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PRIMER: A PARTICIPANTS GUIDE TO THE STOCK MARKET

STOCKADE+

TABLE OF CONTENTS

I. INTRODUCTION TO THE STOCK MARKET .......................................................................................................... 3


WHAT IS THE STOCK MARKET?
WHAT ARE STOCKS?
WHAT RESOURCES DO I NEED?
WHAT IF I WANT TO KNOW MORE?
II. THE GAME: STOCKADE+ ...........................................................................................................................................15
I.

LOGIN PAGE..................................................................................................................................................................18

II.

MY PORTFOLIO ............................................................................................................................................................19

III.

STOCKS ........................................................................................................................................................................20

IV.

BUY STOCKS ..............................................................................................................................................................21

V.

RANKING .......................................................................................................................................................................22

VI.

ANNOUNCEMENTS .......................................................................................................................................................23

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STOCKADE+
I. INTRODUCTION TO THE STOCK MARKET

WHAT IS THE STOCK MARKET?


The STOCK MARKET is the virtual place where shares of
stock

of

different

corporations

are

bought

and

sold.

The market is dominated by traders who speculate on


the price of shares to make a profit on the difference
between the selling price and buying price.
Are all stocks of the corporation included in the stock
market?
included.

No.

Only publicly-listed corporations (PLC) are

PLCs

offer

their

shares

to

the

public

at

large.

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STOCKADE+

WHO ARE THE MARKET PARTICIPANTS?


Part 1

There are 8 participants in the Stock Market:


The STOCK MARKET is an organized marketplace or facility that
brings buyers and sellers together and facilitates the sale and
purchase of stocks.
In the Philippines, the only operating stock exchange is the
Philippine Stock Exchange, Inc. (PSE). Its task is to make sure that
trading transactions are done in an efficient, orderly, fair, and
transparent manner. It enforces rules and regulations that both
PLCs and trading participants must abide by. Thus, it is called the
guardian of the Philippine stock market.
INVESTORS are the stockholders of a PLC. They are accorded
certain privileges such as right to fair and equal treatment, right to
vote, right to receive dividends, and other benefits. Investors buy
stocks either directly or through a stockbroker. (In STOCKADE+, you
are an investor.)

Source:

PSE Academy

<http://www.pseacademy.com.ph/LM/investors~details/id1316273868284/Who_are_the_Market_Participants.html>

TRADING PARTICIPANTS or stockbrokers are the middlemen. They


are licensed by the Securities and Exchange Commission (SEC) to
trade at the Exchange. They act as an agent between the buyer
and seller of stocks. For their services, they receive from their
clients either a buying or a selling commission.
During trading time, these stockbrokers execute orders in the
market to the greatest possible advantage of their customers.
There are two types of stockbrokers: Traditional (receives orders
via written instruction or phone call) and Online (provides a main
interface where clients can execute their orders).
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STOCKADE+

WHO ARE THE MARKET PARTICIPANTS?


Part 2

LISTED COMPANIES or issuers are those whose shares of stock are


traded on the Exchange. These companies qualified with the
stringent listing and reportorial requirements of the PSE, and have
gone through initial public offering (IPO) or listing by way of
introduction.
As of August 2011, there are 249 listed companies in the PSE.
These are classified into six sectors: Financials, Industrial, Holding
Firms, Property, Services, and Mining and Oil.
CLEARING HOUSE ensures the orderly settlement of equity or stock
trades executed at the PSE. In the Philippines, the Securities
Clearing Corporation of the Philippines (SCCP) serves as the
clearing house and is a wholly owned subsidiary of the PSE.
SCCP is responsible for synchronizing the settlement of funds and
transfer of securities, among others. In other words, it is
concerned with the money matters and risk management.

Source:

PSE Academy

DEPOSITORY acts as custodian of listed shares of stock that are


traded at the PSE. In the Philippines, the Philippine Depository
and Trust Corp. (PDTC) is the depository. It performs book-entry
transfer of securities from seller to buyer during settlement of
Exchange trades.

<http://www.pseacademy.com.ph/LM/investors~details/id1316273868284/Who_are_the_Market_Participants.html>

SETTLEMENT BANKS are where trading participants make and


receive payments for stock transactions.
TRANSFER AGENTS are the official keeper of corporate
shareholder records. They provide the listed company with a list of
holders of its securities and process corporate actions like dividend
distribution and stock splits.
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STOCKADE+

WHAT ARE STOCKS?


A

SHARE

corporation.

OF

STOCK is
When

you

literally
buy

share

stocks

of

in

the

PLC,

stockholder or shareholder of the company.

ownership of the
you

become

Being a stockholder

entitles one to dividends and other ownership rights.

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STOCKADE+

WHAT ARE THE TYPES OF STOCKS?


Part 1

Investing in the stock markets requires knowing what stocks


are best to invest in. Stocks are classified according to
characteristics and earning potential:
ACCORDING TO RIGHTS:
(1) COMMON STOCK
This security is usually purchased for
participation in the profits and control of
ownership and management of the company.
While their owners of these stocks exercise
control over the company, they are last to
claim rights to the companys assets and
earnings.
Most stocks traded in the stock market are
common stocks.
Common shares are further classified
according to ownership: CLASS A (exclusively
traded by Filipino investors) and CLASS B (can
be bought and sold by both Filipino and foreign
investors).
(2) PREFERRED STOCK
This security does not give voting rights to the
owner but gives such owner a higher claim on
the assets and earnings.

ACCORDING TO SECTORS:
The PSE classified the stocks listed and traded in the stock
market into six. This categorization allows analysts to
determine the status of each industry. If there is a new
development in the industry, stocks of the companies within the
industry will be affected.
(1) FINANCIAL
(2) INDUSTRIAL
(3) HOLDING FIRMS
(4) PROPERTY
(5) SERVICES
(6) MINING AND OIL

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STOCKADE+

WHAT ARE THE TYPES OF STOCKS?


Part 2

ACCORDING TO CHARACTERISTICS:
Analysts generally describe stocks as:
(1) BLUE CHIP
These are shares of well-established and financially
sound companies. They demonstrate ability to pay
dividends in both good and bad times. They also
exhibit more modest but dependable returns. (Minimal
changes in stock price, steady returns)
(2) GROWTH or glamour stocks
These are shares of companies whose earnings are
expected to grow at above-average rate relative to the
market. These corporations do not usually issue
dividends because earnings are reinvested in capital
projects. (High possibility of changes in stock price,
minimal returns)
(3) DEFENSIVE
These are shares that provide stable earnings
regardless of the condition of the market. Generally,
these are stocks of food, oil, and utilities companies.
(steady returns)
(4) SPECULATIVE
The values of these shares rise quickly when economic
growth is strong and fall rapidly when growth is slowing
down. (high risk)

STOCKADE+ PRACTICAL TIP


If you are a risk-taker, invest in GLAMOUR STOCKS
and/or SPECULATIVE STOCKS.
Buy the shares early when the demand for the
companies products is fast increasing. Sell your
stocks immediately or when demand is almost at its
peak.
If you are a safe player, invest in the BLUE CHIP
STOCKS and/or DEFENSIVE STOCKS.
Buy the shares at any time and leave your money
there for a long-term investment. Returns will increase
or decrease slightly, but be careful of major changes
in the market that might cause stock prices to
plummet.

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STOCKADE+

HOW DO I EARN FROM MY STOCKS?


There are 2 ways to make money grow in the stock market:
(1) INCREASE in STOCK PRICE or CAPITAL APPRECIATION
The first is the increase in the market price of the stocks. The difference
between the buying price and the selling price will determine your
earnings.
(2) DIVIDENDS declared by the company
Dividends are paid out to shareholders depending on when the directors
decide to give dividends rather than reinvest the money in the business.
There are two types of dividends: CASH and STOCK dividends. CASH
dividends are earnings declared for every share of stock. STOCK
dividends are additional shares given to shareholders at no cost.

STOCKADE+ PRACTICAL TIP


Under the first method, you cannot gain from the
price appreciation unless you sell your stocks.
Sell your stocks when there is an increase in the
market price.
However, well there is a decrease, dont
panic. Generally, these prices will increase
eventually. Thus, wait until the price increase.
An exception, however, is when there is a
major downfall in the companies or industry.
In such case, sell your stocks immediately
before the prices decrease further.
* For the purpose of STOCKADE+, the investors
should focus on the first method to acquire the
highest net portfolio.

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HOW DO STOCK PRICES CHANGE?


Part 1

Now you know that you can earn by the increase in the market price of stocks. The next question is, when
or how does the market price increase? What affects the increase or decrease of the price?
The answer lies in our basic knowledge of Economics: Supply and demand moves prices.
The house analogy by Andrew Horowitz is a good way of explaining this.
For example, SELLER decides to sell his house. He OFFERS the house for P600,000 because he
wants to sell at the highest possible price. BUYER wants to buy the house but wants to pay as low as
possible to get what he wants. He places a BID of P300,000.
In the stock market, the price given by the SELLER is called the OFFER or ASKING PRICE while the
price given by the BUYER is called the BID. The difference between the two prices is called the BID/OFFER
or BID/ASK SPREAD. When the buyer and seller agree upon a fair price and transact, then, a TRADE occurs
and the house is sold.
In the course of the negotiations, there may be 3 scenarios:
First, the BUYER is aggressive to find a house because he recently relocated with his family and
cannot afford waiting around. When the SELLER offers the house at P600,000 and refuses to drop the price
down to the bid, the buyer must decide whether to pay P600,000 or walk away.
Second, the SELLER is aggressive in selling the house because he must relocate to a new city
immediately. Reluctantly, he agrees to the BUYERs bid price of P300,000 and they trade.
Third, neither BUYER or SELLER is in a hurry to buy or sell, and eventually, they agree to
compromise at P450,000.
After every 5 years or so, the house will be resold. Over a period of 30 years, the actual sale price of
the house can be charted.
In the stock market, the stocks are sold not every 5 years but every second. That is how prices are
charted on a short term basis. The logic of the sales of both house and stocks are the same. The difference
is that stocks change hands many times per second and there are more than one buyer and seller.
So, for more liquid or in demand stocks, the BID/OFFER spread is very slim and prices dont
fluctuate much. As for less liquid stocks which have fewer buyers and sellers, the BID/OFFER will be wider.

STOCKADE+

HOW DO STOCK PRICES CHANGE?


Part 2

Aside from the negotiation between the buyer and seller, other factors also affect the
market price of stocks. Among which are:
INFLATION Inflation is the rise in prices. When inflation is too high, consumers tend to
spend less, thus, the company does not earn much. In effect, investors lose confidence
in the company and sell their shares. Because the company does not earn much, there
is not much demand for the stocks. Thus, stock prices go down.
EARNINGS When a company is earning profits, everyone wants a piece. However, when
the companys products are out of trend, demand will go down. When the companys
profit decreases, stock price decreases. Investors lose confidence in the company
and sell their stocks, thus, causing the value of the stock to decrease.
ENERGY PRICES Demand for energy is constant. Unless a major change occurs which
changes the demand or cost of energy, then, stock prices will move only slightly.
OIL PRICES Oil is important in everyday life. However, when oil prices are high, people
tend to find alternative means. Thus, demand for oil decreases and oil companies earn
less. Effect to the stock market is the same as above.
INTERNATIONAL AND DOMESTIC ISSUES When there is unrest, crimes, fraud, or issues
of corruption, businesses make less money and investors either do not invest or dump
out their stocks. The effect is a fall in the market. The more investors there are, the
more fluid the stock market will be.
FEAR Aside from all the issues above, investors are also afraid of losing their money.
Thus, when investors see that the prices of their shares are decreasing, they tend to
withdraw their investment and sell the same even at a price lower than their buying
price.
You may notice that this list of other factors still follow the supply and demand

framework. As you may notice by now, the stock market is not that hard to
understand.
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STOCKADE+

WHAT RESOURCES DO I NEED?


Investing in the stock market requires knowing what company or
industry
stock

is

earning.

market tools

News
can

help

articles,
you

trend

make

analyses,

well-informed

and

other

investment

decisions.
If you intend to be a short-term trader, you need to look into
real-time news.
need

to

look

If you intend to be a long-term investor, you


for

strong

economy

and

company

potential

for

growth.
Click the photos on the right side to visit the websites of these
business

articles.

There

Philippine stock market.

are

also

other

resources

on

the

Just feel free to find interesting news.

CLICK the photos to be directed to the links

Information is everywhere.

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STOCKADE+

IF YOU WANT TO KNOW MORE


This primer provides the basics of stock market trading.
of

STOCKADE+, the

participants.

information

in

this

primer

is

For the purpose

sufficient

to

guide

the

Find your own strategy of making your investments grow.

Soon enough, youll be on your feet to be an expert stock trader.


If you decide that you want to know more about stock market, feel free
to look around the internet or read books and newspapers. There are a
number of websites and books dedicated to giving stock trading strategies
and

the

like.

One

particularly

useful

site

is

the

PSE

A CADEMY.

contains reading materials opportunities in the Philippine stock market.

It
It

CLICK the photos to be directed to the links

There are a lot more to learn such as technical analysis, trading platforms and the like. Simply, technical
analysis is charting the OFFER/BID based on different market factors over a period of time. Trading
platforms provides the virtual trading floor wherein buyers and sellers come together to trade stocks.
When reading more on the stock market, dont get too caught up on the business jargon. Remember
that the market is simple as offering to sell and bidding to buy a house.
NOW, YOU ARE READY TO PLAY!

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STOCKADE+

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STOCKADE+

Before Monday, make sure you:

II. THE GAME: STOCKADE+


o Join the yahoogroup:
o Note down your
username & password
o Have the Primer on
hand
o Smile and be ready!

SCHEDULE & SOME NOTES:


Dec 2 (Sun) Free Navigation
- LINK to STOCKADE+
Dec 3 (Mon) 12nn Start Trading
-TRADING TIME is 12nn-11pm
Dec 14 (Fri) Last Trading Day
Dec 15 (Sat) Announcement of
Winners
- Should you have any questions
or concerns, just email
stockade@ateneolawinbusines.
org or post in our yahoogroups.

WELCOME TO STOCKADE+
In this competition, the participants will put their knowledge at
play.
STOCKADE+

is

participants

will

simulated

buy

and

sell

stock

market

stocks

competition.

of the

The

listed companies.

56 companies have been chosen for the participants to invest in.


The stock prices are based on the PSE values early on the
trading day.
The

TRADING

The stock values will change daily.


TIME

is 12nn-11pm

from

Mondays

to

Outside this time period, no transactions may be done.

Fridays.
Thus,

participants may allot around 10 minutes daily during this period


to buy and sell stocks.
The goal is to learn and experience the stock market.

As an

extra incentive, the player with the highest net portfolio at the
end of two weeks will win as much as P7,000.
Have fun and good luck!

HAVE FUN TRADING!

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STOCKADE+

6 PAGES
In this chapter, you will be guided through the pages in our simulation program.
The program has 6 pages.

Each will be discussed in turn.

LOGIN PAGE
MY PORTFOLIO

STOCKS
BUY STOCKS

RANKING
ANNOUCEMENTS

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STOCKADE+

I.

LOGIN PAGE

When you press the link, you will see this page:
Simply input the USERNAME and
PASSWORD provided to you.
Then, you will be directed to your
personal page.

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STOCKADE+

II.

MY PORTFOLIO

After you log in, this page will appear:


The first page that will appear is the
MY PORTFOLIO page. Here, you will see
the stocks you have bought and the
value of your stocks.
Your
AVAILABLE MONEY is amount
considered in getting the winner.

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STOCKADE+

III.

STOCKS

In the pages panel, click STOCKS and you will see this page:
The STOCKS PAGE displays 56 publiclylisted corporations.
You can see the increase/decrease of
values of stocks since the previous
day. (see HISTORICAL VALUE, CURRENT
VALUE and % of change).

Let

Buy stocks of the corporations by


clicking the BUY button on the right
side.
Buy stocks of the corporations which
seem to be increasing in value for several
days or those which decreased in value
but slowly increasing.

Buy

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STOCKADE+

IV.

BUY STOCKS

When you click the BUY button, this page will appear:

This is the ORDER FORM for buying


stocks.
For purposes of the
competition, shares are sold at fixed
market price.
Input the number of shares you want
to buy and click the SUBMIT
TRANSACTION button on the lower left
side.
The program will also compute the
total value to be spent on the shares
and your remaining money after
buying said shares.

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STOCKADE+

V.

RANKING

When you click the RANKING PAGE, you will be directed to this:

The current rank of all participants will


be reflected in this base based on their
available funds.

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STOCKADE+

VI.

ANNOUNCEMENTS

When you click the ANNOUNCEMENT PAGE, you will be directed to this:

The most recent announcement is


shown on the page.
If
you
missed
previous
announcements, just click the links on
the right side.
Answers to common concerns and
questions will be posted here.

EASY NAVIGATION for EASY LEARNING.

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STOCKADE+

YOU ARE ALL SET!


The competition will run from Dec 3 (Mon) 12nn
to

Dec

14

(Fri)

11pm.

Winners

will

be

announced on Dec 15 (Sat).

Have fun and game on!


Let the games begin!

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STOCKADE+
ANNEX:

LIST OF 56 COMPANIES INCLUDED

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STOCKADE+
SOURCES
http://www.fi-advisor.com/what-is-stock-market.asp
http://www.pseacademy.com.ph
http://www.pseacademy.com.ph/LM/investors~details/id-1316267745169/What_are_STOCKS.html
http://winninginvestor.quickanddirtytips.com/how-do-stock-prices-change.aspx
http://money.howstuffworks.com/personal-finance/financial-planning/stock-market-trends1.htm
http://www.stockmarketero.com/p/stock-market-tools.html

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