Wednesday, December 5, 2012

Short Answers to Unanswered Questions: Catching Up with Emails


Dear Investor Juan,

Hello there!

I happen to read some of your entries while self-educating on investing. I am a 19-yr old fresh grad who is very interested to know more about investing. As of now, I am reading stuffs about stocks and mutual funds. I know they are risky and that's why I read a lot. If you are kind enough to send me some ebooks about investing for beginners, I'd really appreciate it.

All the best,

Dear Donna,

You might want to start with Burton Malkiel's A Random Walk Down Wall Street.


Dear Investor Juan,

I have been subscribed to your posts ever since and I appreciate your sharing of your knowledge in finance. used to publish company betas (including PSE listed stocks). These betas could no longer be seen since they have replaced their "portfolio" feature to just a "watchlist".

I have checked Thomson Reuters ( and their betas are wrong since they are based on S&P500.

Do you know of other sites that compute and publish these betas?  I don't have much historical data so it is also hard to compute by myself (plus a bit time-consuming hehe)

Best Regards,

Dear ScIoN,

Sorry for the late reply.

As far as I know there are no locally-published betas for Philippine stocks. There was one study made by Dr. Joel Yu of the UP College of Business Administration on CAPM for Philippine stocks; I think this paper includes estimates for beta, so you might want to check it out. Not sure if the paper is available online, if not you can contact Dr. Yu for a copy, I'm quite confident that he will grant your request (he was my MBA prof, and he's quite a nice guy).

If you're going to do serious analysis, I suggest that you buy data from the PSE and just compute for beta on your own. Easy enough to do with Excel if you have data.

Dear Investor Juan,

Do you know what happens to your stocks if your brokerage firm goes bankrupt?



Dear Eugene,

If your broker goes bankrupt, you would still own your shares and both you and the broker would have records of your share holdings. And since your broker would not have physical "possession" of your money or shares, it would not be able to use these to satisfy its financial obligations as it goes through bankruptcy. I'm not sure exactly how it would work, but as far as I know you should be able to trade your shares through another broker.

I hope this helps.


Dear Investor Juan,

I have saved up a few thousand dollars from working for an international company, recent news says that exchange rate could go as Php 32 to USD 1.

It is tucked away on a regular dollar account, do you think I should convert it to pesos? Or it is far better on dollar denominated UITFs? Or just keep it on my savings account? 

Thank you in advance.


Dear Anthony,

Yeah I'm in the same boat with my HKD. 32 to 1? It's possible, but I'm not so sure.

Just based on historical exchange rates, right now the Philippine Peso is very expensive compared to the USD. So regardless of whether the peso will continue to strengthen or revert to its level a couple of years ago, I suggest that you keep your earnings and savings in USD or USD denominated securities, and just convert to peso as needed. The choice between a USD savings account and a USD UITF is an investment decision, though, and would have a different set of considerations.


Dear Investor Juan,

Just would like to ask kung maganda bang investment vehicle for an OFW ang UITF? let's say po for 5 year term. gagamitin ko sana as my appliance fund sakaling makabili me ng bahay. Ano po ang maipapayo nyo sa akin, para magamit ko po ito to maximize my investment potential. I already have an emergency fund, meron din po akong Insurance (vul), may EIP po ako, tsaka may nakalagak po akong pera sa SUNLIFE flexilink na nasa equity fund. Thank you po for reading my letter and more power to you.


Dear Bob,

Yes, UITFs in general are good investment vehicles for anyone, not just OFWs, as long as you know and accept the risks involved. Actually, you are already invested in UITF-like instruments with your VUL, EIP, and Sunlife fund. What I suggest is that if you want to invest more in UITFs and mutual funds, just add to your current holdings instead of investing in a new one. Adding more funds to keep track of would just result in additional hassle (and possibly, costs) without any significant additional benefits.

I hope I was able to answer your questions, Bob. Good luck.

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