Stock Market Investment Tutorial eBook ( Last Chapter)

Chapter 6

Open an Online Account

     

I don’t work for Citiseconline.

But I highly recommend that you use it as your way into

the market.

I’m recommending it to you because they’re the best

online trading platform in the country today. They’re also the

biggest. (And to be upfront about it, I also bought Citiseconline

stocks. Yes, they’re a publicly listed company too. I believe in

the team that owns and runs it.)

Do you want to invest using a traditional stock broker?

My mother used to do that.

She’d pick up the phone and give instructions. “Please

buy for me…”

Just for fun, I dare you try doing that with your P5000.

See what will happen.

At least, you’ll give someone a good laugh and de-stress

his day.

You see, traditional stock brokers will never handle the

accounts of my house helpers. I can’t blame them. Manpower

is very expensive.

But Citiseconline will handle the accounts of my house

helpers.

Precisely because everything is done online.

It’s Really Easy

Citiseconline has made it very simple for small investors.

They created the Easy Investment Program or EIP.

If you have P5000 or more, you can start investing. P5000

is the initial minimum amount. It’s up to you how much you’ll

invest after that. After that, Citiseconline won’t remind you to

deposit your monthly investments.

But at the TrulyRichClub, I’ll do that.

That’ll be my service to you.

I’ll bug you every month to invest. I’ll email you my Stocks

Update to remind you to follow your investment plan. (More on

this later.)

For the Easy Investment Program, Citiseconline suggests

the great companies you can invest in—companies that they

believe will be around for the next 10 years or more.

Blow the trumpets please!

Here they are…

Company Name                                  Stock Symbol

Ayala Land Inc.                                              ALI

Bank of the Phil. Islands                               BPI

Jollibee Food Corp.                                       JFC

Manila Water Co. Inc.                                   MWC

SM Prime Holdings, Inc.                              SMPH

Phil. Long Distance Tel Co.                           TEL

Every month, you can deposit P5000 (or whatever amount

you want to put in) into your Citiseconline account. No need to

go to their office to do this. You can do it through a bank deposit

via any branch of BDO, BPI, Security Bank, and HSBC.

From the comfort of your home, you can open your

computer, log onto the website, and buy the stocks from the list

above that you like. You’re doing it. You’re in control.

Very Important Note: All companies require a minimum

number of shares or what they call “Board Lot” every time you

want to buy shares. So if you only have P5000, you won’t be

able to buy shares from PLDT, Jollibee, and SM Prime Holdings.

Because their prices are higher.

Example: As I write this piece, Jollibee is selling at P58 and

they require a minimum of 100 shares. So that means you’ll

need at least P5800 to buy shares from Jollibee.) So if you only

have P5000 to invest, choose between Ayala Land, Manila Water,

and Bank of the Phil. Islands. Those are solid, great companies

that will make you wealthy in 20 years.

So every month, buy.

When will you sell?

Oh, in about twenty years.

I’m not kidding.

Make the stock market your big piggy bank.

Important Note: In the off chance that there’ll be a grave

reason to sell, I’ll tell you about it through my monthly Stocks

Update. (More on this later.)

Now let me speak to those who have more money…

If You Have P1M or More,

You Can Also Do a Variation of EIP

As I write this, Citiseconline has yet to launch this

program.

If you have more money—say P1M or more—and you

want to invest in the stock market, you can do a variation of

their Easy Investment Program (EIP).

From what I hear, they may call it Accumulator Plus. (You

know how they like sophisticated names.)

I just call it EIP with caffeine. Or EIP with boosters. Or

Super EIP.

Or EIP Plus.

Hey, these terms are just between you and me, okay?

Don’t call up Citiseconline and ask for Super EIP. They won’t

understand what you’re talking about.

This is what this EIP with caffeine is all about: There’s

another list of great companies whose share prices are really

low—and who are about to go up within these next six

months.

So if you have P1M, don’t invest it all in one plop.

If the market crashes, you’ll have a heart attack.

Even if you know that it’ll go up again in thefuture, it’s

still depressing.

So why not divide your P1M into five parts—and invest

P200,000 every month? That way, if the price goes down, yourP200,000 will be buying more shares in the next few months

If the price goes up, you’re still earning very well from yourfirst investments. The important thing is that you can sleep at night..  So select two, three, or four companies from the magic list of growth companies below. According to Citiseconline, these are the companies that are undervalued today (meaning: share prices are cheap compared to their real value):

Company Name                        Stock Symbol                    Target Price

Energy Dev. Corp.                                EDC                                     P6.50

First Gen Corp.                                    FGEN                                  P15.50

First Philippines Holdings                  FPH                                     P75.00

Security Bank                                      SECB                                   P63.50

Engineering Equip.                               EEI                                       P3.40

Manila Water Co. Inc.                        MWC                                  P20.75

Note: I’m writing this in March 2010. This list will change!

So when will you sell?

Unlike the original EIP where you don’t sell, the EIP Plus

has a specific price you’re waiting for. Do you see the target

price above? If the price of the share goes very near that target,

sell your shares. Keep your earnings and wait for another

opportunity to invest again.

You may ask, “But Bo, what if it goes higher than the

target price?”

Don’t be greedy. Better to be safe. Unless Citiseconline

analysts set a higher target price for the company, I’ll sell. I’ll

be happy with the profits. I won’t be greedy. I’ll wait for other

undervalued companies.

What Stocks Have I Bought

My house helpers are doing an EIP.

So they’ve bought shares of Ayala Land (ALI) and Manila

Water (MWC). But two of my helpers also bought First Gen

(FGEN) and Energy Dev (EDC), two companies that aren’t

listed in the EIP—but in the EIP Plus. But since I’m monitoring

their accounts, they’re safe. Once these two companies reach

the target price, they’ll sell.

Personally, I’m doing an EIP Plus. (Remember, this is

just our term. Citiseconline will most likely call it Accumulator

Plus.)

I’ve bought First Gen (FGEN), First Phil Holdings (FPH),

and Engineering Equipment (EEI). So far, I’m very happy with

my earnings.

I also have other stocks that don’t fall into these lists. I have

Universal Robina (URC) but I’ll sell this soon when it reaches its

target price of P25. I also have Citiseconline (COL), but I think

this is more of an emotional purchase than anything else. I just

love this company and the people behind it.

Okay, it’s time to open your account.

Log on to www.citiseconline.com now.

4-Step Application Process

1. Go to www.citiseconline.com

On their website, click on their Easy Investment Program or

EIP.

You’ll read stuff that you read in this book, but you’ll

understand it more.

Repetition is the mother of all skill.

So keep reading!

2. Submit an Application Form & Other Documents

From their website, you can download an Application

Form. Simply print it out, fill in the information, and mail

all required documents to their office. And then call up

for any questions. Their phone number is Tel. 6333-777. Or

better yet, visit their office and talk to someone face to face.

Their office is 2403-B East Tower, Philippine Stock Exchange

Centre Exchange Road, Ortigas Center Pasig City. Just walk

right in and say, “I want to open an account.” Someone will

walk you through the application process.

3. Deposit Your Money

If you visit the office, you can bring your cash or a check.

Not going to their office? You can deposit your money to

Citiseconline using any branch of BPI, BDO, Security Bank,

and HSBC. Again, their website will tell you how to do

that.

Epilogue

See You at My Next

Stocks Update

As my TrulyRichClub member, I’ll send you a Stocks Update

every month.

In one single page, I’ll tell you everything you need to know

about your stock investments. Here are the other things I’ll do for you

through my Stocks Update.

I’ll remind you to invest each month. I’ll urge you, push you,

beg you to be faithful to your monthly investments.

I’ll tell you when it’s time to sell the stocks I wrote about here.

I’ll tell you the new undervalued stocks that you can buy.

I’ll tell you what I’m doing with my own stocks.

I promise: In plain, simple English. No financial jargon you

won’t understand

In the meantime, keep learning.

May your dreams come true,

Bo Sanchez

PS. Did a friend pass this Ebook to you? For those who are not

yet members of the TrulyRichClub, I’m personally inviting you

to join me and invest in your spiritual and financial education.

You won’t regret it. Receive my Stocks Update every month,

plus a mountain load of material for your financial and spiritual

growth. To try it out, click at the link below.

www.TrulyRichClub.com 

Stock Market Investment (chapter 4&5)

...the TrulyRichClub...

Chapter 4

Own a Great Company

When I was 8 years old, I learned that my parents invested

in the stock market. I overheard them say that they owned shares

of San Miguel. (My father worked for San Miguel Corporation for

most of his life.)

I asked my father, “What do you mean by stocks, Dad?”

He said, “If I bought a few shares of stock of San Miguel,

that means I own a tiny part of San Miguel.”

“Wow,” I gushed, “if you own a part of San Miguel, does

that mean they’ll give us free Magnolia ice cream and Coke?” (At

that time, San Miguel also owned both companies.)

Dad shook his head. “No. It means if San Miguel earns

money, they’ll give me a tiny part of their profits. They call

them dividends.”

“Oh, I see.”

Actually, it was as clear as mud to me.

Dad looked at my face and knew I was lost.

So he gave me an example.

“Let’s say your mother puts up a small candy store in

front of our house…”

“But Dad, Mommy doesn’t like candies. She loves

chocolates.”

Dad rolled up his eyes. “This is just an example!”

“Then make it realistic. Let her open a chocolate store.”

“Okay! Mommy needs P50 to buy the chocolates and

another P50 to buy a small table for the store. So she needs a

total of P100. But let’s say she doesn’t have P100. Let’s say she

only has P90. So she walks up to you and asks, “Bo, can you

give me P10? In return, you’ll own 10% of my candy store…”

“Chocolate store,” I frowned.

“Okay, chocolate store. So you give Mommy your P10. At

the end of the year, the chocolate store earns a nice profit of P10.

So Mommy decides to share with you P1, since you own 10% of

the store. That P1 is what you call your dividend.”

“That’s great. So you’re earning dividends from San

Miguel, Dad?”

“Yes, but that’s just one way of earning. The other way is

through capital appreciation.”

“Capital what?”

The Company Gets Bigger

“Let’s go back to Mommy’s chocolate store. Do you

remember how much was the store worth?”

“No.”

“How much did she need to buy all the stuff?”

“P100.”

“Yes. That’s how much Mommy spent to buy the

chocolates and the table. But after a year, business was so good

that she decided to sell biscuits too. From the profits of the

business, she bought an entire pack of biscuits worth P50. She

also bought a second table for another P50. So Bo, how much is

the store now?”

“P200.”

“And how much percent do you own?”

“I own 10% of the store.”

“That’s right. One day, your sister says, ‘Bo, I want to buy

your ownership of Mommy’s chocolate store.’ What will you say?”

I crossed my arms and pouted. “I’ll tell her it’s not for sale.”

“But if you wanted to sell it, how much should she pay

you?”

“10% of P200 is P20?” I flashed a smile, “Hey, I earned

P10…”

“That’s capital appreciation. You pick up fast. But that’s

not all…”

The Company Has More Potential

“You know how your sisters like to buy the same shoes

and clothes? Let’s say your other 4 sisters want to also be a

part-owner of Mommy’s chocolate store. Because they believe

that the chocolate store will spread to 100 branches all over the

world. They foresee Mom opening stores in Paris, New York,

Moscow, Tokyo… So they go to you and beg you to sell them

your 10% share. What will you do?”

“I don’t know.”

“Think.”

“I guess they’ll gang up on me, twist my arm, pinch my

ear, and whoever causes the most pain wins.”

Dad rolled up his eyes to the ceiling again. “Bo, imagine if

all your sisters are kneeling down in front of you, asking, ‘C’mon

Bo, sell me your 10% ownership! Please! Pleeeeeeaaaaase!’”

That was my lightbulb moment. I got it.

“Hey, I won’t sell it for P20,” I said, “since they’re fighting

over it, I’ll sell it for P30. Or P40. Or even P50! I’ll sell it for P100.

Plus, whoever buys it from me must be my slave for the next 5

years.”

Dad chuckled. “So you realize that the price of the stock

is determined by two things: Real Value and Perceived Value.

Real value means the cost of the store—how much are the

chocolates and tables. Perceived value means how much are

people willing to buy it. Perceived value is based on potential.

Perceived value is based on demand.”

What I Do Today

Fast forward 30+ years later.

I now invest in the stock market.

And I teach others to invest too.

Note: I didn’t say “Trade” the Stock Market.

Because there’s a giant difference.

Let me explain in the next chapter.

Chapter 5

How to Retire a Millionaire

“The stock market is dangerous!”

Have you heard that before?

I have. Many times.

And you know what? I agree.

After all, statistics say that 85% of stock market players lose

their money. Believe me, billions have been lost.

But whenever people say, “The stock market is dangerous!”

they’re referring to trading in the stock market. Not investing in

the stock market.

There’s a big difference.

In this little book, I’d like to teach you how to invest in the

stock market, not trade. If you want to trade in the stock market,

this book isn’t for you. Please look elsewhere.

Here’s the basic difference:

Trading is buying stocks and selling them within a day or

a few days.

Investing is buying stocks and selling them in six months

or never!

Warren Buffet, the richest man the stock market has ever

made, said, “Only buy something that you’d be perfectly happy

to hold if the market shut down for ten years.”

Here’s why I believe you should be investors: I don’t

believe ordinary people should be trading. I repeat, 80% of

people lose their money in the stock market. My belief is that

most of those 80% are traders.

Another word for trading is “speculating.”

As Mark Twain said, “October is one of the peculiarly

dangerous months to speculate in stocks. The others are July,

January, September, April, November, May, March, June,

December, August and February.”

In trading or speculating, you don’t look at how strong

the company is. Any company is game—even what they call

“penny” stocks. These are companies whose stocks are worth

centavos. Because they’re considered very risky.

So leave the trading to full-time traders—the people who

do this full-time, studying about it 8 hours a day.

Investors invest only on the great companies. Because

we’re in for the long haul.

And instead of trading, you should focus on your business

or job. Focus on your core competency. Stick to your game plan.

Everything that I’m teaching you here at the TrulyRichClub.

Through your business or job, you create the money

necessary to invest in the stock market.

One of the Greatest Inventions:

Money Cost Averaging

If you want to invest in the stock market, there’s only

one choice: Money Cost Averaging. That’s just a fancy name for

buying stocks of great companies, little by little, each month.

Perhaps P5000 a month.

Or P10,000 a month.

Or whatever fixed amount you’re can set aside from your

monthly earnings.

Can’t afford P5000 a month? No problem.

My maids can only afford to save P2000 a month. So every

third month, they invest P6000 into the stock market.

The important thing is to do it regularly.

Discipline yourself.

The moment you get your salary, divide it according to

the 5 “envelopes” I mentioned in Chapter 1.

 When you do this, you’ll find your money growing

steadily year after year.

What About Recessions?

Now here’s a powerful point I want you to read carefully:

When you adapt this Money Cost Averaging strategy, you’ll be

buying without much thought to the bouncing of the market

prices.

You’ll hear a lot of talk like this…

“Is Ayala Land cheap today?”

“Do you think Jollibee will go up tomorrow?”

“Is BPI’s price expensive today?”

“Perhaps PLDT will be lower tomorrow?

Here’s a nice way of answering all these questions: Who

cares?

Because in 10 years—they don’t matter.

An oil crisis explodes all over the world.

Buy your stocks anyway.

A political crisis erupts in the country.

Buy your stocks anyway.

A world economic recession happens again.

Buy your stocks anyway.

Keep buying those great companies.

This is the secret of the wealthiest people in the world.

Do You Want to Become Rich?

Do What the Rich Do.

One of the richest men in the world, Warren Buffet, has a

rule on investing in the stock market: “Be fearful when others

are greedy, be greedy when others are fearful.”

When the economic recession happened last year, Buffet

was like a little kid in a giant candy store that has declared an

“All-Items-Must-Go” Sale.

Great companies were selling their stocks marked down

at half-price.

Some of the best imported chocolates were at 60% off!

Little boy Warren couldn’t believe his eyes. Even with his

vast amounts of money, there was so much good stuff to buy.

So Buffet went on a buying spree—picking up stocks of

solid companies left and right. While people were fearful, he

was brave.

Remember this when you’re doing your Money Cost

Averaging.

Are you ready?

Let’s enter the Candy store.

Here’s a nice way of answering all these questions: Who

cares?

Because in 10 years—they don’t matter.

An oil crisis explodes all over the world.

Buy your stocks anyway.

A political crisis erupts in the country.

Buy your stocks anyway.

A world economic recession happens again.

Buy your stocks anyway.

Keep buying those great companies.

This is the secret of the wealthiest people in the world.

Do You Want to Become Rich?

Do What the Rich Do.

One of the richest men in the world, Warren Buffet, has a

rule on investing in the stock market: “Be fearful when others

are greedy, be greedy when others are fearful.”

When the economic recession happened last year, Buffet

was like a little kid in a giant candy store that has declared an

“All-Items-Must-Go” Sale.

Great companies were selling their stocks marked down

at half-price.

Some of the best imported chocolates were at 60% off!

Little boy Warren couldn’t believe his eyes. Even with his

vast amounts of money, there was so much good stuff to buy.

So Buffet went on a buying spree—picking up stocks of

solid companies left and right. While people were fearful, he

was brave.

Remember this when you’re doing your Money Cost

Averaging.

Are you ready?

Let’s enter the Candy store.

Here’s a nice way of answering all these questions: Who

cares?

Because in 10 years—they don’t matter.

An oil crisis explodes all over the world.

Buy your stocks anyway.

A political crisis erupts in the country.

Buy your stocks anyway.

A world economic recession happens again.

Buy your stocks anyway.

Keep buying those great companies.

This is the secret of the wealthiest people in the world.

Do You Want to Become Rich?

Do What the Rich Do.

One of the richest men in the world, Warren Buffet, has a

rule on investing in the stock market: “Be fearful when others

are greedy, be greedy when others are fearful.”

When the economic recession happened last year, Buffet

was like a little kid in a giant candy store that has declared an

“All-Items-Must-Go” Sale.

Great companies were selling their stocks marked down

at half-price.

Some of the best imported chocolates were at 60% off!

Little boy Warren couldn’t believe his eyes. Even with his

vast amounts of money, there was so much good stuff to buy.

So Buffet went on a buying spree—picking up stocks of

solid companies left and right. While people were fearful, he

was brave.

Remember this when you’re doing your Money Cost

Averaging.

Are you ready?

Let’s enter the Candy store.

To be continued..........

...the TrulyRichClub...