Year-to-Date Performance as of May 2010

THIS IS OUR FIRST PERFORMANCE REPORT about what smallCOST had accomplished for the first five months of this year 2010.

Stock trading activity
smallCOST started the year 2010 on Week 1 ending January 2, with 5,000 pesos equity in our BPI Trade online stock trading account. Our stock trading activity began on Week 6 ending February 6 when we bought 100 shares of AyalaLand (PSE symbol: ALI) at 10.50 per share. We closed this position on Week 10 ending March 6 when we decided to sell ALI at 11.50 per share. We had a net profit of 49 pesos equal to a 1% return on our trading equity.

Equity build-up
By Week 22 ending May 29, we made two deposits to our BPI Trade trading account. First, on Week 21 ending May 22 with an amount of 15,000 pesos, and then on the following Week 22 ending May 29 with 5,000 pesos. Hence, by the end of May 2010, we had a total trading equity of 25,296 pesos including our net income from stock trading.

Buy and sell transactions
As of May 31, 2010, we completed a total of 5 buy orders and 2 sell orders. In the process, we had accumulated a net profit of 296 pesos representing 1.2% return on total assets. Our stock portfolio consisted of a single stock: ALI.

Return on equity
For computation of our return on equity on a weekly basis, we computed our average weekly equity and compared this against our year-to-date net income. This reckoning is not standard. This is our own devise and formulated for our own purposes. On this basis, we managed a 4% return on average weekly equity as of the month ending in May 31, 2010.

Balance sheet
Our balance sheet contains only 3 main accounts: Cash, Stocks and Equity. As of May 31, 2010, we have a cash balance of 2,026 pesos and our stock position valued at 23,270 based on purchase cost. Altogether, these two asset accounts total 25,296 pesos. Our total equity is equal to our total assets at this point.

Stock trading cycle
This is how our online stock trading activity looks like:


We start with our cash to buy stocks at the Philippine Stock Exchange (PSE) through our online broker BPI Trade. At the completion of our buy order, an inventory of stocks which we can call a portfolio is then created. When our decision criteria is satisfied, we can then decide to sell any or all of our stock position using the same online broker, thereby generating receivables during the 3-day clearing period. After clearing, we collect our sales proceeds in the form of cash deposited to our trading account.

Next Post: Week 23 Ending June 5, 2010 Stock Trading Update