BuildYourWealthThruStocks

TheTrulyRichClubWay

ByLaurentDionisio,CPA,RFP

ManyofusFilipinosarestrugglinginourdailyfinancialstatus.Someof

usarebornrich-eithercontinuebeingrichorendedupbeingpoor.

Therearealsosomethatarebornpoor-eitherstaypoororstrivedto

succeed.However,onlyafewofusareenjoyingthebenefitsofbeing

wealthythroughinvestinginstocks.

Didyouknowthatthereareonlylessthan1millionindividualFilipinos

whoareinvestinginthestockmarket?

Areyouoneofthem?Ifnot,why?

Iwonderedwhytherearestillmanyofuswhoareskepticalaboutthe

subjectofstock.

Didyoufindthissubject“sogoodtobetrue”,“tooabused”or

“undermined”?

Well,let’stakeadeeperdiscussionaboutitandseehowyoucanbuild

yourwealththroughit.

First,let’sseeifyoucananswerthesesetsof5questions.

Basedonyouranswers,youwillknowifyouarequalifiedtoinvestin

thestockmarketornot.So,let’ssee:

1.Areyoualreadysatisfiedwithyourcurrentregularincome?Do

youfindawaytoexpandit?

2.Howmuchmoneydoyouhaveinthebank?Isisenoughforan

emergencysituation?

3.Howaboutaninvestment,doyouhaveany?Howmuchmoney

haveyoualreadyearnedfromitinthepast6months?

4.Howmanyyearsareyouwillingtoworktoearnaliving?Are

youyoungenoughtodoit?

5.Areyoufamiliarwithstockinvestment?Doyouwanttotakea

risk?

Now,itisuptoyouifyouwillbuildyourwealththroughstocks.

Togiveyouawiderunderstandingofstocksandthethingsthatyouare

curiousabout,let’sdiscussitonebyone.

DefinitionofStocks

Thetermstockreferredtoastheownershipofanindividualtoa

corporation.Theindividualiscalledasastockinvestororastockholder.

Acorporationcanbeownedbymanystockholdersthatareunknownto

eachother.

TypesofStocks

Stockshavetwotypes,thecommonstock,andthepreferredstock.

Thesetwoaredifferenttoeachother.Acommonstockholderhasthe

righttovoteatacorporatemeetingplushecanalsopracticehis

preemptiverights.Incaseacompanydeclaredbankruptcy,acommon

stockholderisthelastonetoreceivetheshareorwhatisleft.Onthe

otherhand,apreferredstockholderdoesn’thavetherighttovote,but

hehasahigherclaimthanacommonstockholder.Unlikeacommon

stockholder,apreferredstockholderistheonewhoisfirstinlinewhen

acompanyisonbankruptstatus.

CommonNamesofStock

Youmayhearalotofunfamiliartermsreferringtostocksuchasequity,

equityinterest,shares,commonstock,stake,ownershipandownership

interest.Thesetermsarebeingusedinthestockmarket.

Tohaveabetterunderstanding,takealookattheexamplesbelowand

seehowthesetermsareused.

1.Anahasa5%stakeinafast-foodchainsoAnaownsthe5%of

alloutstandingstock.

2.Juanhasa10%equitypositionincompanyXYZ.Thecompany

has1500shares.Therefore,Juanowns10%ofallstockin

companyXYZ.Heowned150outof1500sharesofstock.

3.Mariaownsa20%ownershipinterestinafamoussalonchain.

ThismeansthatMariaownsthe20%ofallstockoutstandingin

thissalonchain.

TheStockMarketDefined

Thestockmarketissimilartoatypicalmarket,therearesellersand

buyersaswellasthemiddleman.

Theplacewherebuyingandsellingofstockstakeplaceiscalledasthe

stockmarket.Ontheotherhand,thebuyingandsellingofa

stockknownasastocktrading.Theplacewherestocktradingisbeing

executedisreferredtoasthestockexchange.

ThenationalstockexchangeinthePhilippinesislocatedintheMetro

Manila,whichisknownasThePhilippineStockExchangeor

abbreviatedasPSE.Themostpopularandlargeststockexchangeinthe

worldistheNewYorkStockExchange.

PeopleintheStockMarket

Therearethreetypesofpeopleinthestockmarket.Thestockbuyer,

whichisyouinthisinstance.Thestockselleristheonewhosellsthe

stock.Lastly,thestockbrokerwhoactsasamiddleman.

Thestockbuyerneedsastockbrokerinordertobuystocks.Itisvery

importantthatyoudoyourresearchonstockbrokersfirstandif

possibledoanextensiveresearch.Asanewstockbuyer,youshould

onlybuystock,accordingtowhatyoucanandavoidborrowing.Astock

buyercanalsobeastocksellerifyoudecidetosellyourstock.

Thestockbrokercanbeanyofthesetwotypes:thefull-servicebroker

andthediscountbrokeroralsoknownastheonlinebroker.Thefull-

servicebrokerisalittlebitexpensivethanthesecondtype,butthey

providefinancialanalysisandplanningaswellasfinancialadvice.The

discountbrokerearnsthroughcommissionrates,whichisusuallylow.

Thistypeofbrokeralsoprovidessomefinancialadvicebutonlylimited.

TheIPO

Whenaprivatecompanybecomesapubliccompany,thisiswherethe

IPOtakesplace.TheIPOstandsforInitialPublicOfferingwherein

referredtoasthebeginningpointofstock.Itisalsosometimesreferred

toasthestockmarketlaunch.Thisistheveryfirsttimewhenastockis

beingofferedtothepublicwhereinstockbuyerscanbuythestock

throughastockexchange.AfteranIPO,apubliccompanycanrevertas

aprivatecompany.

ReasonsWhyCompaniesIssueStock

Therearemanypossiblereasonswhyacompanyissuestock,hereare

some:

1.Toallowexpansion

2.Toacquireanothercompanyorbusiness

3.Toacquireassetsthroughotherinvestors

4.Todecreasedebtandliabilities

5.Todevelopnewproductsandservices

6.Topresentmorejobsandaddmoreemployees

7.Toprovidevaluetothecompany

8.Topayfornewbuildingsinsteadofloaning

9.Tobuymoreequipmentandtechnology

10.Toofferforanacquisitionormerger

AdvantagesofInvestinginStock

Unlikeotherformsofinvestment,investinginstocksisverybeneficial.

Asastockholder,youhaveaclaimonthecompany’sassets.For

examples,youowneda1%shareinthecompanythentechnically,you

ownedthe1%oftheequipmentandotherthingsinthecompany.You

alsotakepartofthebrandingandcontractsthatthecompanyhas.

Youcaneithertakeholdofyourshareorsellitanytimeyouwant.

Whenthevalueofyourstockincreases,itisuptoyouifyouwilltake

holdofthatorsellit.Thecompanywillnotcontrolyourshare.The

higherthepotentialofthecompanyyoubelong,thegreateryour

capitalgainswillbe.Youcanalsoearnthroughdividends,whichwillbe

discussedlater.

DisadvantagesofInvestinginStock

Asidefromitsadvantages,investinginstockcanalsoberisky

sometimes.Actually,therearerisksinanyinvestment.Itisuptoyou

whereyouputyourmoney.Oneofthepossibledisadvantagesof

investingstockiswhenitdecreasesitsvalueorwhenthecompany

declaresbankruptcy.Thismayrefertoascapitalloss.

Findingtherighttimeofbuyingstock

Todayistherighttimetoinvestinastock.Ifyouareyoung,thebest

timeyouhavetoinvest.Timingthestockisjustamyth.Thestock

markethasitsupsanddown,what’simportantisyoumakeyourfirst

stepinyourwealth.Also,takenotethatyoushouldcontrolyour

feelingswhenitcomestoinvestinginstock,donotletyouremotion

interfereThatiswhytherearestockbrokersthatwillhelpyouanalyzed

themarket.

ToSellorToHold

Sellingorholdingthestockmaybethehardestdecisionyouwillmake.

Youneedtoanalyzethemarketandavoidgettingintoconclusion.

Whenthestockpricedecreases,mostinvestorsthinkofsellingbecause

thecompanyisnotdoingfine.Thismaybejustaminorsetback.Itis

stilluptoyouifyouwillsellorholdthestock.Sellingcanalsobe

expensiveduetotaxesandbroker’sfee.Holdingthestockcanalsobe

risky.

WaystoMakeMoneyfromStock

Therearetwowaystomakemoneyfromstock,thefirstiscalledas

capitalgainsandtheotheroneisdividends.

CapitalGain

Whenyousellaproduct,youwillhaveaprofit.Instock,itisreferredto

asthecapitalgain.Thisprofitcanberealizedoncethestockissold.To

haveabetterunderstanding,let’stakealookatthisexample:

Amonthago,JuanboughtasharefromtheXYZcompany.He

bought100shares,eachsharecosts$10sohespent$1000.

Today,thecurrentvalueofthisstockinthestockmarketis$15,

sotechnicallyhegained$5eachsharesowiththetotalof$500

capitalgain.However,thisisnotyettheactualcapitalgain

becauseitisonlyonpaperunlessJuansellshisshares.OnceJuan

soldhisshares,hewillget$1500fromitandthecapitalgainis

$500.IfthevaluedecreasesandJuansolditatalowerrate,then

itiscalledasacapitalloss.Eachday,thevalueofstocksfluctuate.

Dividend

Ifthecompanyperformswell,itwilldeclareadividendtoallofits

stockholders.Thedividendisknownasthepaymentofthecompanyto

itsstockholders.Theamountofpaymentdependsonyourshare,ifyou

haveabiggersharethenyouwillgetabiggerdividend.Thedividend

willbedividedaccordinglytothesharesofallstockholders.Tohavea

betterunderstanding,let’stakealookatthisexample:

IntheXYZcompany,Juanhas100shares.Thecompanydeclaresa

20centsdividendtoallshareholders.Juanwillget20centson

eachshareasdividendpaymentfromtheXYZcompany.

StepsinGettingStartedWithStock

Youneedtofollowthese5simplestepssoyoucanstartwithstock.

Eachstepiscompletelydiscussedbelow:

Step#1:OpenanOnlineStockTradingAccount

Asdiscussedearlier,youcannotbuyyourpreferredstockalone.You

needthehelpofastockbroker.

Thestockbrokerisafirminwhichwillbuyorsellstocksonyourbehalf.

ThefirmwillbetheonewhoisgoingtoparticipateinthePhilippine

StockExchange.Therearetwotypesofastockbroker,theonlineand

theofflinebrokers.Youcanmakeallyourtransactionsthroughan

onlinebroker,exceptforopeninganonlinestocktradingaccountwith

astockbrokerfirm.Itislikeopeningasavingsaccountinabank

whereinyouhavetopresentyourselfaswellassomedocuments.

Openinganonlinestocktradingaccountrequiresthefollowing:

• Photocopyof1validid,itcanbeanyofthefollowing

o Voter’sID

o Passport

o PostalID

o Driver’sLicense

o PRCID

o SSSID

o CompanyissuedID(plusbirthcertificate)

• Dulyfilledupform(s)

• Proofofbillingunderyourname(ifnotavailable,underoneof

yourparents'name,shouldnotbelaterthan3months)

• Miscellaneousrequirements(dependingonyourpreferred

stockbroker’slistofrequirements)

Afteropeninganonlinestocktradingaccount,youcannowdoallyour

transactionsthroughonline.Youcandothefollowingtransactions:

• Fundingofaccount

• Buyingofstock

• SellingofStock

• Withdrawalofmoney

Itiseasiertohaveanonlineaccountwhereinyoucanmonitoranytime,

anywhere.AsamemberofTrulyRichClub,Ilearnedalotaboutstocks

andhowthingsworkaroundit.Therearemanyonlinestockbrokers

thatyoucanfind,youjusthavetobevigilant.Ifyouareanewbie,you

cancheckCOLFinancialwhichistherecommendedstockbrokerof

TrulyRichClub.Itiseasytoopenanonlinestocktradingaccountwith

COLFinancial.Thisstockbrokeracceptsnewbies,OFWs,professionals,

aswellasstudents,butnoyoungerthan18yearsold.Theyevenaccept

non-Filipinoresidents.TheserviceprovidedbyCOLFinancialisso

competitive.Youcanalwayscomparetheratesandservicessuchas

financialanalysisandplanning.

Ontheotherhand,ifyouwanttodoitofflinethenyouneedtobe

presentedtothestockbroker’sofficeeverytimeyouwillmakea

transaction.

However,youcanalsomakeacallifitisnotconvenientforyoutobe

presentintheiroffice.Thisiswhatwecalledatraditionaltrading

account.Therequirementsarealmostthesamewithanonlinestock

tradingaccount.Itisuptoyouwhichtypeareyougoingtoopen,but

anonlinestocktradingaccountishighlyrecommended.

Step#2:FundyourOnlineStockTradingAccount

Nowthatyouhaveanonlinestocktradingaccount,thenextthingtodo

istofundit.Youcanchoosewhichtypeofaccountdependingonthe

stockbroker’savailableaccounts.Theminimumamountrequiredin

fundingyouraccountis5,000php.Youhave2optionstofundyour

account,theseareasfollows:

• Onlinetransfer

Thisismyfavoritemeansoffundingmyaccount,especiallyifIam

alwaysonthego.Ifyouhatelonglinesandgoingtothebank

makesyouuncomfortable,thenyoushoulddoanonlinetransfer.

Itiseasier,fasterandmoreconvenienttotransfermoneyvia

onlinebanking.

• Bankdeposit

Ifyoupreferthetraditionalwayoffundingyouraccount,youcan

gotothenearestbankwhichiscompatiblewithyour

stockbroker’sbankaccount.Afterdepositingthemoney,you

needtoscanthebankslipandsendittotheemailofyour

stockbrokerforconfirmation.

Onceyoufundyouraccount,youcannowgotothenextstep.Forsure,

thisisexcitingforfirsttimers.

Step#3:BuyYourVeryFirstStock

Let’sgetthispartmoreexcitingandtrynottobeoverwhelmed.Ihave

towarnyou,thispartisalittlebittricky(becauseyouareafirst-timer).

However,donotbeeasilydiscouragedasthisthingisveryeasyto

understand.So,whatwillyouexpect?Youhavetoexpectthatyouwill

seealotofnumbers,figuresandunfamiliarmenus.Don’tworry,your

stockbrokerwillhelpyouwiththis.Youneedtochoosewhichstockto

buy,thisisalittlebitchallengingatfirst.Thesearesomeguidelinesthat

willhelpyouinchoosingwhichstockareyougoingtobuy:

• Investinmutualfundsthaninindividualfunds,itislikeputting

youreggsinmanybaskets.

• Fundonlywhatyoucanandavoidborrowingforthefirsttime

• Considerbuyinginternationalfundsandseeitspotential

• Buystocksfromcompanieswhicharefamiliartoyou

• Donotbuystocksbasedonthemessageboardastherearesome

peoplethatmightmisleadyou

• Checkthecompany’sbalancesheet

• Research,researchanddoextensiveresearch

• Asktheexperts,itisalwaysbettertoask

Step#4:SellYourStock

Aftersometime,youwillseethechangesinthevalueofyourstock.It

willeitherdecreaseorincrease.Ifyouseeanincrease,thenitistime

foryoutosellyourstock.Tohaveabetterunderstanding,refertothe

examplebelow:

JuaninvestedinXYZcompanyfor1000shares.Eachsharecosts

P10,soheinvestedatotalofP10,000.Afteramonth,thevalueof

astockofXYZcompanygoesuptoP15fromP10.Juancanhavea

gainofP5,000ifhewillsellitnow.So,hedecidedtosellit.Now,

JuanhasP15,000andhisprofitgainisP5,000.

Inthiscase,thesellingpriceisP15higherthanthebuyingprice

thatiswhyJuanhasacapitalgain.

WhenJuaninvested,thebuypriceisalittlebitlowandwhenhesees

thegrowthonhisinvestmenthethendecidedtosellit.Youcaneither

sellitortakeholdofit.However,forafirsttimer-itisajoytohave

yourveryfirstsale.Theincreaseinthestockdoesn’thappenalways,

therearealsotimesthatyouwillexperiencecapitalloss.Itisimportant

alsotohaveyourtargetpricesowhenthattimecomes,itiseasierfor

youtosellyourstock.Therearetimesthatthepriceofastockgoesup,

butbecauseofgreed,somestockholdersarehesitanttosellitandwait

forthetimeitwillgoupagain.Youshouldlearnhowtoseparategreed

inmakingdecisionsaboutyourstock.Thevalueofstocksfluctuate

fromtimetotime,astockcanworthP1dollaryesterday,P20todayand

becomesP10tomorrow.

Thestockmarketcanbeacomplicatedworld,butitpayswhenyou

havepatiencewithit.Ittakesalotofpatience,deeperunderstanding,

experiencesandahightoleranceofriskstostayinthestockmarket.If

youhaveacapitalgain,thencongratsonyourfirstsale!

Step#5:EnjoyYourProfit

Filipinosalwaysliketoenjoytheirfruitsoflaborsoenjoyit.Youcan

withdrawyourfundstoyourbankaccount,youneedtomakearequest

fromyourstockbrokersotheycanmakethetransaction.Youcanalso

leaveyourmoneyinyouronlinestocktradingaccountandtreatitas

yourinvestment,soyoucanalwaysbuyanewstock.Inbuyinganew

stock,youjusthavetorepeatthewholeprocessandbeawiser

investornow.

Afterreadingthis,haveyoualreadymakeupyourmindinbuildingyour

wealthwithstocks?

Iknowhowskepticalyouarerightnow,I’vebeeninthatsituationtoo!

Youhavesomedoubtsandthatistotallynormal.However,Iwantedto

helpyouachievewhatIdid...

Stocksarejustacombinationofnumbers,numbersthatcanhavea

highervalueifyouwillonlyallowit...

Nowhowcanyouinvesteffectively?

FollowtheStrategicAveragingMethod(SAM)ofTrulyRichClub

WhatisSAM?

ThisisextractedfromtheStocksupdateReportintroducingSAM.

MeetYourNewFriend,SAM.

BySAM,Idon’tmeanUncleSam.

BySAM,ImeanStrategicAveragingMethod.

ThereWereOnlyTwoWaysofGettingintotheStockMarket,Until…

Inmymind,therewereonlytwowaystoinvestinthestockmarket:(1)

passiveinvestingand(2)activetrading.

WithSAM,I’mintroducingathirdway.(Ididn’tinventSAM.Mymentor

did.He’sabillionairewhohasdoneallthreemethodswithincredible

success.Thestockmarkethasbeenhisplaygroundforthepast38

years.)

BeforeSAM,Itaughtpeopletobepassiveinvestors,notactivetraders.

Reason?Eightyfivepercentofpeoplelosemoneyinthestockmarket.

That’safact.Andmostofthoseareactivetraders.Activetradersbuy

andsellstockseveryday.Ihavefriendswhoaresuccessfulactive

traders,andbelieveme,they’reveryrare.Theytradefulltime,they

studyeveryday,andtheyfollowverystrictrules.Withouttheserules,

activetradingisgambling,period.

Passiveinvestingislong-term.Activetradingisshort-term.

Passiveinvestingonlylooksatthequalityofthecompanies.Active

tradingonlylooksattheirshareprice.Passiveinvestingcomesbymany

names.Manypeoplecallit“moneycostaveraging”,or“pesocost

averaging”,or“dollarcostaveraging”.Citiseconline,ourpreferred

onlinebroker,callsittheEasyInvestmentProgram(EIP).

SowhatisSAM?

SAMisinbetweenpassiveinvestingandactivetrading.

SAMissemi-passiveinvesting.

SAMusesthe4RulesofPassiveInvesting,tweaksthem,andaddsa5th

rule.

Torefreshyourmemory,herearethe4RulesofPassiveInvesting:

Rule1:InvestMonthlyfor20yearsormore.

Buyingstockseachmonthusingyoursmallmonthlysavings.It’sreally

makingthestockmarketyourpiggybank.Youdothislong-term—for

20yearsormore!

ButinSAM,wetweakthisrule.IfyouuseSAM,there’llbetimeswhen

youdon’tinvest,andchoosetostayawayfromthemarket.Theseare

timeswhenwebelievethemarketisoverboughtandisgoingdown.

We’dratherwaitforthemarkettogodownandbuywhentheprices

arecheaper.

Rule2:InvestevenWhenThere’saCrisis.

Passiveinvestingmeansdisregardingifthepricesareupordown,if

there’satsunami,earthquake,coupd’etat,orrecession.Youjustkeep

buyingmonthaftermonthaftermonth.InSAM,wetweakthisruletoo.

Ifpossible,wetrynottobuyonthewaydown,wetrytobuywhenit’s

alreadydown.

Rule3:InvestonlyinGiants.

Passiveinvestingmeansbuyingonlyestablished,enduring,bluechip

companiesthatwebelievewillbethereforthenext50years.Wedon’t

dabbleinpennystocks.Becausewebelieveinpeoplewhobuypenny

stockswillbecomepenniless.

InSAM,wetweakthisruletoo.Generally,wedon’tbuypennystocks.

Atraretimesthough,wefindgemsamongthem.Andwemakean

“intelligentspeculation”.Becauseofitsvolatility,weonlyput“extra

funds”inthesegems.

Rule4:InvestinmanyGiants.

PassiveinvestingmeansnotbuyingoneGiantbutahandfulofGiants.

Why?There’ssuchathingas“BlackSwan”inthestockmarket—when

anunexpectedeventhappens.Wedon’twantallourmoneytobein

onecompany—andtragedyhitsthatcompany.

Ifyou’redoingpassiveinvesting,werecommend10Giantcompaniesor

more.

Ifyou’redoingSAM,werecommendfivetosixcompaniesonly,

becausewe’reabletomovefromonecompanytoanother.

Irepeat:SAMusesall4rules,althoughtweakedabit.ButitaddsRule

5.AndRule5isthemagicsaucethatmakesSAMmoreprofitablethan

passiveinvesting.

The5thRuleofSAM

WhatistheRule5?

Rule5:Webuywhenthepriceisbeneathour“BuyBelowPrice”and

wesellwhenthepriceisnearour“TargetPrice”.

InmyStocksUpdateReport,I’llprovideboththeTargetPriceandthe

BuyBelowPriceforyou.

Remember,SAMisinbetweenpassiveinvestingandactivetrading.In

onesense,itissemi-passiveinvesting.Passiveinvestingneveruse

timing.Activetradingisallabouttiming.SAMusesalittlebitoftiming.

Passiveinvestinglooksonlyathowgoodthecompaniesare.Active

tradinglooksonlyattheshareprice.

SAMlooksatboth:companiesandshareprice.

Passiveinvestingneversells.Activetradingalwayssellseverydayor

everyweek.SAMsellsafterafewmonths.We’llgiveyouthe“Buy

BelowPrice”andthe“TargetPrice”ofeachofourrecommended

Stocks.

HereAre4BigAdvantagesOfSam

1.FasterGiants

AsIwritethis,Citiseconlineisrecommending16stocksforitsEasy

InvestmentProgram(EIP).They’refantastic,enduringcompaniesthat

willmostlikelybethere50yearsfromnow.Butfromexperience,

havingsomanystockstochoosefromcancauseconfusion.And

confusioncausesinaction.

ForSAM,we’llnarrowdownthelisttofivetosixstocksonly.Lesser

choicesmeanlesserstressforyou!

Whynarrowdownthelisttofivetosixstocks?BecausenotallGiants

arecreatedequal.SomeGiantsaresogigantic,theirgrowthmaybe

slower.

SomeGiantsareinamatureindustry,sothegrowthwillbeminimalat

best.Sowe’llchoosetheGiantsthatwebelievewillrisefaster.

Obviously,wedon’thaveacrystalballwith100percentaccuracy.So

wecouldbewronginoneortwoofourselections.

Butwe’rehopingthatourrightpickswillbeenoughtomakeyour

moneygrowfasterthanifyouweredoingtotallypassiveinvesting.

2.LowerPrices

Justlikeinpassiveinvesting,you’retobuyaparticularstockeach

month.ButinSAM,youonlybuywhenitspriceisbeneathour“Buy

BelowPrice.”

Here’sasecretinmakingmoremoneyinstocks:Youmakeyourmoney

whenyoubuy,notjustwhenyousell.WhatdoImean?Ifyoubuyitat

acheaperprice,yourearningsincreasemanytimesmore.

HowdoesSAMdothis?I’llgiveyoua“BuyBelowPrice”foreachofour

recommendedstocks.Thiswillpreventyoufromchasingarisingstock

allthewaytothetop.

3.SecuredProfits

Inpassiveinvesting,youneversell.

InSAM,we’lltellyoutosellafterafewmonths—whenour

recommendedstockhitsourTargetPrice.Byselling,youlock-inyour

profits.Youtakeyourprofitsoffthetable.

Youtakeyourmoneyfromacompanythat’salreadygoneupandputit

inanothercompanythatstillhasroomtogoup.Thismultipliesyour

earningsnicely.

4.NiceJackpots

Andthentherearejackpots.Lepanto(LC)wasourjackpotstockthis

year.MymentormentionedittomelastDecember2010—andIwrote

aboutitrightaway.IfyouboughtwhenIrecommendeditlast

December,youwouldhaveearned157percentbynow.

Iwarnedpeoplethatit’savolatilestock.Itmaygoupordown.Sothis

isn’tourbreadandbutterin

SAM.ButItoldyouthatifyouhadextramoney(thatyou’rewillingto

loseifthingsgowrong),youcanbuyLepanto(LC).

Mymentorcallsthesecalls“intelligentspeculations”.Irepeat:Asa

rule,wedon’tspeculatewithpennystocks.Buteveryonceinawhile,

hefindsagemamongthepennystocks.It’sveryrare.Butwhenhe

findsone,he’lltellme—andI’lltellyou.Therisksarehigher,that’swhy

Iaskyoutoputyour“extramoney”only.

Sowhatdoyouthink?

Forme,Ifollowthismethodformylongterminvestments.=)

SoherearetheSAMHouseRules

1.InvestSmallandSlowly

Invest comfortable amounts. Don’t invest big chunks ofmoney all at

onego.

Investsmallamountsregularlytogetgoodopportunitiestobuyatlow

prices when stock prices are down. In other words, invest small

amountstogetgoodaveragepricesovertime.Thisconceptisknownas

CostAveraging.

LikeBro.Bosuggestedbefore,ifyourmoneyissmallerthanP300,000,

divide your money into 6 parts, and invest each part for the next 6

months. On the other hand, if your money is more than P300,000,

divideitbymorethan6parts.Perhapsby12partsandinvesteachpart

regularly.

2.BuyatBuyBelowprices

ForeachSAMstockwerecommend,wehavewhatwecalla‘BuyBelow

Price’.Thistelluswhentobuythatstock.As longasthepriceofthat

stock remains lower than our Buy Below Price, we continue to buy

regularly(everymonth,everyquarter,oreveryweek).

YoucanchecktheBuyBelowPricesofourSAMstocksbelow.

Forexample,oneofourSAMStocksisAyalaLandInc.(ALI)andit’sBuy

Below Price is P16.73,while its currentmarket price is P15.90 (As of

November9,2011).Thismeansthatasthispricewecanbuysharesof

ALI.

3.StopbuyingwhenpricesgobeyondourBuyBelowprice.

When thepriceofaSAMstockgoeshigher thanourBuyBelowPrice

thatmeansweshouldstopbuying.However, if thepricesofourSAM

stocksgobacklowerthanourBuyBelowPricethisgivesusasignalto

startbuyingagain.

WewanttobebuyingatBuyBelowpricesbecausewewanttobuyat

attractivepricesorvaluations.Ontheotherhand,westopbuyingwhen

prices go beyond our Buy Below Price to avoid buying at high priced

valuations.

Going back to our example earlier of ALI with its Buy Below Price at

P16.73, if at one point the price of the stock goes up to P16.76. This

would signal us to stop buying such shares for it has crossed beyond

ourBuyBelowprice.

However, if ALI’s price goes back to P15.80, then thismeans it once

againbelowourBuyBelowprice.Thismeans,wecanbuyagainshares

ofALIatthatprice.

4.WaitfortheTargetPrice.SellwhentheTargetPriceishit.

TheTargetPrice isaprojected futurepriceofa stock thatwebelieve

the stock will go to or go close to given the performance of the

company.ThispriceisusedbyBrokerstoestimatethepotentialgrowth

ofacompanyconsideringa1-yearpointofview.

So after accumulating shares at Buy Below prices, all we have to do

nowiswait.

Like tea that we steep, or wine that we store over time, we wait

patiently and let time coupled with the company’s consistent good

performancedriveupthepricetoourTargetPrice.

AssoonasthemarketpriceofourSAMstockhitsorgetsclosetoour

TargetPrice,wesell.Thismeansthatwe’resellingoursharesandwe’re

locking inourprofit. By this time,we’vealreadymademoney!We’re

onestepclosertobecomingmillionaires!

Nowusing the sameexampleofALIwith itsTargetPriceofP19.75, if

thecurrentmarketpricegoesuptoP19.75orclosetothatprice,then

thiswouldraiseoursellflagsignifyingthatweshouldalreadysell.

5.ReinvesttootherSAMstocks.

UsethemoneyyoumadefromsellingaSAMstockatourTargetPrice

and reinvest it, buying shares of our other SAM stocks that are still

pricedbelowareBuyBelowPrice.

By doing this you’re compounding your previous profit with the

potentialprofityou’llbemakingwiththisnewSAMinvestment.It’slike

rolling-overatimedepositinthebank.

I’ll talk about the concept of Compounding on our next issue. This is

anotherkeytomakingourmillionsintheStockMarket.

SticktoSAM’sSystem

Thisisourtreasuremaptothemillionsinstoreforus.Wejustneedto

followit,followittothedot.Followthesystemandyou’llmakemoney.

It’sthatsimple.

The only thing challenging about it is the discipline it requires. So

choosetobedisciplinedandsticktothesystem,sticktoSAM’ssystem

nomatterwhat,evenintimesofcrisis.

Onedayyourdisciplinewillberewarded.

ExampleofaSAMTable

Soareyounowconvinced?

HerearethetopwinnersofTrulyRichClubinthepreviousyears.

Sowhatareyouwaitingfor?Startinvestingnow!

Joinusnowatwww.TrulyRichClub.ph

Seeyouinside!Godbless!

LaurentDionisio,CPA,RFP

www.PinoyFinancialPlanning.com

Gotquestions?Emailmeatluranski@gmail.com

Skype:luranski_19