PRIMARY MARKET
The higher the risk of an
investment instrument, the
higher returns you should
receive in the future.

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TYPES OF MARKETS
Primary and Secondary
Markets

SECONDARY MARKET
is where investors purchase
securities or assets from other
investors, rather than from
issuing companies themselves.

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OPENING A TRADING
ACCOUNT
Investment Procedures
Select your STOCKBROKER.
Open a TRADING ACCOUNT.
Discuss with your broker
stocks you
wish to BUY or SELL.

the

Give ORDERS to the brokers.

Get
the
RECEIPT.

CONFIRMATION

Deliver
/
pay
SETTLEMENT DATE.

before

Receive PAYMENT.

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TRADING SCHEDULE
Day and Time
9:00 AM 9:15 AM
PRE-OPEN
9:15 AM 9:30 AM
PRE-OPEN (No cancellation period)
9:30 AM
MARKET OPEN
9:30 AM 11:57 AM
11:57 AM 11:59 AM
CONTINUOUS TRADING
PRE-CLOSE (No cancellation period)
12:00 NN
MARKET CLOSE
12:00 NN 12:10 PM
TRADING AT-LAST (Run off)
12:10 PM
MARKET CLOSE
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STOCK MARKET QUOTATIONS

Reading and Analyzing

NAME
The stock symbol of the listed
company.
OPEN
The first price the stock traded for
the day.
BID
The highest buying price in the
market.
ASK
The lowest selling price in the
market.
HIGH
The highest price traded for the
period.
LOW
The lowest price traded for the
period.
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STOCK MARKET QUOTATIONS

Reading and Analyzing

VOLUME OF SHARES
The total number of
shares traded in the stock
market during a period.

VALUE OF SHARES
The currency value of
shares traded in the
market during a period.

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STOCK MARKET QUOTATIONS

Reading and Analyzing

PHILIPPINE STOCK EXCHANGE

COMPOSITE INDEX (PSEi)
is a fixed basket of 30 common stocks of
listed companies, carefully selected to
represent the general movement of the
stock market.
It is the benchmark measuring the
performance of the Philippine stock market.
The selection of these companies is based on
a specific set of criteria.

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STOCK MARKET QUOTATIONS

Reading and Analyzing

GAINERS
The stocks with the highest
percentage increase in price during a
period.
LOSERS
The stocks with the highest
percentage decrease in price during a
period.
MOST ACTIVE
The stocks with the most frequent
transaction during a period.

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SOURCES OF INFORMATION
Broadsheets and Daily
Quotations

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SOURCES OF INFORMATION
Television and Radio

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SOURCES OF INFORMATION
Data Providers

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SOURCES OF INFORMATION
Internet

OFFICIAL PSE WEBSITE

PSE / MED SOCIAL SITES

The Philippine Stock Exchange, Inc.

http://thephilstockexchange.multiply.com

www.pse.com.ph

http://twitter.com/PhStockExchange

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SOURCES OF INFORMATION
Electronic Billboards

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Investing in the Stock Market

A presentation prepared by the

Market Education Department
Capital
Markets Development Division

website: www.pse.com.ph
e-mail: marketeducation@pse.com.ph
tel.no: (632) 688-7536
www.facebook.com/pages/The-Philippine-Stock-Exchange
http://twitter.com/PhStockExchange
http://thephilstockexchange.multiply.com