If you can't help 'em, please don't burn 'em

Business Mirror
January 13, 2006

EDITORIAL

If you can't help 'em, please don't burn 'em

THE advice for overseas Filipino workers to invest some of their earnings in shares of stock of companies listed on the Philippine Stock Exchange lacks many things, if not everything.

It might have been easy for someone from the Executive branch to call on OFWs to save and boost the trades of the stock market with their hard-earned dollars. But the adviser failed them in not telling them about the intricacies of stock investing and the risks that go with it.

In the first place, it pains our OFWs to leave their families behind to be able to provide them with the most basic things in life, such as food, shelter and clothing. The three necessities may not come in that order, considering that the dream of Filipino parents to send their children to school until they obtain a college degree remains the best legacy that poor parents can arm their children with for future battles in life.

The question now is who among our so-called modern heroes, praised as the messiahs of the country's economy, can afford to forgo education, food, shelter, clothing and set aside part of the family income, derived mostly by the parents from working in other countries, for stock investing?

One puts money in stocks for a certain length of time-six months may be the shortest for the more conservative investors like stockbroker Irving Ackerman. Can an OFW last that long with his money tied up in stocks until the payment for the next tuition comes along? Or the next meal? Or the next apartment rent that comes every month? Or the next contractor's demand for the budget for the house that is being built or for the next amortization for the house bought on installment?

An OFW may not easily find the answers because he may not know anything at all about stock investing. Who is now going to educate him on how one scores gains and losses in the market, giving each subject equal emphasis but perhaps more on the latter? It is important to note, too, that what is probably one of the most important pieces of advice for investing that an OFW should be educated on is when to sell-for greed knows no boundary.

OFWs should take a look at a concrete illustration of investments gone sour. Who will forget that even the Government Service Insurance System and the Social Security System failed to protect their members' money when their officials-and their think-tank group -invested heavily in the shares of Belle Corp.?

Here is the computation of how the two funds lost their members' contribution. This is not necessarily intended to scare them and make them ignore the suggestion of Neda's Dennis Arroyo (as reported on in one paper) for them to save their money in stocks but, more important, to warn them that even the most erudite investment advisers could go wrong. Whether or not the two funds' investments are influenced by some other political consideration is beside the point. Simply put, the billions poured into Belle shares by SSS and the paper losses until today should serve a good lesson on how not to invest in stocks.

On October 21, 1999, GSIS and SSS paid P1.399 billion for 447.650 million shares of Belle Corp. at prices ranging from P3.10 to P3.20. The two funds, which have for their members employees of government agencies and private companies, respectively, have been stuck with Belle shares since, as the market kept falling. Two years after, Belle's share price dropped to P0.40. As a result of the big decline, SSS and GSIS lost a whopping P1,219,940,000!

Who among our OFWs, who may all be SSS members, could shoulder a loss of P2.80 for every share? Every thinking investment strategist at SSS and GSIS must have suffered so many sleepless nights during the years that Belle has been on the slump. Luckily, Belle is slowly inching up. It is now trading above P1 per share, a price still way below the acquisition price.

Granting that our OFWs are well-informed and learned enough to understand the intricacies of stock investing, the next thing that should worry them is who will protect them from price manipulators? How certain are they and the rest of the public investors that the scandal that rocked the market many years ago involving BW Resources Corp. won't happen again?

Any recurrence of a similar price manipulation that saw BWRC's share price top P100 from a few centavos would certainly send OFWs with investments in stocks either packing their belongings to return to see what went wrong with their money.

The President and her circle of advisers have been so obsessed lately with the OFWs' income that they tend to cling to it for everything and anything the economy needs. That is why they are invariably cited as a factor in most developments. And yet, ironically, no one in government takes the trouble to seriously provide OFWs and their families a forum or a means to put whatever savings they have into long-term, productive investments.

It then goes without saying that if we can't even provide them a means for multiplying the economic impact of their money-other than praise them to high heavens for providing the dollars with which to pay the national debt-the very least the government can do is not to jeopardize whatever funds they have set aside by giving haphazard advice that could burn them.

Sure, recent and ongoing reforms in the Exchange should inspire confidence in the public; but OFWs must be told that the stock market is not the only venue for investments. If the government really wants to help OFWs grow their savings, it should at least inform them of some other safe havens for their money, such as small Treasury bills, which are much safer than stocks for they are guaranteed by the national government.