Stocks Update: Give a Warm Welcome to Four Fantastic Companies

Last week, I announced that we’re expanding our SAM’s list of fantastic companies.

Current SAM Stocks:  Target Price (Buy below price)
1. Ayala Land ALI P21.65 (P17.43)
2. Aboitiz Power AP P37.06 (P32.22)
3. Cebu Pacific CEB P109.20 (P79.43)
4. Energy Devl Comp. EDC P8.58 (P7.10)
5. First Philippine Holdings FPH P106.81 (P77)
6. Metrobank MBT P108.00 (P83.07)

New SAM Stocks: Target Price (Buy below price)
1. BPI BPI P80 (P72.3)
2. JG Summit JGS P35 (P28.83)
3. Nickel Asia NIKL P26 (P24.57)
4. SM Phil. Holdings SMPH P20 (P17.07)

Note: BPI isn’t really new. We already recommended it last November even if it wasn’t in our list.
As we expand our SAM list, I’d just like to give you a friendly reminder…

“Don’t Listen to the Noise”

The difference between a successful stock investor and an unsuccessful stock investor is this: The unsuccessful stock investor is preoccupied with the market—its ups and its downs. The successful stock investor is focused on fantastic companies.  Warren Buffett, the greatest stock market investor in the world, said that if they closed the stock market for five years, it wouldn’t bother him. Why? Because the ups and downs of the market is noise to him. He doesn’t care about it. He invests in growing businesses, period.  Not the stock market.  The key?  To invest each month in fantastic stocks.  That’s why Warren Buffett’s investment horizon is 10 years to forever.

For example, when CEB, EDC, and FPH dropped almost 10 percent, that was noise. Peter Lynch, another legendary stock market guru,said: “The key to getting rich in stocks is not getting scared out of them.”

Out of the 10 companies we’re recommending, some companies are like eagles flying high today, such as ALI, MBT, BPI, NIKL. (We predict they’ll go higher.)
Some companies are horses that are galloping nicely, like CEB and SMPH.  Some companies are turtles crawling in the mud, like JGS, AP, EDC, and FPH. We believe that they’ll have their day to shine. We just don’t know when.  But all that is noise. They’re eagles, horses, and turtles now. In the future, they might be exchanging places.  So if you have the money, invest in all of them. Or buy five this month and buy the other five next month.
If your investible funds each month are smaller, then buy two or three different companies each month.
Which should you buy now?
If you’ve been doing SAM for some time, I suggest you buy some or all of our new recommended companies: BPI, NIKL, JGS, and SMPH.
My other suggestion? Block out the noise.
Remember:  Becoming wealthy is simpler than you think.

Happy investing!

May your dreams come true,
Bo Sanchez

Stock Market: An Overview

All of us want financial security in the future.  We plan to have our own dream house or a car.  We also want to give the best education to our children and of course when our working days are over, we will all retire.

“The wise man saves for the future but the foolish man spends whatever he gets” – Proverbs 21:20

Aside from the bible verse above which inspires me, my primary reason for investing in stocks is to beat the inflation.  You might be asking why we don’t just put our money in a bank for long-term.  Let’s say, savings or a time deposit account?  Yes of course you can but banks will just give you a measly and tiny interest rate for your money of 2.5% per annum; this is mainly for a time deposit account which is the biggest interest banks can give.  Yes you got it, only 2.5% interest per year less 20% tax of the amounting interest.  If you have 100,000 pesos and put it in a time deposit, it will only earn 2,000 pesos (2,500-500 tax) per year.  Well, if you compare this to the average inflation rate of 7% per year, time deposit interest rate is very low. I still remember in 2010, the price of unleaded gasoline costs about 40-45 pesos per liter.  At 1,700 pesos, my car’s tank is already full. But today it costs almost 2,500 pesos.  Therefore, banks are not good for long-term investments.

So where will you invest your money?

Money can be invested based on the level of risk you want.  It could be in a business, real estate, mutual funds, UITF or the stock market.  For me who still enjoy my day job, I’m investing part of my income per month in the Philippine stock market.

Stock Market: What is it?

A good definition of stock market can be found in Citiseconline’s web site, an online stock broker in thePhilippines.

Stock market is the place where you can invest in other peoples public listed companies.  You can visit the Philippine Stock Exchange website to check these companies.  A company sells shares of stock through an Initial Public Offering (IPO) to raise capital to grow their business.  For example, when you choose to buy stocks of San Miguel Corporation, you become part owner of the company.  But do take note, even if you have thousand shares of San Miguel, it doesn’t mean you will get discounts when you buy a bottle of San Miguel beer or Petron Blaze car fuel.

How will you profit from the stock market?

Your investment grows over time by capital appreciation and by receiving dividends.   Let me tell you a story of my friend to clearly illustrate capital appreciation.  Roughly 11 years ago, he bought 400 shares of PLDT at a price of 300+ per share.  So that’s about 12,000+ pesos of investment.  When the price per share reaches 600+ he was tempted to sell all his shares and take the profit off the table.  But today at the time of this writing, the price per share has increased to 2,746+ per share so his 12,000 pesos is now 1,098,400 pesos if he decided to wait and forget about his investment for 11 years.

capital appreciation

Capital appreciation works over time, so time is one of our greatest assets in the stock market.  Moral lesson: the earlier you start investing the better.  Capital appreciation is one of my bases why I decided to invest my money in stocks for the college education of my kids instead of putting it in an educational plan offered by insurance companies.

Dividends on the other hand, are the profits distributed by the company to its shareholders given in the form of cash or additional shares.  I remember, last July, I received my first dividends from SM Prime Holdings.  I’m very happy although it’s just a small amount the fact that, I didn’t work for it.    I realized my money actually grows!  I also received dividends from SMDC, AyalaLand and First Philippine Holdings.  Click here to view actual dividends.

What if the stock market is down?  Isn’t it dangerous?

When the stock market is down, most people are panicking specially the “Tsupiteros” or the traders.  But for me as a long-term investor, I’m happy!  Why?  Because my favorite “blue chips” stocks which are solid and giant companies are “on-sale”.  It’s like I’m buying sale items in Megamall where all items are 30-50% off.  My money can buy more shares than ever before and one day, when the crisis is over, these “items” will stabilize and will go back to its normal or higher prices then I earn!  For me, there’s nothing wrong investing in giant companies like SM and Ayala Land even in the time of crisis.

So instead of buying sale items in the department stores like shoes or bags, I choose to buy shares that are “on sale” in the stock market especially when there’s crisis like what happen September last year (2011).  Nowadays, my Ayala Land has a gain of 27% (after 14 months of continuous investing) while Metrobank has 20% gain.

This concludes my overview of stock market investing.

Happy investing!



The views expressed herein are that of the Website’s owner unless otherwise stated.  This blog does not solicit the reader to buy because of the articles posted here. Due diligence must be exercised before buying shares of stock.  The Website owner doesn’t hold responsibility in any manner arising from reading this blog.

Stocks Update: Expanding SAM!

In his latest stocks update, Bo talks about expanding SAM or Strategic Averaging Method. This method lies between the active and passive means of investing hence the name “strategic”.  From the previous 6 recommended stocks, he’s adding 4 more.

To understand the basics of investing in the stock market, download and read this e-book.

Below is the list of SAM and it’s target price.

Current SAM Stocks: Target Price

  • Ayala Land (ALI) – P21.65
  • Aboitiz Power (AP) – P37.06
  • Cebu Pacific (CEB) – P109.20
  • Energy Devl Comp(EDC) – P8.36
  • First Phil Holding(FPH) – P107.16
  • Metrobank (MBT) – P108.00

New SAM Stocks:

  •  BPI (BPI) – P80
  • JG Summit (JGS) – P35
  • Nickel Asia (NIKL) – P26.20 (upgraded soon!)
  • SM Prime Holdings(SMPH) – P20

That brings SAM to 10 Stocks.

The reason for expanding this list is because we are currently facing a booming stock market.  It will help us to have more fantastic companies where we can invest our money.

The next issue of stocks update will discuss these new recommendations in detail so watch for it!

Top10 Past Winners of TrulyRich Club stocks

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