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Monday, June 6, 2011

Terms and words use in the Phil Stock Exchange (PSE)


Terms and words use in the Phil Stock Exchange (PSE)

The Phil Stock Exchange or Philippines Stock Exchange (PSE) is the private organization that operates the Philippines stock market wherein people can invest (buy and sell) in the publicly listed companies in the Philippines.

The website of the Phil Stock Exchange contains a lot of information that is valuable for every investor. Examples are, company reports, financial statements, stock market update, company disclosure and announcements and etc.

Below is a screen capture of the said Phil Stock Exchange website:

  

It is important to know the terms and words use in the Phil Stock Exchange (PSE).

1. Ticker Symbol, Symbol or Ticker - is the nickname of the listed companies. (Trivia: GMA7 or GMA Network, Inc  is the only listed company in Phil Stock Exchange with numerical number on its ticker). To look for the listed company in the Phil Stock Exchange website, type-in the ticker symbol in the form located in the upper right hand corner of the site.

2. Listed Shares and Outstanding Shares - Listed Shares is the total shares or stocks issued including those stocks repurchased by the company while Outstanding Shares is the number of stocks currently being held by the investors and is the most important in valuation of stocks.

3. Free Float Level - is the percentage of a company's outstanding shares that are not held by strategic shareholders. The higher the free float level, the more liquid is the stocks and the higher its turn-over that's why short-term traders prefer stocks with high free float level. Currently, Phil Stock Exchange imposed the 10% minimum free float level to all listed company.

4. Board Lot- is the multiple of minimum shares that can be bought depending on the stock price. See below:

 
For example, FPH's last price, 63.5, falls under the 50-99.95 range and so the lot size is 10 which means stocks can be bought at multiples of 10 (10,20, 30 and etc.).

5. EPS or Earnings Per Share - this is the portion of net income allocated to each outstanding share.

6. PE Ratio - literally it means price to earnings ratio. It's a quick parameter to tell if a stock is expensive or not. As per literature, high PE ratio of 20 or above means the stock is expensive while below 10 means the stock is cheap. A caveat: high PE ratio doesn't always mean expensive stocks specially for the case of growth stocks or those companies that are expanding fast and low PE ratio may sometimes mean the company condition is not good and so no one wants to buy it.  It is important not only to look at the number but also on the story behind it.

7. 52 week high - the highest stock price for the last 52 weeks (trivia: there are 52 weeks in a year).

8. 52 week low - the lowest stock price for the last 52 weeks.

9. Order - when you buy or sell stocks in Phil Stock Exchange, you place a so-called order.

10. Bid Price and  Volume - price of stocks and volume(number of shares) order of the buyers.

11. Offer Price and Volume - price of stocks and volume order of the sellers.

12. Matched Order - when buyers stocks price and volume have a corresponding seller, then we have a matched order and the transaction is done.

13. Blue Chip - is a stocks of a mature and well-established company with remarkable earnings. Example of the Phil Stock Exchange Blue Chips are SM, AC and JFC. Majority of the stocks in the Phil Stock Exchange index are considered blue chips though there are some blue chips that is not included like LPZ and SMC. Blue chip companies are known, weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth. The name "blue chip" came about in poker game because in the game of poker the blue chips have the highest value.

14. Overbought - it means a stock(s) price is pushes up at level above its fundamental or intrinsic value due to much optimism of the market participants.

15. Oversold - the opposite of Overbought, it is a stock which is trading at a dirt-cheap price due to irrationality and short-sightedness of the market like what happen during a stock market crash. This is the best time to buy the stocks.

16. Red, Green, Yellow - this is not the color of our Philippine flag but a coding system used in the stock market to indicate movement of stocks compared to its previous trading day closing price. Red means the stock price decreases, Green means it goes up, and Yellow mean sideways or same as previous price.

17. Bullish - a bull is used to represent an optimistic market (prices going up). This is derived from the upward movement of the bull's horn when it attacks.

18. Bearish - a bear is a representation of a panic or negative market. The downward action of the bear's paw when attacking is same with the movement of the bearish market.

19. Index - used to track the overall performance of the Philippine stock market. It is like an imaginary portfolio with selected stocks and calculated based on its own methodology (each index has different calculation parameters). In the Philippines, the PSEi is the main index.

20. Trading Time -  is the time when market is open and active. Phil Stock Exchange trading time is daily from 9:30 AM to 12:10 PM except Saturdays, Sundays and holidays.

21. Profit Taking - selling stocks which already appreciated in value to lock or ensure profit.



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