Saturday, July 30, 2011

What is an Ex-Date or Ex-Div Date

Ex-Date or Ex-Div Date is always encountered once a listed company declares to give out dividends to stockholders either in the form of cash or stocks.

Actually there are three dates mentioned in the dividend announcements of companies.  It is the ex-date or ex-div date, record date and the payment date but the most important date that should be watched out is the ex-date or ex-div date.

The ex-date or ex-div date is the cut-off date where all stockholders who hold a share of stocks as of the previous day is entitled for a share in the dividend allocation.

For example, if a company declares to give out dividends and the ex-date or ex-div date specified is August 3, all stockholders holding a stock share until August 2 will be entitled to the dividend payment.

Mostly the dividend declaration announcement is being done one or two weeks before the ex-date, that gives time for investors to buy the stocks in order to be entitled for a dividend.  The stock price during this period usually goes up.

If you want, you can sell your stock shares the day after the ex-date or ex-div date … you will still be entitled for the dividend but usually, the stock’s price drops down during this period.

Sunday, July 24, 2011

Investing vs. Trading

When I first started participating in the Philippine Stock Market years ago, I usually hear and read about the term investing and trading.  Then there comes the investor and the trader.  Are they the same?
Well after a few years of participating in the stock market, I learned that people who are investing and/or trading in the stock market have the same goal ... that is, to build up wealth.  Of course this is the number one reason why we participate in the stock market, we believe that there is an opportunity to grow our wealth here.  The only difference between investing and trading is the method used in building up that wealth and this is where time and risk is involved.

Investing in stocks of a certain company is holding on to that stock for an indefinite time (mostly years) believing that the company have a great potential to grow and that we, as investors are riding with their growth.  A thorough study of the underlying factors which affect the company's business and future expansions is a must here.  This sounds complicated but with the help of experts it will be easier.  This is where some stock brokers is a big help.  Some stock brokers just like citiseconline gives information to clients as to what companies are worth investing in.  Citiseconline even have this program called Easy Investment Program or EIP which makes use of cost averaging technique which is suitable for new and long term investors.
Trading on the other hand is attempting to accelerate the pace of building up wealth by engaging in short term opportunities.  Here, market timing is required.  When to buy or when to sell is very important to maximize profits in trading.  Technical analysts are expert in this, they study the movements of market prices and forecast the future price trend using different charting tools. Again, some stock brokers are giving tips to clients as to when to buy or sell their stocks.

Whatever methods you will use in building your wealth, there is always a risk of losing money especially in trading, so in order to minimize our loss, an effective risk management plan should be developed.  Also remember that informations or tips coming from stock brokers are not perfect so wise judgement should be done.

In my case, I do both investing and trading.  In choosing the companies where to invest or trade, I rely on the informations my stock broker provides but when it comes to the timing of buying and selling, I developed my own trading strategy which goes hand in hand with my risk management plan.  So far, it's effective and I'm happy with the earnings I made from the stock market.

Thursday, July 21, 2011

Extended Trading Hours at Philippine Stock Exchange

At present, the Philippine Stock Exchange trading hours is from 9:30 AM to 12:10 PM.  That is only 2 hours and 40 minutes of trading but starting October 1, 2011, longer trading hours will take effect. 

The Philippine Stock Exchange Board of Directors approved the extension of the longer market trading hours and the implementation will come in two phases.

The first phase is the extension of the morning trading hours which will take effect on October 1, 2011.  The trading hours will be from 9:30 AM to 1:00 PM.  The second phase will take effect on January next year which will introduce the afternoon trading hours which will start from 1:30 PM to 3:30 PM.  All in all, the trading hours starting January next year will be 5 hours and 30 minutes.

I don’t really know what will be the effect of this extended trading hours to investors/traders but just the same, I welcome this change PSE is implementing in their system.