Money Blueprint

Whew! I just came from a two weeks vacation in the Philippines and it feels right good for me. Somehow my batteries are recharged and is now ready to pounce on every opportunity I might bump.

Within the two weeks vacation I took, I observed some of the thinking or mentality of most of the people I have talked to. In that period, I have noticed that around 99% of the people I have met have what I call the "Poverty Blueprint".

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I talked to one of my relatives and asked how his one million peso was spent. Let's call him Uncle John. Nine months ago, Uncle John just sold his parcel of land he owns for one million pesos. He needed the money because he doesn't have any job and they need it to get by through the day. His plan was to buy a jeepney worth two hundred fifty thousand pesos and rent it to others so that he can have a daily income to sustain their daily food expenses. The seven hundred fifty thousand pesos left from the sale of land will be deposited in the bank for emergency purposes. Uncle John thought he could live comfortably from that day on.

He bought a jeepney for two hundred fifty thousand pesos and deposited the rest in the bank. Following his plan, he rented the jeepney to others and collects the daily "boundary" from the driver. Things are going very well.

Two months later, he bought an owner type jeepney with a reason that since he is already fifty years old, he needed a vehicle that would transport him to locations so that he can avoid the daily commute. He spends fifty thousand pesos for that vehicle. This is the first time that he owned a vehicle for his personal use. He uses the owner jeep to go to destinations he likes to see. Uncle John is now brimming with confidence and soon follows a woman who rides on his owner jeep.He told the woman that she should not worry about anything and he will take care of her since he has money in the bank.

He continued with his life and nine months after the sale of his land, he is almost back to his old financial situation when the land is not yet sold. Bank account is now fifty thousand pesos and the jeepney is needing some major repair. Things are getting ugly. He asked me if I could lend him but I told him, "No".

What happened to Uncle John? A man who has a million pesos in his pocket, did some business (jeepney), is now back to his old financial situation. Why do you think had happened? Hindi niya swerte?

What happened to Uncle John and to many Uncle Johns of the world is not because of fate or luck or tadhana. Uncle "Jigs" told me that even if you will give Uncle John ten million pesos he will still be back to his old financial situation.

Uncle John's money blueprint is not for millions but for thousands only. He lives and earns in thousands before and even when his parents are alive, they don't live by the millions. His life has been molded to earn and be comfortable in thousands that's why when he got a million, no matter what his reasons are he will be back to his old financial ways. It's deep within him and it is the subconscious mind embedded within him that Uncle John will always look for thousands not millions.

I have seen in others as well and it is really pathetic. What is more troubling is that they held firmly on their beliefs. The only way to get out of this is to follow the mindset of successful people. Learn from them and act.

The Keys to Success

As I have mentioned in the previous blog, the environment plays a huge role as it is quite inevitable – particularly our inner environment.

A calm relaxed individual is far more likely to come out a winner in a trying situation than his/her counterpart – a person who his nervous frustrated and erratic. The former has his senses fully identified with the environment in which he places himself.

However, the restless individual does not understand the environment and consequently gets into trouble. The keywords are focus, concentration and care in whatever you do in life.

1. Develop a definite and a clear-cut goal/aim.

2. Draw up a wise workable plan/program.

3. Guard your health. Without health there is no real wealth.

4. You must conserve your energy.

5. Be honest in your life (in words, deeds, thoughts and actions).

6. Stick to virtues and adopt good principles.

7. Reflect upon ideal personalities and seek strength from their philosophy.

8. Seek divine guidance and be truthful.

9. Endeavor to help and serve others with gratitude.

10. Always think positive and believe in the power of God.

Transformative thinking is indeed the way to success. Set out a plan to achieve your goal and deliberately ruminate over the meaning of this plan and make it happen.

From time immemorial great people from all walks of life have emerged as true victors and the reason behind this is training the mind for happiness. Ethical discipline is essential, particularly self-discipline.

Each individual is unique. What is good for person A may not be suitable for person B. However, it has to be emphasized that all can enjoy quietude, solitude and silence, and to be honest every individual irrespective of age, caste, creed, color, sex has at some stage or another experienced peace.

After discovering through trial and error method, you can determine the precise way to compose your mind body complex and thus attain great heights.

Meditation may not be effective for all, but that does not mean that you do not improvise such methods as and when required.

Be systematic, and your only goal should be to employ methods that bring you success and happiness.
Our mental faculties determine our actions, and it is quite obvious that the mind should be tamed and subdued. Constant vigilance is necessary and continuous training of the mind will pave the path to ultimate success.

Do not fall prey to the dictates of your mind!

Optimistic, heroic and noble ideals have a powerful and uplifting effect upon the body. Enthusiasm with deliberate well-orchestrated self-application in joyous mood and absolute optimism is the secret path to wealth for all great men.

The Basic Steps

The following guidelines will help you pave a wonderful path to your ultimate success.

The steps are very simple to implement in your daily life.

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1. Do what you love and what you are good at.
2. Be prepared to learn and to be positive (motivation and enthusiasm).
3. Be an innovative individual.
4. Be prepared to invest not just money but your time, effort and resources, too.
I mentioned money – this does not mean that you have to invest a large sum to become a millionaire or wealthy.
5. You must be disciplined in having set goals and targets. Remember that persistence is the key to success.
6. You must be prepared to manage your time effectively.
7. As you evolve, learn to give back what you amass to the society. I call this philanthropy.

You must have a solid vision – one in which you ‘see’ yourself having attained success. Great people of the past and present see to it that they reach this coveted position, by employing these basic steps.

However, notice in step 2 I deliberately used the word ‘learn’, and that too for a very good reason. Life is the greatest teacher, thus you must be willing to accept challenges all the time (using the power of discrimination) and thus as a result you must learn via its eternal principles the magnificent doctrine it has revealed with the passing of time. This means that you must act when the time is right.

Action is incredibly important and highlights success – the two are synonymous to be quite honest. To succeed action is needed but the essential ingredient is how serious you are. Being too serious can ruin your business venture, so the point is to have FUN.

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Any discipline will require organization and orderliness. You must be prepared to listen to your inner voice as much as you possibly can. This means that rather than being too dependent on your family, friends and so on (not that this is bad) begin to have faith in your own capabilities.

Stand-alone and strive to learn and succeed. Often, failures may just result from instances where we have stopped exercising our own views, or we have become too dependent on others’.

Success is not some secret that you have to search for or unearth in order to reach your destination; it is rather the understanding or the recognition factor that you develop with respect to what you really want in life. Intuition, courage, skills, knowledge, challenges and opportunities are some of the concepts that determine the traits of people who enjoy wealth. Any task performed with the right spirit will give you victory. Mental attitude is what will give you success, but negative attitude, laziness and working unwillingly will result in failure.

Do not expect too much in too short a time, but your approach should be positive and execute your task with absolute perfection, paying particular attention to your long-term goal(s). This means that you approach your duty with concentrated energy and you execute your plans righteously. This should be your philosophy of life.
To begin a new venture, it vitally important that you realize the following, which I have to say is crucial. You have to appreciate the fact that to start a business you need to acquaint yourself with the term cash flow. Investment in the form of a capital is a requirement, but more importantly it is the concept of viability of the business venture that matters most.

Rewire Your Wealth Beliefs

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      Once upon a time, I was a grade five student studying in Angeles City. We live in a resettlement provided by the government since our barangay was ravaged by volcano lava. Our house was buried in mud and the whole community was covered by sand and lava . In fact, most of the houses' roofs cannot even be seen. The eruption of Mt. Pinatubo almost removed our barangay from the Philippine map. Our barangay became an ocean of sand.

Be an absolute realist and eternal optimist
Years later, the volcano tamed and pulled all its fangs against our province. People began visiting the scar-plagued community we live in.The visits became regular and the people starts to build houses again. My father built a small house also as well as a piggery to support our living. He even managed and cultivated some sugarcane in our barangay of which this day is still existing. During those years I am coming with my kin in visiting our beaten barangay. One day, they discussed about the future of the children. Since I am a valedictorian in elementary and an honor lister in high school, they have high hopes on me. One man suddenly blurted out that I will never be a successful person. That I will never be able to buy a car. Somehow, as a young man who is just starting to shape it's dreams began to doubt its ability and confidence. I was shaken.

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That comment lingers in my mind for many years until I decided that it's time for me to carve out my own future and bring out the best in me. I hired successful mentors, associated myself with great people and began borrowing the ideas of my heroes. My heroes are my father who is an epitome in rewiring old thoughts into a winning attitude, my boss for his business acumen and developing his employees potential, Bro Bo in spiritual and wealth abundance, Robin Sharma in leadership skills and others. The four people mentioned above are the cornerstone of my belief and in the building of my character. I borrowed most of my ideas and beliefs from them. There are also great people whom I admired so much like Dr. Jose Rizal for patriotism, Abraham Lincoln for focusing in his dreams despite various setbacks and crippling challenges and many more. In fact, I have a lot of books from others. I do get a lot of inspiration in reading books.

Rewire Your Beliefs
      Are you familiar with Julie's Bakeshop? The owner, Tita Julie has 500 branches scattered all over the Philippines. Bro. Bo asked Tita Julie on what is the secret of her success on the 70th birthday of Tita Julie. Tita Julie said "Everything I need comes to me!" What a wealth belief! Imagine what kind of life you would live if you wake up every morning with that thought, and you believe that in your mind and heart, everything you need comes to you. Do you need certain wisdom and knowledge? It will come to you. Do you need money and capital? It will come to you. Do you need people to help you in business? They will come to you. You've got to believe that those things that you need will come to you and they will.

My Stock Portfolio

As a stock investor, perhaps you are wondering what are the stocks I am buying. Well, I have bought various stocks already and sold them at a profit. After selling all my stocks before, I purchased again every month and below are the current stocks I have.

Action	Stock Code	Market Price	Ave. Cost Price	% Gain/Loss
BUY | SELL	ALI	15.9000	15.0918	5.36%
BUY | SELL	FPH	60.7000	62.8556	-3.43%
BUY | SELL	MWIDE	11.0600	8.9262	23.90%
BUY | SELL	SCC	214.8000	213.5281	0.60%
BUY | SELL	VLL	3.1800	3.1794	0.02%

ALI - is the largest and most diversified real estate company in the Philippines.ALI is a brand of it's own. A company that sets the benchmark in almost every aspect of real estate industry.

The share price against it earnings is expensive. Investors are willing to put a premium to the price of it's share given it's vast knowledge and experience in real estate. Since the company has 4300 hectares of land bank, it is well position to capitalize on the hot property market in the next ten years. Net income has been growing every year except in Year 2009. 

The net income for the 1st quarter is 1.6 billion pesos and it's well on it's pace to break it's previous net income record in Year 2010. Liquidity is not an issue also because the current ratio is 1.96:1 for the 1st quarter of Year 2011. The debt to equity ratio is also good at .53:1. Overall, ALI has huge cash in the coffers and can capitalize on every market opportunity.

Since the company is growing and with it's steady net income and on it's way of achieving it's 10 billion pesos net income target, it might be beneficial to include it in the stock portfolio.


FPH - this stock is recommended by Bo Sanchez.(by the way, if you want to know his stock recommendation, please click on the Truly Rich Club banner on the right side).


I checked Citiseconline's research on this and below is there analysis on FPH.


Cheap from all angles.  FPH’s is cheap, no matter how you value the stock. At Php57.00,
the stock is trading at a 30.3% discount to its market based NAV of Php82/sh.  It is also 
trading at a very compelling 2010E P/E of 8.7X vs. the PSEi’s 10.5X.  Moreover, FPH is 
currently trading at a steep 28.75% discount to our fair value estimate of Php80.00/sh, 
which is conservative since it includes a 20% holding company discount.  


Cash hoard now secure. FPH will be in a net cash position of Php7.6Bil following the sale 
of its 6.7% stake in Meralco to the Metro Pacific group, based on our estimates. FPH plans 
to use its cash hoard to maximize shareholder value.


FPH could be one of the highest dividend paying stocks this year. After resuming its 
Php1.00/sh cash dividend in 2009, management said it will pay a Php2.00/sh this year. 
Based on a Php2.00/sh cash dividend, FPH’s dividend yield would be 3.5%, making it one 
of the highest yielding issues in the market.


MWIDE - The outlook for the property sector is bright because of the strong economy, growing OFW remittances and skyrocketing tourism. The ties of MWIDE with Henry Sy will ensure billions worth of revenues in the coming years because SM Malls are sprouting like mushrooms everywhere. Also since MWIDE uses high technology in construction (it is the first company actually to extensively use advance technology), it has a big advantage right now compared to Ayala Land and Megaworld. It is also setting up a billion pesos precast manufacturing complex that will increase its production and lead time.


MWIDE is bidding for government projects also this year as it tried to spread the profit from SM to other clients.


SCC - is a defensive company and is not vulnerable from cyclical downturns. It is a great company with competent management. The power plant business is slowly gaining momentum and will realize its full potential in a couple of years. Global demand for coal is soaring coal prices are skyrocketing. Being the only large scale coal producing company in the Philippines, it is well established to capitalize on global energy demand and a rising Philippines expected to gobble up more electricity. As one of the large companies giving a large dividend pay-out, it’s worth including SCC shares in my portfolio. 


VLL - After checking the Price Earnings of other real estate listed in the stock market, VLL is on the bottom part but I believe that sooner the correct fair value of the company will reflect in the market. The recent buy back of the Company and the management's confidence in their own internal processes and financial condition, reflects the company's belief that it's share price is grossly undervalued. The current ratio is very strong, and the longterm debt are manageable. 2011 could be a record year and given the hot property market still soaring, VLL can capitalize on this. It is a cash rich company and it's subdivisions are well known throughout the country.

The ratios and key performance indicators I mentioned above were based from 1st quarter 2011 reports. It's latest financial reports strongly suggests that VLL is undervalued and is currently selling at a bargain.

What Goes Up, Goes Down!

Yesterday, I went to our office for work. Normally, we are taking a break of five minutes within the 8 am to 1 pm morning period before lunchtime. During the breaktime, we went downstairs to puff one cigarette and shake the stress a little bit. While we were discussing something, we heard a loud thud at the nearby building and saw one person throwing a ball high up in the air and fall right back into the ground.


Law of Gravity
What is the law of gravity in the first place. According to Encyclopedia, "Gravitation is the force of attraction, that exists between all particles with mass in the universe. It is the force of gravity which is responsible for holding objects onto the surface of planets and, with Newton's law of inertia's responsible for keeping objects in orbit around one another.""Gravity is the force that pulls you down." -- Merlin in Disney's The Sword in the Stone.  


When you throw a ball up, it will always go down. It's a law. It is universal. No matter what kind of throw you will do, a ball will always go down. Nobody can make a ball suspend in the air. You are in Antarctica, Middle East, America, India, Philippines and Africa, a ball thrown up in the air is always going down.


Likewise in stocks, when a stock price goes up, it will always goes down. Never in the history of stock market that a stock price goes up infinitely. It will always goes down. But sometimes the downward movements is so short, the investors do not even feel the effect of it once it goes up. There are a lot of factors playing out in this high low movement. I have written some of these in this blog also. For a quick view, please go to http://theofwinvestor.blogspot.com/2011/05/7-factors-that-affect-risefall-of-stock.html.


Roller Coaster
"There are risks you cannot afford to take. But there are also risks that you cannot afford not to take"- Anonymous
    
A lot of us perhaps have ridden a roller coaster. I remember when I was a kid, we normally go to Star City as part of our field trip destination. There you will find different types of rides children would normally crave for to try. It is in the excitement in trying these rides (especially if it is your first time) that are worth remembering. Oh yes, I tried the roller coaster when we went in Star City. Most of my girls classmates are afraid to try it out but being a boy who wants to impress the other kids, I gave it a go. "I can do that" I would normally say even though inside my heart I was totally scared. I would sometimes shivers in nervousness but in the end I still tried. The thrill of the up and down movement of the roller coaster coupled with the vomit inducing, praying like crazy, and gripping into a steel bar you have never done before, it was worth it. It was so exhilarating, that trying it on the second time won't be as much as scary before. The excitement is still there but nothing beats the first time experience.

When I first thought of entering the stock market, I was filled with doubts, and was totally scared that I would lose my money someday. Through the motivation of Bo Sanchez, I gave it a shot. (By the way, if you want to check the writings of Bo that inspired me financially, you can click the banner on the right side. Truly Rich Club deals mostly on financial guidance especially on stock market and wealth prosperity). My first stock is the telecom giant, PLDT. I bought it around 2100 per share and I was happy that I am now in the stock market. I thought at that time this is the beginning of the financial freedom I truly deserved. The price of PLDT  skyrocketed to 2400 and you know what, I am so happy I jumped up and down in our house,whistling like I won a lottery. Yes, that was a special moment for me that I will never forget because in the next few months, PLDT stock spiralled down to 2000 per share. Disappointment ensues, discouragement is whispering in my ear "See, stock market is not for you, this is only for the big boys". I almost quit but I studied further and strengthen my knowledge in the stock market. Being an accountant also made my life easier in analyzing these companies. Yes, I've been through the ups and downs of the stock market. I have experience losses and gains as well. Overall, my ride with the stock market has been pleasant and exciting.     


Emotional Discipline
Since I started in the stock market, I have experienced euphoria and depression. When the stock market goes up, I am ecstatic and when it goes down, panic attacks. These feelings and emotions that we experience are normal. Our brain are hardwired to release  a natural chemical called dopamine when positive news are heard or read causing a soft euphoria. On the other hand, when stocks drop it fires up your amydala, the part of the brain the processes fear and anxiety and generates the famous "flight or fight response". These feelings are just natural you can't help feeling fearful when stock prices go down. 


I heard in one audio talk given by BoSanchez in his interview with Edward Lee, the Chairman of Citiseconline, by the time the bull bear market cycle ended, 85% will lose money. These money will of course go to the taxes, stockbrokers fee, and  issuing companies. I might also add to these 85% losses is that when the stock market is high everybody is jumping into the stock market. Greed comes in and the stock market goes into unchartered territory. When it goes down and panic attacks, everybody is selling the stocks even if they are losing some money into it.


Since losses are sometimes traced on our emotions than following our investment plan, it is very important to have an emotional discipline. As Benjamin Graham (author of The Intelligent Investor book, Warren Buffet teacher) puts it, the typical investor "would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons mistakes of judgment". Stick to your investment plan, use the fluctuations in the market to your advantage, not disadvantage. Warren Buffet famous philosophy "Be fearful when other are greedy and be greedy when others are fearful." is one of the best cliche I learned in stock market investing.


Strategy
Since nobody can predict the stock market perfectly, one of the strategies I used is the peso cost averaging. In this type of investing, you are just putting a portion of your salary in the stock market and buy blue chips companies every month. You don't care how much is the price of the stock because through the law of averages, a stocks bought on a higher price this month can be bought at a lower price next month.


Another one would be to buy stocks during the bear markets and sell then at bull markets. But you would be a great analyst if you will be able to predict the high and low of the stock market accurately.


Value investing on the other hand involves a tedious process of analyzing the information of a given stock but you will be able to tell if the stocks are overvalued or undervalued. In this type of strategy, you could based your decision to buy or sell based on the companys financial information.