Money Magnets

Photo by Darius Bashar @ Unsplash

I am a Money Magnet! We are Money Magnets!


-->

I am a Money Magnet! We are Money Magnets!

Stocks, over time, outperforms all other asset class!

Does Investing in the Stock Market Work? YES!  

The reason behind why companies continue to grow is because GDP continues to grow, driven by consumption and the growing population.

I am a Money Magnet! We are Money Magnets!

A comprehensive guide on how to earn passive income and how and where to invest your hard earned money based on the author's personal experience.  It is downright honest and full of wisdom.   A great read we can all learn from.  

A few of our favorite lines:

"Better to just make more with many streams of income so you don’t have to worry about going broke. And then saving will come naturally as you make more money."

"Money is just a side effect of health."

"Here’s the whole thing: stay physically healthy in whatever way you know how (sleep well, eat well, exercise). Be around good people who love you and respect you and who you love and respect, and be grateful every day."

"invest in yourself"

"Invest in experiences rather than possessions.Figure out interesting and unique experiences you can have or places you can go to (but they don’t always have to be places)."

"Books. Reading is the best return on investment. You have to live your entire life in order to know one life.But with reading you can know 1000s of people’s lives for almost no cost. What a great return!"

"Bubbles don’t mean anything. We had an internet bubble in the 90s. Then a housing bubble. Bubbles bubbles bubbles. And if you just held through all of that, your stock portfolio right now would be about a percent from all-time highs."

"Every day give the world at least one more reason to whisper “thank you” to you."

I am a Money Magnet! We are Money Magnets!

In this interview, Bo Sanchez talks about how you can achieve abundance simply by following his 100-10-20-70 Rule.  He also talks about relationships, sex, investing in the stock market, and discerning God's will.
-->
    

  

I am a Money Magnet! We are Money Magnets!

COL Financial Released the composition of their model portfolio last July 10, 2013.  The Model portfolio contains the list of recommended stocks from the firm.  In the latest release, they removed MPI (Metro Pacific Investments, MER  (Meralco), and MWC (Manila Water Company, Inc.) due to "heightened regulatory risks."  If you followed their advice, and removed MER from your portfolio right away, you would have been spared the recent drop in the shares price due to SMC's (San Miguel Corporation) sale of MER shares at a discount.

Here's the latest COL Model Portfolio:

COL Financial Model Portfolio

Among these, MBT and BDO probably has the best potential for future gains.  TEL is currently rising probably in anticipation of dividends in August.

Personal Finance superstar Suze Orman was in the Philippines for a brief road show, encouraging Filipinos to believe in the Philippines, to start saving, and to finally launch that journey to financial freedom.  Here are some of the key points that she imparted during her stay.

On Marriage and Finance

• Having a Prenuptial agreement (prenup) is good.
• Marry someone who you can freely discuss money issues with.

I am a Money Magnet! We are Money Magnets!

In a recent article from BPI Asset Management, author Kleia Crucero highlighted why in the past 5 years, if you simply placed your money in a savings account or even a time-deposit account, you would have lost a fraction of your money's value due to inflation.

The five year average time deposit rate and 5 year average inflation rate for the Philippines are highlighted in the table below.  While your saving's numerical value actually increased, your money's purchasing power actually decreased by -2.49% annually due to inflation.

This article highlights the fact that we should strive to find other investment instruments that can effectively beat the inflation rate.  Possible alternatives are investing in bonds, stocks, mutual funds, or Unit Investment Trust funds (UITFs).

Continue reading the article to know more.

As you probably know already, the Philippines Stock Exchange Composite Index (PSEi) has reached a new all-time high of 6,171 this January 2013.  As a result, insurance and investment companies are banking on this positive development and are aggressively marketing their investment products. (Read more after the jump)

I am a Money Magnet! We are Money Magnets!

Good news Money Magnets!

BPI Asset Management has just announced that they are removing the holding period for all their Unit Investment Trust Funds (UITFs) starting August 1, 2012.  Instead of placing a holding period to encourage clients to commit, BPI is finding other ways to do so.  The change is retroactive and placements made months earlier will also no longer incur a penalty if you do decide to redeem them earlier.  While a short investing time frame is not very ideal for these types of funds, certainly, the freedom to redeem your placement without a penalty is very encouraging especially during times of financial emergencies.


Hurray for BPI! We hope other banks follow suit.

Changes in BPI Unit Investment Trust Funds effective August 1, 2012.

I am a Money Magnet! We are Money Magnets!


In Summary:

• With a Price Earning Ratio (PER) of above 14x, the Philippine stock market remains to be the most expensive.  This is above the country's 15-year average of 15.5x but still significantly lower that it's peak of 16.7x back in 2007. (BPI Asset Management)
• Philippine PER is higher than Asian market PER of 12x (Julian Tarrobago Jr., ATR Kim Eng Asset Management)
• While expensive, fund managers still believe that the PSEi will surge in the fourth quarter and end the year with record highs.  BPI Asset Management said that 5,500 is very much achievable.  While Julian Tarrobago of ATR Kim Eng has set a higher target of 5,800.
• Growth will be powered by a surging Philippine economy, better than expected corporate earnings, low inflation rate, and higher market turnover (participation in the stock market).
• Sector-wise BPI is still bullish on PROPERTY firms, CONSTRUCTION companies, and FINANCIAL institutions.  
• Mr. Tarrobago on the other hand suggested looking at small cap stocks that are "less-known, small and medium-sized companies capable of strong growth."

I am a Money Magnet! We are Money Magnets!


Michael Lewis' Princeton University Baccalaureate remarks:

"The "Moneyball" story has practical implications.  If you use better data, you can find better values; there are always market inefficiencies to exploit, and so on.  But  it has a broader and less practical message: don't be deceived by life's outcomes.  Life's outcomes,while not entirely random, have a huge amount of luck baked into them.  Above all, recognize that if you have had success, you have also had luck - and with luck comes obligation.  You owe a debt, and not just to your Gods.  You owe a debt to the unlucky."

I am a Money Magnet! We are Money Magnets!

The global stock markets have been very volatile these days and certainly it's not the time to play around and risk your hard earned money if you don't know what you're doing.  While one may consider this as "extraordinary times," it's still just one of those crises that we have to face and surmount.  Like what we wrote in our previous post, "Welcome to Crisis", what's more important is to know how to survive and to thrive in such situations.  Every crisis is an opportunity for us to grow to our full potential and in every crisis, there's an opportunity waiting to be discovered.  While the global markets may be in turmoil, it doesn't mean that we can't have a little fun in our continuous pursuit of mastering the skills necessary to thrive in the stock market.  Recently, we've encountered some few interesting ideas about the stock market which were related to songs that we know by heart.  Hope this helps us remember a few points about investing and trading in stocks.

1. "It's just emotions taking me over." Bee Gees

Yesterday a US-based stock broker was quoted in saying that he thinks the current US Stock market is a "Bee Gees Market" because he believes it's just emotions taking stock traders over.  This is a good tip to remember for short-term traders.  When you're trading the stock market, you're not actually trading the stock itself but more so trading the emotions of the other traders.  Supply and demand in the short term is largely influenced by how other traders perceive where the market is going.  If you want to be successful in short-term trading, you might want to heed Jesse Livermore's advice and take emotions out of your trading.  Create a trading plan and follow your plan all the way.



2. "Say a Little Prayer"

For those more inclined to just buy and hold their stock positions, don't just buy and then say a little prayer afterwards hoping that what you bought will increase in value.  Make sure to do your homework first and look at companies with good fundamentals before you choose which stocks to put your money in.  Warren Buffet, one of the world's successful investors, uses this strategy.  With this approach, he doesn't have to monitor the stock prices everyday.  He's not that concerned with daily price movements because he knows that eventually the company will earn and with these earnings, the stock's price will increase without a doubt.

3. "Yesterday Once More"

This song will have to be the theme of stock traders who solely rely on Technical indicators.  By looking at a stock's price chart, certain trends and patterns can be observed.  And when these patterns repeat, it's yesterday once more.

While this approach has its advantages, we believe that it would be wiser if a trader combines both technical and fundamental analysis, as prescribed by William J. O'Neil in his book "How to Make Money in Stocks", in coming up with a winning portfolio.

Keep on attracting wealth Money Magnets!  Happy investing to all!

For more music-inspired learnings about the stock market, read Efren Cruz's article Music-inspired approach to Stock Investing here.

"WELCOME TO CRISIS!"  We echo Roger Collantes as he says this out loud with a cheerful tone.  Indeed, crisis is the new normal.  Everyone faces one form of crisis everyday in our lives and instead of associating crises with all sorts of  negativity we must face it with positivity.  

On a private event sponsored by Banco de Oro (BDO), we got a complimentary copy of Roger Collantes' Beyond Survival: How To Thrive Amidst Life's Inevitable Crisis.  The book tackles issues on how to view crises in a positive light, how to turn it to your advantage, and how you can learn to thrive in it and live meaningfully in the midst of it.  This was just last week.  BDO must have sensed that an imminent crisis was coming as today the PSEi closed at 4,157.03, effectively erasing all gains the PSEi had from the start of the year.  Not to mention of course, the bloodbath in all global markets.  In times like this, the author has this to say ... "Don't get BITTER, get BETTER!"

Found this ad in the newspaper and thought about sharing it here with you guys.  This is certainly good news for everyone who wants to make saving a habit.  With the BDO Easy Investment Plan, you can enroll your savings or payroll accounts in a BDO automatic debit facility for the purpose of immediately investing the money in your choice of BDO Unit Investment Trust Fund.  And as long as you are enrolled in the program, the process of saving and investing is done continuously on the selected contribution dates.

Check out the ad from BDO after the jump. (Includes details on how to avail and where to inquire about the service)  

Good Morning 2011! 

2011 will be a great year.  I can just feel it.  This year and probably for the next couple of years as well, I've decided to focus on learning how to trade and invest in equity markets.  I've started this journey a few years back but it was only the last quarter of last year that I decided to really follow the market and learn both technical and fundamental analyses.  If you are looking to embark on the same journey as well, I found the following recommended books on the internet.

I am a Money Magnet! We are Money Magnets!


It looks like there's no stopping the bull market from charging onwards.  The PSEi continues to go up and make new all-time highs!  If you trade in the stock market or hold an equity-based portfolio, you might find this article by Ron Nathan very helpful.  It's an old article but still very insightful.  Enjoy reading it after the jump.

I am a Money Magnet! We are Money Magnets!

Lending Investments

These investments lend the money you invest in to them to borrowers as loans.  Your investment earns from the interest charged to the borrowers for the use of your money.  Examples of this type of investments are bonds (government or corporate bonds), bank deposits, and pension plans.  These investments have relatively low returns for the short-term but may exceed inflation rate in the long-term.  These investments are recommended for those who need regular and definite income.  It is also best for older people who can take less risk due to old age.

Ownership Investments

As the name suggests, these investments allow you to be part owner of a business or company.  They are classified as high risk investments.  Your money earns only if the business or company goes up in value.  In addition, gains and losses are only realized when you decide to sell them.  Examples of this type of investments are stocks, mutual funds, unit investment trust funds, real estate, and your own business.  These investments are recommended for young investors in their 30's or 40's.

Speculative Investments

Speculative investments are investments that are highly speculative - investors get into these investments hoping that they will hit the jackpot.  Investors take the plunge and hope that the investment will eventually increase in value in the future.  Information on how one can generate profit from these investments are usually vague and incomplete.  Due to the nature of the investment, it possesses a very high risk.  Examples of this type of investments are investment in assets, properties or businesses that may be illegal, and gambling activities like Lotto.

I personally would not recommend Money Magnets to invest in speculative investments.  These are very risky and the chances of gaining returns from this type of investments are very slim.  The more you deal with them the greater is the probability of losing your money.  For capital growth, I suggest you go for ownership investments.  If you are in your 30's then time can be your friend.  The more time you have to invest in these, the less risky they will be.  However, don't forget to leave some money for emergency purposes as well.  Invest these on lending investments which are highly liquid (can be easily converted to cash).  Happy investing to us all!

Get your free email updates.  Subscribe here.

April 29, 2009.  President Gloria Macapagal-Arroyo has signed amendments that will increase the insurance coverage for bank deposits by 100 percent.  The insurance for bank deposits to be provided by the PDIC will be raised from PhP 250,000  to Php 500,000.  

The amendment was done in order to strengthen the confidence in the Philippines' banking system.  In order to encourage the people to keep their money in the banks and protect them during this global recession.

However, in a report from the Philippine Daily Inquirer, it also states that the amendment also "grants the deposit insurer which deposits should be insured and which should be not."  Which begs the question, 'Which deposits are insured?'  Are all our bank deposits insured by default or does it have to be approved by the PDIC first?  If the deposit insurer (PDIC) can take away our bank deposit insurance anytime, somehow, I don't feel so secure anymore.  I realize, of course, that they've added this to deter fraudulent schemes such as that of the Legacy Group.  I think further explanations should be provided to add clarity to the subject.  If the deposit insurance can only be taken away if fraudulent practice is proven to exist, then I guess that would be more acceptable.  

As to when this amendment will take into effect has not been announced yet.  I checked the PDIC and still no news has been reported on the matter.  (Haaay ... I miss Money Smarts already.)

I'll keep you guys updated on this matter once I have more news.

Today was day 1 of my Investment Management class and our professor shared something very interesting.  He gave us the percentages of the success rate of investments made by Filipinos (in the stock market).  I don't know where he got his data or how accurate it is but trust me when I say he's not the type to make things up.  He gave us the following figures:

It was shocking to hear that 90% of the investors actually lose money!  And only 3% actually gain from it!  With these figures, one might say that investing in the stock market is not that much different from gambling.  I wonder what possible reasons there are that brought this about.  I hope to be able to figure these out and eventually be able to share these reasons with you.

I was reading the Philippine Daily Inquirer a few days back and I came across this article by Ma. Salve Duplito about how Vandemir Say, Chartered Financial Analysts of the Philippines' new president, used value-style investing which he learned from Warren Buffett. I think this is a good read for these volatile times.

VANDERMIR C.T. SAY started investing when he was 12 years old. That was 22 years ago. He recalls picking stocks the way he would play darts. Not anymore. For the last decade or so, Vandermir has become a Warren Buffett-follower, investing only in good companies at good prices and buying them for the long haul.

In the last couple of months, amid cascading losses in markets all over the world, Buffett’s value investing philosophy has attracted.

The fact that Buffett, the world’s richest man according to Forbes magazine, has emerged as Wall Street’s knight in shining armor after injecting funds into Goldman Sachs and General Electric a week ago has most likely upped the ante significantly on value-style investing.

And if the sale of Buffett’s first and only authorized biography “The Snowball: Warren Buffett and The Business Of Life” written by Alice Schroeder (editor of Berkshire Hathaway’s layman-friendly annual reports) is any indication, the interest is just heating up. Just days after it hit bookstores in Sept. 29, the book has claimed a top spot on Amazon’s best-selling book list.

Say, the Chartered Financial Analysts of the Philippine’s new president, explains that value-style investing is based on very simple principles. “All we look for are good businesses at good prices,” he says.

In this day and age of extremely volatile markets, the value investor is unfazed because he buys and holds for as long as he needs the investment. He is not concerned about fluctuations. His life is relatively simpler and less harried because for him, Wall Street can wallow in its own toxic securities.

Contrast that with an investor who makes money from trading stocks or bonds and who had to watch his portfolio drop more than 20 percent in the last couple of weeks, asking himself every morning, “Is this ever going to end?”

In fact, Say says, some value investors he knows who have the extra cash are now revving up for acquisitions. After all, prices are low and whether in good or bad times, a good business is a good business.

“In general, what is happening is good for us because the crisis is pushing down prices. My job now is to look for good businesses,” Say says.

Whether in stocks and bonds, Say says good opportunities in the market are starting to emerge. He declines to say what are good buys, but gives tips: Look for businesses that are managed by people with high integrity and find companies that respect the rights of minority shareholders. Those two criteria alone will shorten the list of good bargains out there in the market, he says.

“Right now, Buffett can buy almost anything in the market, but look at companies that he is buying. Goldman and GE, companies that are being run very well … Integrity is important, the goodness of a person is important. What if you meet some guy with no integrity but you can probably make $200 million, you should say no. Why go through all that stress? There are better ways to make money,” he adds.

These may sound like dreamy principles in a day and age where everything is measured by money and returns. But it also uncannily explains why Wall Street is tottering like a drunken lunatic in a suit: Greed is the root cause of the subprime mortgage problem. Even more greed by investment bankers and hedge fund managers blew that out of proportion through derivatives instruments disclosed in legalese language very few understood.

“Buffett and Charles Munger (Buffett’s business partner) have attacked derivatives three or more years ago. Munger said comparing derivatives to a sewer is an insult to sewers. Now in this crisis, what is the value of his advice? Multibillion dollars because what are the key to the problems now? Derivatives,” Say explains.

That said, Say doesn’t see the popularity of value investing to stay for long. “It is the flavor of the year, but if you are asking if it will generally be much more popular than before, I would guess not. Buffett learned from Benjamin Graham more than 50 years ago. It is not a secret; it has been around for a long time. But it has never been a popular style,” he says.

Reading annual reports and understanding what makes a business tick takes a lot of patience. It’s based on analysis, and not a quick tip to make a quick buck by flipping a stock or bond. Adhering to those principles and being disciplined is the hardest part, says Say, because old habits die hard.

“There are a number of value investors here in the country. They are in the minority, as well as with any other market, even in the US,” he says.

And do they make more money than the flippers? Say knowingly smiles, and says, yes, they are wealthy.

The 32-year-old investor tries to emulate Buffett not just in investing but also in the way he lives. Buffett, the shy billionaire who is also called the Oracle of Omaha, still lives in his house in Nebraska that he built more than 50 years ago, doesn’t have a driver, is brand loyal, and highly values integrity. Say uses an old model mobile phone and says his passion is helping people live better lives.

“My clients have been calling me about the book (Snowball) when it came out, and they were very excited about it. It’s like our Harry Potter,” he says with childish excitement.