Smart Pinoy Investor: How to win in the stock market

With some major moves were seeing now in the stock market, below is a helpful quick market update from Sir Gus Cosio, one of the respected fund managers in the country. It's interesting to note his emphasis on the need of fundamental investing skills and less focus on foreign activity.

At the end of his note is another excerpt from Wealth Strategy of Truly Rich Club regarding the importance of knowing your objective in investing and focusing on one's proper investment objective.

Personally, I sometimes wonder if I'm already focusing too much time and all about managing my finances, and if I'm forgetting my objective why I'm in the stock market in the first place.

And the Gospel yesterday seems to be a good reminder on that:

(Luke 16:11) "So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches?"

Photo credit: Now I live in the principle that whatever life presents to me, no matter how small, I'm called to give my best to manage it

You see, before I have this fixation that thinking about this our worldly life is simply not in line with following God's will in one's life. I still didn't have this clear notion of offering whatever you do for the glory of God. And I'm thankful that God has changed it through time. I realized I don't have to wait for heaven to come down before I give my best. Now I live in the principle that whatever life presents to me, no matter how small, I'm called to give my best to manage it, because "the person who is trustworthy in very small matters is also trustworthy in great ones; and the person who is dishonest in very small matters is also dishonest in great ones (Luke 16:10)"

In the end, the challenge is to have a proper perspective, so we don't fall to the trap of serving both God and money. And in the few years of managing my own financial life, I can say that money is indeed a very great servant yet can be a terrible master.

May we always be faithful (and great) stewards of God's gifts to us!

Have fun investing (and making money serve you),
Omeng \_(",)/

***

Most markets closed lower on Friday. Perhaps, the euphoria over the postponement by the US FED has waned. In some investors minds, tapering will eventually come, and it is just a matter of time. I hope everyone of us gets real on this issue of FED tapering. Did you ever believe that the U.S. central bank would do this Quantitative Easing forever. If you ever did, you should pick up your old Economics 101 textbooks and learn some economics all over again.

The monetary solution to averting recession was a master move by the FED, but do not forget that it was simply that - a policy solution. For as long as I can remember, the U.S. central bank always carried out the policy response which the underlying economy needed. Any mature fund manager or investor should know that. This is why we should not have such an exaggerated reaction to any of this tapering action. It is but a normal step that a central bank would take after many years of easing.

I venture to say that in the next round, investors will be able to differentiate among markets with strong fundamentals and those whose are shaky. While I do not really want to see a strong PHP, the recent strength of the Philippine currency highlights that hedge funds and carry traders have recognized the local markets strong support. Even as local stocks declined sharply in the past 3 months, there had been enough participation of domestic investors when stock prices turned cheap. This is an encouragement to external investors because it reflects the significance of local investors in providing depth to the market.

Yes, the Philippine stock market is still small by global standards, but the fact is that it is growing at a very strong and deliberate pace. I think Filipino investors must improve their fundamental investing skills and be less influenced by what foreign funds are doing. We should be the ones buying the market cheap rather than the foreign investors. They should be the ones buying after the locals have accumulated their positions. When we learn to do this, we will be the greater beneficiary of the wealth which the stock market is creating.

Have a good week ahead.

-Gus Cosio

***

If We Have a Big WHY Then We Will Find the HOW - Lyndon Malanog

Why do we save and invest? Is it to earn high interest rate at the end of the year? Technically, an investment can be categorized as a good investment if it can outpace the effect of inflation and taxes. But there should be something more than just the technicalities.

A clear windshield is one of the factors a driver needs to drive a vehicle safely.

But this was not my situation five years ago. One evening on my way home while driving my “old reliable” 1980 “Toyota Tamaraw Jitney,” heavy rain suddenly poured. For those who are not familiar with the vehicle, it looks like a passenger jeepney with no built-in windshield washer (sprinkler). I kept this delivery car after we closed our wholesale and retail business in 2000. To clean the windshield, I always bring with me a bottle of water with a hole on its cup so I could squeeze the water out to the windshield to clean it while the wiper is in motion. I find the HOW because I have a Big WHY should I continue simplifying my life and delaying gratification.

The driving condition worsens when moist filled up the inside of the car because of the absence of an air conditioning unit. I now have to wipe the moist every now and then to have a better view of the road. As a result, I have to drive very slowly because my hands are now so busy performing multi-tasking in addition to the heavy rain. I find the HOW because I have a Big WHY should I continue on my way back home and enjoy the warm embrace of my wife and children.

Now, why I am telling you this story and how is it related to “Wealth Strategies?” Friends, our greatest investment in this world is our RELATIONSHIP with GOD, family and friends more than our own earthly desires.

We build wealth to provide a better life for our family and to improve the life of our brothers and sisters. This is our Big WHY.

Today the market is undergoing correction which is only normal because we are already overbought. Nobody could really tell when we will experience an uphill climb again and what we see with our eyes is just like the moist windshield. The investment weather is not so favorable for many and that’s why a lot of people are asking if we are now in the bear territory. These are the times when the men will be distinguished from the boys.

Friends, focus on your Big WHY and then invest for the long term. Our Big WHY is to fund our dreams for our family. Whatever the weather condition, we will always find the HOW to continue our journey because this will mean a better life for our family. Let’s continue putting in something every month. Remember that “Habit is more important than Skill.” Next, we must invest for the long term because if we do all the up and down of the market, it will always be corrected. What we are experiencing today should not change our investment perspective if our investment period is long term.

Today our country’s fundamentals remain strong amidst the correction and sooner or later, maybe and just maybe eight to nine months from now, the foreign investors will realize that it is indeed more fun in the Philippines. Happy investing everyone.

***

PS: The above piece is a short section of a sample Wealth Strategy article of Truly Rich Club from Lyndon Malanog.

Lyndon Malanog is an Entrepreneur and the Financial Coach of Bo Sanchez, Inc.. He continuously gives “Financial Discipline and Wealth Management” seminars to companies and groups as part of his noble mission and advocacy of educating people.

Meet Lyndon (and other awesome speakers) in person in our powerful seminar this coming Saturday (January 25 2014) at Gateway, Cubao! Know how to avoid many mistakes people commit in their financial lives and learn how to win in the stock market!

Get more details here.

Email pinoyinvesting@gmail.com to reserve your seat now.